“Gamblers.”

That’s how Bloomberg described market participants who avail themselves of leveraged ETFs in a bid to get a little extra juice from their AI bets.

It’s an apt description, but then again, “gambler” applies to anyone who trades on a daily basis. Stocks, you’re gently reminded, aren’t poker chips. Not investment advice, but 99.99% of people have no business whatever trading in and out of the market every day.

Anyway, no lecture. Rather, just a quick reminder that the leveraged ETF space discussed in the linked Bloomberg piece revolves almost entirely around big-tech, semis and AI. It’s a universe that’s “massively concentrated,” as Nomura’s Charlie McElligott put it, in all things “future.”

That concentration comes about on purpose (i.e., as a response to demand for easy-to-attain leverage on the AI theme), but also by default given hyper-scaler dominance at the benchmark index level.

One issue, as McElligott points out weekly, is that those products create a flow imbalance on days when the market moves, and the impact can be meaningful.

The figures above give you a sense of how pronounced that impact can be even in a pedestrian down-trade.

Late last week, when the Nasdaq 100 sold off all off 2%, the SOX 3.3% and Nvidia 4%, Nomura’s estimates show almost $13 billion of selling pressure from the rebalancing needs of a leveraged ETF universe sitting on record AUM north of $110 billion.

As of late last month, nearly nine out of every $10 in levered ETF AUM was allocated to products inside what Charlie calls the “concentric circles” of AI, tech and semis.