Jim Cramer, a well-known personality in the investment industry, has both admirers and critics. As a former hedge fund manager and current CNBC host, he has become the target of two ETFs, much to his disliking. His critics are quick to highlight whenever one of his stock picks on television does not perform well.
The ETFs have been recently introduced and are currently accessible to investors who wish to invest with or against Cramer.
The Inverse Cramer Tracker ETF [SJIM] and The Long Cramer Tracker ETF [LJIM] are the two ETFs, offering short and long exposure to Cramer’s stock recommendations.
Whether justified or not, the ETF industry tends to be prompt in capitalizing on popular culture trends. Roughly 16 months ago, the AXS Short Innovation Daily ETF (SARK) was introduced, which shorts Cathie Wood’s ARK Innovation ETF (ARKK). This ETF’s launch was not meant as a personal attack against Cathie Wood; rather, it was an ETF provider’s attempt to offer a product that would pique investors’ interest.
The same reasoning is applicable to the recent launch of the Inverse Cramer Tracker ETF (SJIM) and the Long Cramer Tracker ETF (LJIM). SJIM’s investment objective is to undertake transactions that produce the inverse of the returns from investments recommended by television personality Jim Cramer.
The success of this fund is primarily dependent on the timing and methodology of identifying and executing the stock picks. The definition of a “call” and the swiftness of executing the corresponding trade are critical factors to consider. This area is considerably vague, and as a result, it may be perplexing.
“The fund’s adviser monitors Cramer’s stock selection and overall market recommendations throughout the trading day as publicly announced on Twitter or his television programs broadcast on CNBC and sells Cramer’s stock recommendation short,” the website for SJIM reads.
As per the prospectus, the strategy appears to be somewhat indistinct. The fund intends to engage in short selling of stocks recommended by Jim Cramer on television or Twitter, but the time frame for executing these trades is not specified. The fund plans to maintain these positions for a duration of 5 trading days, but they may hold them for a more extended period if Cramer persists in expressing his opinion. In the event that the buy call becomes “stale,” the fund has the authority to sell off the position. While the fund generally intends to maintain between 20-50 positions, it is not entirely clear how it will determine which stocks to hold or sell.
The product is intriguing, and I anticipate it will be popular. Based on Fintwit discussions, many people would be interested in investing in this fund. However, since it is an inverse fund, it is not an ideal long-term holding. Investors should only contemplate this for brief periods with limited positions.
