The nascent single-stock ETFs have reached a key period to prove their worth after a slow start for the group in the United States. The products, which were approved by the Securities and Exchange Commission in July , have struggled to attract inflows in their first few months on the market. According to data compiled by Aniket Ullal, CFRA's head of ETF data and analytics, the nearly two dozen U.S. single-stock ETFs have just over $200 million in combined assets, with a median fund size of around $3.4 million. "That's really, really small. I know we're in the first inning here, but it has not been a very good start for single-stock ETFs," Aniket said. However, the issuers of the funds — AXS, Direxion and GraniteShares, so far — have stressed that trading volume is a key test for these short-term focused funds. Some of the funds are regularly trading more than 1 million shares a day, though most are closer to a daily volume of 10,000. "For us, that is a better reflection, or an equal reflection, of the investor appetite," said AXS Investments CEO Greg Bassuk, adding that his firm does not have a specific asset goal for the funds. The biggest funds by daily volume so far are Direxion's Daily TSLA Bull 1.5X Shares ETF (TSLL) and AXS' TSLA Bear Daily ETF (TSLQ) . Earnings season should be a time when the funds prove their worth, as they allow traders to make short-term bets on corporate events like quarterly reports. Dave Mazza, the head of product at Direxion, said that he was pleased with the early performance of the funds and pointed to spikes in trading volume for the smaller funds focused on Alphabet and Microsoft around their earnings reports this week. "My expectations were this earnings season would be that catalyst to propel use, and we're seeing that," Mazza said, adding that this period should introduce the funds to more traders even if the assets don't immediately increase. "Our assets may go down, but our shareholder base broadens out during times of volatility," he said. Performance so far The funds, which are designed to create an inverse or leveraged performance against a single stock over a one-day period, largely appear to be meeting their stated goal. Recent performance of several Tesla funds on the market, including inverse funds from GraniteShares, Direxion and AXS, as well as a 1.5x leveraged fund from Direxion, show that daily moves are often within a few basis points of what should be expected. "They're doing what they're supposed to on the label," Ullal said. But if investors don't follow the daily trading prescribed for the funds, performance can suffer. Through Wednesday's close, the AXS TSLA Bear Daily ETF was down more than 2% since inception, while Tesla is down about 5.7% over the same period. The divergence over time is one reason why SEC officials released statements when the funds were approved that they were skeptical of the space, especially for everyday investors. "I think it was a pretty clear statement that, if I were an advisor, would have struck fear in my heart trying to get these funds for my customers. They basically said that they didn't know if these would meet suitability requirements. I don't see enough edge in these funds to take that risk from an advisor standpoint," said Bryan Armour, director of passive strategies research at Morningstar. What comes next Single-stock funds are already well established in Europe. GraniteShares founder and CEO Will Rhind said that lower leverage for U.S. funds is a major difference compared to the market across the pond, where many funds have 3-times leverage. No U.S. single-stock fund is at more than 2-times. The overall market environment in the U.S., in which the averages are in a bear market and surveys show rock-bottom sentiment, could also be a factor in slow uptake, Rhind said. "I think trading volumes are just down more broadly across the market. … And I think that's just a market of not just the market being down but people selling and going to cash more," he said. None of the three issuers indicated that they were changing their plans for the space going forward, even after a tepid start. "We think that frankly it's just a better mousetrap for those who are already doing these short-term, high-conviction trades," Bassuk said. However, some of the funds could be at risk of closure if the funds cannot attract more assets, Armour said. "There definitely is going to have to be a minimum level. These issuers aren't being paid on trading volume. … It's not cheap to list these funds on an exchange. I would expect down the line some of these to drop," Armour said.