Traders crave quick gains, and in the first quarter of 2024, total assets invested in US single-stock ETFs soared to $7.1B, doubling from the previous quarter (WSJ). Nearly a third of this sits in the GraniteShares 2x Long NVDA Daily ETF, boasting returns that outpace Nvidia twofold this year.
- While leveraged funds, which magnify gains and losses by up to 3x, have been around for years, interest peaked last year after approval in 2022.
- Only four funds have risen above $100M in assets — those linked to Nvidia, Coinbase, AMD, and Tesla — coinciding with a surge in the prices of the first three.
Don’t look down: Leveraged ETFs thrive on upward trends, but losses are amplified on the downside. Take the T-REX 2X Long Tesla Daily Target ETF, which has dropped nearly 60% this year, double Tesla’s losses. And that’s on top of a 1.15% fee charged by these funds. As VettaFi’s Todd Rosenbluth puts it, “This is speculative investing like nothing else” (WSJ).
