Revisiting BUZZ: Inside Dave Portnoy's ETF 3 Months Later

With this fund recently passing its 3-month birthday, it's time to check in on how it's doing and what it looks like right now.
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With apologies to Cathie Wood at ARK, Dave Portnoy became perhaps the biggest celebrity name in the ETF industry when he put his marketing muscle and personal brand behind the VanEck Vectors Social Sentiment ETF (BUZZ). Since its debut on March 2nd, BUZZ quickly became one of the year's biggest ETF launches and Portnoy was largely to thank for it.

As a refresher, BUZZ follows the BUZZ NextGen AI US Sentiment Leaders Index, which is intended to track the performance of the 75 large-cap U.S. stocks which 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 (of which TheStreet is one).

In other words, if you're hearing a lot about a stock in the financial news lately, odds are it's showing up in Portnoy's BUZZ ETF.

I profiled this ETF back when it was first launched (HERE and HERE). With the fund recently passing its 3-month birthday, it's time to check in on how the fund is doing and what it looks like right now.

BUZZ ETF Top Holdings

BUZZ has large positions in mega-cap names, such as Apple (AAPL), Facebook (FB), Tesla (TSLA) and Amazon (AMZN), but a lot of the other holdings are fairly consistent with the companies that are currently in the news.

BUZZ ETF Top Holdings

BUZZ ETF Top Holdings

DraftKings (DKNG) has gained a lot of popularity among growth investors and has been one of Cathie Wood's most traded stocks. Big data analytics firm Palantir (PLTR) similarly has been getting a lot of press due to its heavy involvement in the SPAC market. I probably don't need to tell about how GameStop (GME) is getting its attention. Virgin Galactic (SPCE) maintains steady interest as we make further inroads into space travel.

One name that is nowhere to be found in BUZZ is AMC Entertainment (AMC). The criteria for how names get selected for the portfolio is proprietary, but there is the requirement that the stock exhibits positive sentiment and bullish perception that is likely keeping it out. It's worth noting that when BUZZ first launched, GameStop didn't make the cut either.

From a sector standpoint, there's little question as to which direction the portfolio is headed.

BUZZ ETF Top Sector Holdings

BUZZ ETF Top Sector Holdings

The market's three primary growth sectors - tech, consumer discretionary and communication services - account for more than 2/3 of BUZZ's portfolio. This is in contrast to how the fund was positioned at its launch when it was much more diversified. Back then, tech was still the fund's largest allocation at nearly 27%, but healthcare and industrials accounted for 30% of the fund compared to just 17% today.

Clearly, BUZZ is a growth play, which isn't surprising, but I wouldn't call it a meme stock ETF. GameStop is the only stock that would fall into the category. There are a lot of recovery names in the portfolio - Carnival, Delta Air Lines, American Air Lines and Penn National Gaming - but there's not a whole lot in the way of cyclical exposure. Outside of a 9% allocation to healthcare, there's virtually nothing beyond that which would be considered defensive in nature. This is purely a growth play.

Since the fund's inception, BUZZ has trailed the S&P 500 by 3-4%.

BUZZ vs. SPY

BUZZ vs. SPY

It's important to point out, however, that the long-term track record of the BUZZ index remains impressive. With average annual returns of 27% over the past five years, it easily outpaces the S&P 500.

BUZZ vs. SPY

BUZZ vs. SPY

Conclusion

BUZZ got a lot of attention out of the gate, but it's since faded. The ETF was up to $500 million in assets pretty quickly, but it's fallen to about half of that amount currently.

I think BUZZ has actually done a pretty good job of measuring the sentiment of the market. Whether that translates into outperformance depends on if BUZZ's growth focus is in favor. Over the past five years, growth has certainly been in favor and BUZZ's performance has reflected that.

Dave Portnoy remains the most vocal backer of BUZZ and will no doubt keep a steady level of interest of this ETF.

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