The saga of the Reddit army of retail traders, the Robinhood trading platform and GameStop (GME) has truly been unlike anything we've seen. Even the tech and housing bubble of the 2000s felt like less of a pure speculative mania than what we just experienced with the "stick it to the hedge funds" short squeeze.
While most of the focus has been on the price action in GameStop, BlackBerry, AMC Theaters, Express and other beaten down retail names, a number of ETFs got caught up in the frenzy as well. There were just a few funds that had anything above what I'd consider minimal exposure to GameStop stock, but those that did experienced some wild disconnects of their own.
I'll give a shoutout to Bloomberg's Trillions podcast which offered up a number of interesting nuggets and stats of how this impacted the ETF industry. Among the more intriguing ones:
- GameStop accounts for just 0.02% of the Vanguard Total Stock Market ETF (VTI), but was responsible for 0.4% of the fund's return, a full 20 times above its weight.
- GameStop took over broad micro-cap ETFs, the group they were originally part of. At its peak, GME had a market cap of around $33 billion. Micro-caps typically have a market cap of $1 billion or less. It was a large-cap in a micro-cap fund. After the subsequent share price plunge, GameStop is now barely hanging on to the top 10.
The few funds that did have at least modest weighting in GME had a wild ride of their own. Much of the excess has worked itself out as GameStop has come back down to earth, but here's a handful of ETFs that were most heavily impacted.
SPDR S&P Retail ETF (XRT)
XRT was perhaps the most impacted ETF in this whole fiasco. It's supposed to be an equal-weight fund and with roughly 100 holdings in total, each component should be allocated around 1% of the portfolio.
XRT only rebalances on a quarterly basis, so there's no real mechanism for adjusting in between those dates (unless the fund wants to do a special rebalance, but those instances are rare). As a result, GME accounted for about 20% of the fund at its peak.
With GME shares in such demand and XRT now holding such a significant allocation to the stock, traders began using it as a proxy. Investors withdrew about a half billion dollars from the fund, likely to get their hands on GME shares. Some of it has since come back, but that's a big move for a fund that only had about $750 million in assets to start with. Spreads also shot up from around 2 basis points to 15 basis points. The fund also briefly traded at about a 1.3% premium to NAV.
Activity has mostly returned to normal, but GameStop is still XRT's top holding at around 3.4% of assets.
Wedbush ETFMG Video Game Tech ETF (GAMR)
No surprise that GameStop showed up in this video game ETF, but it literally took over this portfolio at its peak. GME was one of the fund's larger holdings pre-rally at about 4% of assets, but at its peak it accounted for more than 30%.
It's not that unusual to see single stocks accounting for huge positions - Amazon accounts for 22% of the consumer discretionary ETF and ExxonMobil/Chevron are nearly half of the energy ETF - but a concentrated holding like this in such a niche fund is almost unheard of.
GAMR's stake in GME is down to about 5% now, but it's still the fund's top holding.
Cambria Shareholder Yield ETF (SYLD)
SYLD is comprised of the 100 companies with the best combined rank of dividend payments and net stock buybacks, which are the key components of shareholder yield.
It also had roughly a 4% stake in GameStop before all of this went down, but because it's actively-managed, it was able to move much more nimbly than the other funds on this list.
I saw GameStop's weighting climb above 10% at one point over the past two weeks, but I'm guess it took profits on the way up because today it's not even among the top 10 holdings.
Invesco S&P SmallCap 600 Revenue ETF (RWJ)
Like the fund's name suggests, RWJ starts with the S&P 600 index, but revenue-weights the components instead market cap-weighting.
GME is still in the top 10 of this fund, but only at a relatively modest 2% weighting. As of the end of January, however, it was at about 13%. RWJ wasn't the only Invesco fund where GameStop made a splash. The Invesco S&P SmallCap Value with Momentum ETF (XSVM) and the Invesco SmallCap Consumer Discretionary ETF (PSCD) also owned double digit allocations.