Industry Updates

ETF traders buy the dip following tech sell-off

A triple-leveraged Nasdaq 100 ETF saw $800m inflows on 17 February

Tom Eckett


Traders are targeting a triple leveraged Nasdaq 100 exchange-traded fund (ETF) as a way of taking advantage of the sell-off in tech last week.

According to data from Bloomberg, the US-listed $11bn ProShares UltraPro QQQ ETF (TQQQ), the world’s largest leveraged ETF, saw $800m inflows on 17 February as investors viewed the recent sell-off as an attractive entry point into tech stocks.

The Nasdaq 100 suffered its biggest fall since October 2020 dropping 3.5% last Thursday amid concerns of frothy valuations and rising US Treasury yields.

Tesla has been the poster boy of the sell-off with the electric vehicle manufacturer down 21.5% since investing $1.5bn in bitcoin earlier this month, as at 26 February.

Furthermore, US 10-year Treasury yields briefly traded above the S&P 500 dividend yield hitting a one-year of 1.614%, a further indication of jitters in the market.

Nick Wood, head of fund research at Quilter Cheviot, said the short-term dip could present an attractive entry point for investors.

“Every year we get some sort of market correction that throws everyone off balance,” Wood continued. “It certainly appears as if the market could be shifting in sentiment given the rise in bond yields and the sell-off we are seeing in tech-focused names.

“Despite the volatility, tech remains an important part of a portfolio given the trends seen since the pandemic, but this should serve as a reminder of the importance of being diversified.”

At the other end of the spectrum, investors have started to take profits on Cathie Wood's range of ETFs.

Last Tuesday, ARK Investment Management's flagship ARK Innovation ETF (ARKK) suffered a record $465m outflows while the ARK Genomic Revolution ETF (ARKG) saw $202m outflows, according to data from Bloomberg.

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