Tuttle Files For New Credit Default Swap ETFs To Bet Against AI Debt

 Tuttle Capital Management has filed with the SEC to launch five new ETFs that would give everyday investors exposure to a growing concern on Wall Street: the massive amounts of debt being taken on to finance the AI boom, according to the SEC Prospectus. 

The proposed funds would target Oracle (ORCL), CoreWeave (CRWV), the Magnificent Seven tech giants, semiconductor companies, and hyperscalers building large-scale computing infrastructure. The filings come as investors increasingly question whether the hundreds of billions being spent on AI data centers, chips, and cloud infrastructure will generate enough revenue to justify the investment.

Unlike traditional ETFs that aim to profit from rising stock prices, these funds would use credit default swaps (CDS), financial contracts that work like insurance against corporate debt defaults. 

When investors become more concerned about a company's ability to repay its debt, the cost of that insurance typically rises. Tuttle's ETFs would aim to profit from that increase, even if the underlying companies never actually default. The proposed funds would also use leverage of 5 to 10 times their assets to amplify exposure to changes in credit risk, making them particularly risky investments. 

Essentially, they would allow investors to bet that the market is underestimating the financial risks behind the AI buildout.

We previously predicted that CDS trader could be the best job of 2027, as the AI investment boom creates growing demand for ways to insure and trade risky corporate debt. Tuttle's filing is another sign that this market could expand beyond specialized Wall Street trading desks and become accessible to everyday investors. 

While the products have yet to launch, their proposed introduction suggests that asset managers see an opportunity in growing concerns about AI financing. For years, the biggest AI trade was betting on the companies that would benefit from the technology. 

As we have often joked (kind of...) the next big opportunity may be betting on the rising cost of insuring the debt used to build it.

https://www.zerohedge.com/markets/tuttle-files-new-credit-default-swap-etfs-bet-against-ai-debt