Investors risk billions trying to ‘buy the dip’ in chip rout

Lever aged single-stock ETFs continue to attract net inflows despite plunging during sell-off

Financial Times Europe26 Aug 2026EMILY HERBERT AND STEVE JOHNSON Addi tional report ing by Ram say Hodg son

Investors poured bil lions of dol lars into risky lever aged funds track ing semi con -ductor com pan ies dur ing July and August, even as those products suffered heavylosses, as they tried to pos i tion for a pos sible rebound in the sec tor.

The biggest lever aged exchange traded fund track ing chip stocks — called Direx ionDaily Semi con ductor Bull 3X Shares — attrac ted almost $7bn of net inflows dur ingJuly and the first two weeks of August, accord ing to Morn ing star data.

The ETF offers triple-lever aged expos ure to the NYSE Semi con ductor Index, a groupof 30 US chip com pan ies. While the index fell more than 20 per cent from its peak,the fund plunged 70 per cent between its June peak and sub sequent low.

Single-stock lever aged funds track ing chip maker SK Hynix and memory groupSandisk also attrac ted size able inflows dur ing and after the chip stock rout.

“Buy ing the dip and selling the rip” has been a pop u lar strategy in many lever agedETFs, said Ben Snider, US equity strategist at Gold man Sachs, refer ring to howinvestors have been buy ing as the mar ket falls and selling when stocks rally.

Lever aged ETFs use deriv at ives to amp lify returns and have been par tic u larly pop -u lar with retail investors look ing to juice their returns in an arti fi cial intel li genceboom fuelled by the hun dreds of bil lions of dol lars that hyper scalers are spend ing

on infra struc ture. Semi con ductor stocks, regarded as among the biggest bene fi ciar -ies of this invest ment, soared glob ally but have tumbled over the past couple ofmonths on con cerns over the dur ab il ity and likely profi t ab il ity of the boom, lead ingto hefty losses in lever aged funds track ing the sec tor.

But some investors have used the sel loff as an oppor tun ity to buy in the hope of arebound.

A fund run by CSOP Asset Man age ment offer ing double the daily return of SouthKorean chip group SK Hynix — a stock that a num ber of times rose or fell 10 percent or more in a single day dur ing the mar ket sell-off — attrac ted more than $1bnof net inflows in the past six weeks. Inflows came even as the fund fell 86 per centfrom peak to trough.

Investors poured a net $350mn into a lever aged ETF track ing Sandisk in the sameperiod, a US memory com pany that tumbled 46 per cent in July alone. That productdropped 85 per cent from its June high to its July low.

“We have noted time and again that there is clear evid ence of ‘buy the dip’ in theflows [into lever aged ETFs],” said Anshul Gupta, head of deriv at ives research atBarclays. “Buy ing the dip is like catch ing a fall ing knife.”

Retail investors in South Korea, where these products had become hugely pop u larbut where they have also been blamed for amp li fy ing moves in indices and stocks,were par tic u larly hard hit dur ing the down turn. Gold man Sachs estim ates thatmore than 1.2mn lever aged retail accounts in South Korea had triggered mar gincalls — demands for more secur ity for loans — in mid-July.

Korean reg u lat ors have since intro duced new caps on indi vidual expos ure andmade it man dat ory for investors to take a week-long course before trad ing insingle-stock funds.

Des pite the tight en ing of reg u la tions, the inflows sug gest that many small investorsremain keen to bet on these risky products.

“A big part of the froth might have come out of the mar ket, but I don’t believe thebeha viour has changed,” said Fabi ana Fed eli, chief invest ment officer for equit ies atM&G. “I am con cerned about that.”

She added: “We have seen reg u lat ors start ing to look into these products . . .although it does not appear those steps are effect ive enough.”

Not all of these types of products have repor ted net inflows. Pop u lar ETFs offer inglever aged expos ure to US chip makers Nvidia and Micron have logged mil lions of

dol lars of out flows since the chip stock sell-off star ted in July.

The activ ity has come dur ing a sum mer of “bru tal out comes” for investors in single-stock lever aged and inverse ETFs, accord ing to Inès Barah hou, head of ETF advis oryat research house Kepler Cheuvreux, with 43 funds los ing more than 90 per cent oftheir value over the past 12 months. These include ETFs linked to AI and semi con -ductor stocks Intel, ASML, TSMC, AMD, SK Hynix and Sandisk, as well as cryptoasset-related Strategy and Coin base.

There had also been a record 122 del ist ings of single-stock lever aged funds so farthis year, Barah hou said, sur pass ing the record full-year tally of 98 set in 2023, withfive of them based on Strategy alone.

“We had a lot of volat il ity dur ing the month,” Barah hou said. “If you have highvolat il ity then [lever aged ETFs] are awful, you lose a lot of money. It’s a casino, it’snot invest ing.”

This type of product remains pop u lar, with new launches run ning at 303 as ofAugust 12, accord ing to data from Kepler Cheuvreux’s Trackin sight arm, withintouch ing dis tance of the full-year record of 324 set last year.

“We are see ing a new busi ness model arising. Lever aged single-stock ETFs are beinglaunched, tested against investor demand and, if that demand fails to mater i al ise,quickly closed as issuers move on to new oppor tun it ies,” said Barah hou. Fees are sohigh that busi ness mod els work even if only 20 per cent of launches are suc cess ful,she added.