ETF Trends CEO Tom Lydon discussed the VanEck Vectors Social Sentiment ETF (BUZZ) on this week’s “ETF of the Week” podcast with Chuck Jaffe on the MoneyLife Show.
The BUZZ ETF holds 75 stocks with at least a $5 billion market cap generating the most social media mentions. The ETF made headlines when influential Barstool Sports Founder Dave Portnoy announced his involvement.
What’s the BUZZ all about?
In the age of telecommunications, Twitter, Reddit, Stocktwits, and dozens of other platforms established communities for investors to discuss stocks. As a result of the greater online engagement, they have become an alternative dataset for investors to tap into for a performance edge. BUZZ can potentially help investors benefit from the predictive insights gained by measuring the collective convictions about stocks, reflecting a type of benchmark for social sentiment.
The vast amount of content generated across social platforms contains valuable insights that can help investors gain a potential edge over the broader market. In the U.S., about 80% of the population now uses these platforms, up from 10% in 2008. Social media has transformed into a real-time news outlet, oftentimes breaking news before traditional media.
Beyond just a news source, people are increasingly using them as online-communities to share opinions about stocks and other financial topics. The introduction and adoption of stock cashtags ($+ticker) and the creation of dedicated investment platforms, like Stocktwits and dozens of others, have helped solidify this movement and fuel the growth of investment-related online discussions. This creates a rich and valuable dataset that gives insight into the potential of different stocks.
BUZZ works as an investment powered by the collective voices of the people. It’s an evolution in behavioral finance – long known that investor sentiment and emotions can impact the price and performance of stocks. Look to social media to assess millions of diverse opinions to ascertain the mood of investors—potentially even before the market as a whole realizes it.
A BUZZy Index
The fund tracks The BUZZ NextGen AI US Sentiment Leaders Index. It employs leading-edge analytics to harness the collective conviction of millions of investors. The Index tracks the performance of the 75 large cap U.S. stocks that exhibit the highest degree of positive investor sentiment and bullish perception based on content aggregated from online sources, including social media, news articles, blog posts, and other alternative datasets.
Millions of investment-related messages and posts on sites like Reddit, Stockstwits, Twitter, and others are analyzed to identify stocks with the highest future return potential. The index is dynamic and keeps the portfolio of stocks current by reviewing picks each month, dropping stocks that have declined in investor sentiment, and adding others where sentiment has increased.
The Index ensures the quality of picks and strength of conviction by targeting only large cap stocks with seasoned message history and consistent, diverse, and broad conversation. Messages and posts are filtered through an analytics model using Natural Language Processing technology to determine what the online community is saying about these stocks and whether the sentiment is positive, negative, or neutral on a collective basis.
Listen to the full podcast episode on the BUZZ ETF:
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