The VanEck BUZZ ETF: How to Turn Sentiment Into Profit

The VanEck Vectors Social Sentiment ETF (BUZZ) taps into social media's growing voice and David Portnoy's popularity. But the exposure it provides isn't quite what you might think.

Asset manager VanEck is tapping into the wisdom of the crowd for its latest product offering: the VanEck Vectors Social Sentiment ETF (BUZZ).

And they've brought one of the loudest of loudspeakers in to let you know about it.

The BUZZ ETF, which is set to launch March 4, tracks an index comprised of stocks benefiting from positive sentiment expressed through social media, news, blogs and other “alternative datasets.”

It's a fitting launch given that the past year has seen a groundswell in daytrading, especially among young people who are taking their stock-picking cues from Reddit forums such as r/WallStreetBets and other social media platforms.

And as if to drive the point home, the BUZZ ETF's launch was announced on Twitter by Dave Portnoy. The, ahem, vocal CEO of Penn National's (PENN) Barstool Sports began day trading heavily during the COVID lockdowns of 2020, inspiring many of his followers to do the same. (Portnoy also is a partner and part-owner of Buzz Holdings, the firm behind BUZZ's underlying index.)

But early hype – and early detractions – about what this fund could be don't quite hit the mark. Read on as we discuss what the BUZZ ETF really is … and what it isn't.

What the BUZZ ETF Is

It's a sentiment tracker.

VanEck says its VanEck Vectors Social Sentiment ETF is a collection of larger stocks – names with market values of at least $5 billion – that “exhibit the highest degree of positive investor sentiment and bullish perception” based on content that one could typically find online. Twitter posts. News articles. Blogs.

[Breakthrough: This Could be the Closest Thing to Buying Amazon When it was $50]

The BUZZ ETF tracks the BUZZ NextGen AI US Sentiment Leaders Index, which uses natural language processing technology to ingest and determine the positive, negative or neutral value of millions of inputs.

“It's all about training the models to understand written text the same way people in the investment world understand that text,” says Jamie Wise, founder and CEO of Buzz Holdings. “People speak very differently about stocks than they do, say, product reviews on Amazon.”

After ranking stocks by factors such as degrees of sentiment and breadth of discussion, the system's algorithms pluck the 75 top-scoring names for inclusion in the index.

The BUZZ index repeats the process as part of a monthly rebalancing, with a small “buffer” provision included. If a stock was ranked at 71 to 75 in the prior month, and following rebalancing it would be ranked at 76 to 80, the index keeps said stock to minimize turnover (and thus trading costs).

What It Isn't

The BUZZ ETF is not a way to recreate the r/WallStreetBets phenomenon.

We explain the GameStop/WallStreetBets phenomenon in more detail here, but for the uninitiated, a very quick explanation:

Back in January, a Reddit community identified a number of stocks that Wall Street was overwhelmingly betting against. These stocks were perfect targets for a so-called short squeeze, in which a burst of buying impels people making bearish bets against the stock to unwind their trades – by purchasing more shares, thus driving the stock even higher. The greatest stock of focus, GameStop (GME), was squeezed as much as 2,463% higher at its peak … before crashing back down to earth, that is.

That brings us back to the BUZZ ETF.

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