ETFs Aimed At Overnight Equity Gains Are Losing Sleep

Two new exchange-traded funds trying to capitalize on overnight equity gains, or so-called “night effect,” are taking a hit.

The NightShares 500 ETF (ticker NSPY) and the smaller-cap NightShares 2000 ETF (ticker NIWM), have trailed their broader benchmark indexes by over 11 and 13 percentage points, respectively, since their release on June 28. NSPY tracks the S&P 500 Index, while NIWM tracks the Russell 2000. The ETFs use futures and swaps to allow investors to buy stocks at the market close and sell them at the next trading day’s open.

“The negative performance differential between the NightShares ETFs and their broader indexes is eye-popping thus far,” Nate Geraci, president of The ETF Store, said.