A leading global fund company is deepening the deployment of two major “trenches” — big tech stocks and diet pills — while forming leveraged and inverse ETFs at the same time.

In the diet medicine sector, Roundhill Investments is preparing to launch a fund focused on GLP-1 diet drug companies. The company's chief strategy officer Dave Mazza said more details about the fund's debut are expected to be announced in May.

“Keeping a close eye on this area is critical,” Mazza said in a media program last week. “We will witness rapid progress in drug development. New drugs and new business opportunities from leading companies have already appeared in the market.”

Three weeks ago, Roundhill also launched two leveraged and inverse ETFs — Roundhill is twice as bullish on a daily Mag 7 ETF$ROUNDHILL DAILY 2X LONG MAGNIFICENT SEVEN ETF (MAGX.US)$and Roundhill Daily Reverse Mag 7 ETF$ROUNDHILL DAILY INVERSE MAGNIFICENT SEVEN ETF (MAGQ.US)$.

MagX specifically tracks the seven major technology stocks of Google's parent company Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla, with the aim of providing investors who are optimistic about these tech stocks an opportunity to double their earnings. MAGQ, on the other hand, provides reverse investment options to meet the investment needs of bearers.

Mazza explained:

These tools can be used by investors with short-term views. Whether bullish or bearish on the Big Seven, investors can express their views through the corresponding tools.

If you're optimistic, try holding MAGX. Conversely, if you want to hedge your positions or take a clear bearish position in the short term, then you can choose MAGQ.

Both funds recalculate their performance every day, so Mazza cautions that they are riskier investment options and are more suitable for short-term holdings.

You need to be able to review your investment positions every day. Although you can hold these products for more than a day, you need to constantly evaluate yourself: Should I keep holding this deal?

They are not designed for long-term holding.

“Frequent mistakes are the norm,” warns Todd Rosenbluth, head of research at investment agency Vettafi. Given their significant volatility, leveraged and reverse ETFs may not be suitable for all investors.

You need to fully understand and accept that these products can perform extremely exceedingly well or very poorly on a daily basis.

I think using leverage and inverse ETFs is like swinging all your might when playing baseball. You might hit a few home runs, but you'll also experience quite a few strikeouts.

Since its launch on February 29, MAGX has accumulated a cumulative increase of more than 7%, while MAGQ has declined by more than 4%.

Editor/Somer