Hiccups in ETFs tracking MicroStrategy occurring as bull market fuels trading boom in single-stock funds [Video]

ETFs that give that give retail investors magnified exposure to individual stocks are booming. That could be an ominous sign for the market, and for the funds themselves as glitches emerge.

Leveraged single stock ETFs hit a record of $17 billion of trading volume on Nov. 21, according Strategas ETF strategist Todd Sohn. Several issuers have launched these funds in recent years, typically tracking stocks with high volatility like Nvidia, Tesla and MicroStrategy.

“The entire leveraged cohort is just 0.4% of U.S. ETF AUM, but with trading volume as % of total constantly flirting with the 8-9% range recently – that’s up from 4% at the start of the year and we find the growth rate curious with equities trading at an all-time high,” Sohn said in a note to clients last week.

The volume would seem more likely to spike during downturns in the market, when general volatility rises, …