Amazon, Meta, Tesla, and other single-stock ETFs are set to launch. Here's what you need to know.

Single-stock exchange-traded funds may be the industry’s next big thing.

In February, Direxion filed for 24 ETFs based on eight specific stocks: , , , , , , and . The firm, known for its leveraged and inverse ETFs, plans to offer funds that double the downside, double the upside and invert the performance for each stock.

If approved, these would be the first single-stock ETFs to trade in the United States, following smaller firm AXS Investments' filings for 18 similarly leveraged ETFs on popular growth stocks.

According to David Mazza, head of product at Direxion, the firm's funds, which reset daily, may not be suitable for everyone.

Mazza stated in a Monday interview that most of their ETFs are designed for traders who can manage their portfolios daily to make decisions to either increase or decrease exposure or mitigate other risks in their portfolios.

These tools can be extremely beneficial for traders if used correctly, and we strongly encourage traders to conduct thorough research and education to determine their suitability. If they do not align with your needs, do not use them.

Ben Johnson of Morningstar advised proceeding with caution when investing in leveraged and inverse ETFs.

Jack Bogle's worst nightmare regarding ETFs is that they become a strictly speculative tool, according to Johnson in the "ETF Edge" interview.

From the inception of this space, we have made significant progress. While these things may have a purpose for certain investors who engage in speculation, they are not suitable for the average investor.

James Davolos, Horizon Kinetics portfolio manager and research analyst, emphasized the importance of position sizing in the same interview.

Davolos stated that people utilize these for various reasons, such as hedging or enhancing underlying exposures. He emphasized the importance of using them intelligently rather than speculatively, and advised sizing them appropriately.