As single-stock exchange-traded funds approach their one-year anniversary, investor interest in the leveraged products remains highly associated with the popularity of the underlying stock."There's always enthusiasm for companies like Tesla, both long and short," GraniteShares CEO Will Rhind said on CNBC's "ETF Edge" on Monday.GraniteShares released its first set of single-stock ETFs in August 2022, …
As single-stock exchange-traded funds approach their one-year anniversary, investor interest in the leveraged products remains highly associated with the popularity of the underlying stock.
“There’s always enthusiasm for companies like Tesla, both long and short,” GraniteShares CEO Will Rhind said on CNBC’s “ETF Edge” on Monday.
GraniteShares released its first set of single-stock ETFs in August 2022, with products tracking well-known companies such as Tesla, Apple, and Coinbase. While its 1.25x Long Tsla Daily ETF (TSL) and 1.75x Long AAPL Daily ETF (AAPB) have seen significant increases in 2023, Coinbase’s 1.5x Long COIN Daily ETF (CONL) has gained 123% year to far.
Looking at overall flows, Rhind explained that since the beginning of the year, a lot of money has gone into fixed income ETFs and money market funds.
“So, I believe that the rally that we’ve seen over the last six months hasn’t been as widespread as you might think, just by looking at the actual performance numbers.”
Because single-stock products are leveraged, Rhind believes they are better suited to short-term activities and exposures.
“So, one way to measure interest is not just the assets under management,” he explained, “but also the amount of volume and value traded on an exchange.”
GraniteShares 1.5x Long NVDA Daily ETF (NVDL) has emerged as the firm’s outperformer, rising more than 349% this year. The fund, which was launched in December 2022, has received $172 million in inflows.
Aside from receiving the benefits of a fund linked to a popular company, Dave Nadig, financial futurist at VettaFi, stated that the products are beneficial for investors with discount brokerage accounts who do not have access to options or margin borrowing.
“ETFs now serve all types of investors, from long-term buy-and-hold investors who trade every 30 years to day traders who trade every 30 minutes,” Nadig said on Monday. “These products obviously lean much more toward that speculative side of the balance sheet, and trading volumes have been substantial.”
Nadig noted that investors can expect additional single-stock ETFs to enter the market, but it will be up to investor appetite and market movements to drive activity.
“A lot of them will sit around being uninteresting and languishing for a while until there’s a headline,” he said. “And then, all of a sudden, we’ll be discussing why everyone is trading IBM dailies I think it’s going to be a very different world”
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