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Inverse Cramer ETF Shuts Down

Published: Jan 29, 2024 | Last Updated: Jan 29, 2024
Howard Kane
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The novel SJIM fund, betting against Jim Cramer's picks, closes due to poor performance and low interest.

The world of finance often sees innovative products, but not all of them manage to capture the interest of investors. A recent example is the Inverse Cramer ETF (SJIM), which was designed to short the stock picks of CNBC's famed TV stockpicker, Jim Cramer. However, after ten months of operation, the ETF is being shut down due to underwhelming performance and lack of investor interest.

Understanding the Inverse Cramer ETF

The Inverse Cramer ETF, also known as SJIM, was a unique financial product that allowed investors to bet against the advice of Jim Cramer. The idea was to provide a tool for those who believed that following television personalities for stock advice might not always lead to profitable outcomes. Despite its novel approach, SJIM only managed to attract $2.4 million in assets and experienced a negative 15% return, leading to its closure.

Why the ETF Failed to Gain Traction

There are several reasons why SJIM failed to resonate with the investing public. First, the concept of betting against a TV personality's stock picks might have been too niche or speculative for many investors. Additionally, the timing of the ETF's operation coincided with Cramer's success with certain stocks, notably the 'Magnificent 7' which includes big names like Apple, Amazon, Alphabet, Microsoft, NVIDIA, Meta Platforms, and Tesla. This success may have undermined the premise of the ETF.

The Closure Process

The board of trustees of the Northern Lights Fund Trust IV, which oversaw the Inverse Cramer ETF, decided to liquidate the fund in the best interest of the shareholders. The ETF will cease trading on February 13, with the final distribution of proceeds to shareholders taking place on February 23. This follows the earlier shutdown of its counterpart, the Long Cramer ETF (LJIM), which was scrapped in August 2023.

Lessons for Investors

The closure of the Inverse Cramer ETF serves as a reminder of the risks associated with following stock picks from television personalities. While TV stockpickers can provide valuable insights, their advice should not be the sole basis for investment decisions. Diversification and thorough research remain key components of a successful investment strategy. Moreover, the lack of interest in such a specialized ETF underscores the importance of market demand in the viability of financial products.

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