GraniteShares 1.5X Long NVDA Daily ETF’s Outstanding Performance
In the dynamic landscape of exchange-traded funds (ETFs), one standout performer this year is the GraniteShares 1.5X Long Nvidia Corp NVDA Daily ETF (NVDL.O), closely tied to the soaring shares of U.S. chip giant Nvidia Corp (NVDA.O). The ETF, tracking 1.5 times the daily percentage change of Nvidia, has surged an impressive 328.5% year-to-date, eclipsing the stock’s own rise of 190%.
VettaFi Research reports NVDL.O as the top-performing ETF in 2023, signaling the growing allure of artificial intelligence in investment portfolios. Following closely is the GraniteShares 1.5x Long Meta Daily ETF (FBL.O), another leveraged ETF boasting a substantial 272% gain this year.
Leveraged ETFs: Focal Points of Investor Interest
Leveraged ETFs, designed to magnify the returns of the underlying index or stock, have become focal points of investor interest. The success of NVDL.O is attributed to the stellar performance of Nvidia, which has solidified its position as the leading stock in the artificial intelligence realm, according to Will Rhind, CEO and founder of GraniteShares.
Net assets in the NVDL.O ETF have surged from its launch in December 2022, reaching $205.6 million as of the latest data from LSEG Lipper. This remarkable growth signifies a significant uptick from its initial launch capital of nearly half a million dollars.
Rising Interest in Single-Stock ETFs: The “Magnificent 7” Effect
This year has witnessed heightened interest in single-stock ETFs, particularly those offering exposure to the “Magnificent 7,” a group encompassing companies such as Nvidia and Meta Platforms (META.O). Direxion introduced two Nvidia-tied ETFs in September, while last month, REX Shares and Tuttle Capital Management unveiled the T REX Single-Stock ETF suite. This suite provides investors with 200% and -200% exposure to Nvidia and Tesla (TSLA.O).
However, the allure of leveraged ETFs comes with a cautionary note. Bryan Armour, Director of Passive Strategies Research for North America at Morningstar, emphasizes the inherent high volatility associated with these funds. Describing them as magnets for risk-takers, he notes that, over the long run, leveraged ETFs are often considered a losing proposition due to their daily exposure resets, necessitating buying in upswings and selling in downturns.
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