(Reuters) – The GraniteShares 1.5X Long NVDA Daily ETF, which tracks 1.5 times the daily percentage change of U.S. chipmaker Nvidia Corp, has become the top-performing ETF of the year as investors are drawn to the artificial intelligence (AI) frenzy. It has gained 328.5% so far this year, surpassing the stock’s 190% rise.
VettaFi Research reports that this makes the GraniteShares 1.5X Long NVDA Daily ETF the best performing ETF of 2023, followed by the GraniteShares 1.5x Long Meta Daily ETF, which has rallied 272% year-to-date. Leveraged ETFs seek to amplify the returns of the underlying index or stock.
“The reason why NVDL is the best performing ETF in the US market is because of the astonishing performance of the underlying company,” said Will Rhind, CEO and founder of GraniteShares. He added, “Nvidia has become the number one stock to own in AI.”
According to LSEG Lipper data, the net assets in the GraniteShares 1.5X Long NVDA Daily ETF have climbed to $205.6 million as of Wednesday, from nearly half a million dollars since its launch in December 2022.
In September, Direxion introduced two new ETFs tied to Nvidia, while REX Shares and Tuttle Capital Management launched the T REX Single-Stock ETF suite last month, offering 200% and -200% exposure to Nvidia and Tesla.
“Leveraged ETFs come with the high volatility that draws gamblers like a moth to a flame,” said Bryan Armour, director of passive strategies research for North America at Morningstar. He continued, “Over the long run, they are a losing proposition. They reset their exposure daily, meaning they have to buy more when they go up and sell when they decline.”
According to Bansari Mayur Kamdar, reporting for Reuters in Bengaluru, the GraniteShares 1.5X Long NVDA Daily ETF has attracted a lot of attention due to Nvidia’s impressive performance in the AI field. The ETF’s assets have soared from nearly half a million dollars at its launch in December 2022 to $205.6 million as of Wednesday.
Investors are increasingly interested in single-stock ETFs, particularly those that provide exposure to companies like Nvidia and Meta Platforms. However, experts caution that leveraged ETFs can be volatile and may not be a profitable long-term investment.
Edited by Mrigank Dhaniwala.
