MAGA, YODA and BRRR - The quest for catchy ETF tickers

Ticker symbols have taken on an outsized importance in the exchange traded fund world, where pursuit of the kind of name recognition enjoyed by funds such as SPY, the SPDR S&P 500 ETF, has become the holy grail.

“I would venture that half the enterprise value of our single bond ETFs is in the tickers,” said Alexander Morris, president and chief investment officer of F/m Investments.

“The notion that TBIL was not taken blows my mind,” Morris added of the ticker symbol he bagged for his three-month Treasury bill ETF in 2022.

With more than 3,000 ETFs trading in the US alone it is hard for recent entrants to gain traction, Todd Rosenbluth, head of research at VettaFi, a consultancy, pointed out. “However, a memorable ticker that is well-connected to the fund’s investment approach is one way to do so and does not hurt profitability the way an eye-catching low fee would. It’s a low-cost form of marketing.”

Nate Geraci, president of The ETF Store, a financial adviser, agreed. “A ticker symbol serves as the ‘front porch’ for an ETF, immediately painting a picture about what lies inside,” he said. “There is no question a flashy ticker symbol can enhance the ‘kerb appeal’ of an ETF.”

Rosenbluth traced the beginning of the trend of launching deliberately memorable tickers to HACK, the Amplify Cybersecurity ETF, which launched in 2014, marking one of the first attempts to use a ticker to cut through the crowd. 

Geraci said HACK was a “perfect example [that] catchy tickers can help in attracting financial media, who might latch on to a particular ETF because its symbol helps quickly convey a narrative or enhance a story”.

Others soon followed, such as PAVE, the Global X US Infrastructure Development ETF, and ROBO, the Global Robotics and Automation Index ETF.

“A good ticker can go a long way in attracting investors. Something like TBIL may be more effective than funny tickers, but they still draw attention,” said Bryan Armour, director of passive strategies research, North America at Morningstar.

What started with thematic funds has broadened out, Rosenbluth said, adding that catchy tickers can help any fund from small independent providers gain exposure.

ROE, short for return on equity, was bagged by the Astoria US Quality Kings ETF. The AdvisorShares Pure Cannabis ETF tried to smoke out the competition with YOLO, the acronym for “you only live once”. And the Freedom 100 Emerging Markets ETF, renowned for shunning authoritarian regimes such as in China, chose FRDM.

Tickers can also be used to skirt restrictions. In 2018, the US Securities and Exchange Commission barred issuers from using “blockchain” in fund names.

The Amplify Transformational Data Sharing ETF sidestepped this by adopting the ticker BLOK. The prohibition has since been dropped, but that has not stopped Amplify from raising ticker selection to an art form, with IBUY (an online retail-focused fund) and IPAY (mobile payments) also in its roster.

A well-chosen ticker can prove lucrative in other ways. In 2022, when Facebook rebranded as Meta, it enviously eyed the META ticker boasted by the Roundhill Ball Metaverse ETF. Perhaps unsurprisingly, a deal was struck for the ticker, leaving Roundhill with the less sexy METV. It declined to comment on exactly how lucrative the deal was.

More unexpectedly, research by Rutgers University in 2019 concluded that having a similar ticker to that of a large company can reap rewards, with 5 per cent of trades in the smaller entity made by mistake. “Sometimes investors try to trade tickers intuitively with strange results,” said Armour.

Others benefit on the humour front. While PP may be a perfectly logical ticker for the Meet Kevin Pricing Power ETF, “it’s hard not to say that and not sound like a young boy trying to tell a joke”, said Rosenbluth.

Some sail closer to the wind still. When Valkyrie filed to launch a leveraged bitcoin futures ETF last year, the filing included its intention to use the ticker BTFD, an abbreviation popular in the crypto and meme stock world that stands for “buy the f***ing dip”. When the ETF launched in February, it instead had the ticker BTFX.

Similarly, Valkyrie’s Bitcoin and Ether Strategy ETF, ticker BTF, was originally intended to be labelled BTFD before a late change.

Steven McClurg, chief investment officer, denied any intended profanity. To Valkyrie, BT is short for bitcoin and FD for fund. McClurg said BTFX was adopted instead for the leveraged ETF because “it’s a little bit more descriptive”, with X representing 2x.

As for BTF, McClurg said Valkyrie “got pushback from the regulators” not because of any link to salty language but because BTFD might be construed as a recommendation to buy a security.

The recent spate of US spot bitcoin launches represent both sides of the ticker coin.

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The larger issuers, such as BlackRock, with IBIT, and Fidelity, with FBTC, “went with plain vanilla ticker symbols”, probably “in an effort to convey a sense of maturity and responsibility”, Geraci said.

In contrast, the likes of VanEck (HODL, or “hold on for dear life”) and Valkyrie (BRRR, meme speak for the sound of the Federal Reserve’s hyperactive money printer) coined tickers that are “much more likely to resonate with retail investors”, Geraci said.

Fun tickers are no guarantee of success. The SoFi Weekly Income ETF (TGIF, or “thank God it’s Friday”), was liquidated in February. DUDE, the Merlyn AI SectorSurfer Momentum ETF, died in November, and investors no longer need fear missing out after FOMO, the AXS FOMO ETF, disappeared last month.

“Flashy ticker symbols can be a double-edged sword,” said Geraci. “While tickers are certainly important in attracting retail investors, they can very easily turn off financial advisers and institutional investors. Do advisers really want a fund with the ticker symbol DUDE showing up on client statements? Probably not.”