Despite recent drop of Nvidia, the total assets under management of the special etf category fund soared to $5 billion, a 425% surge since the beginning of the year.
In the past year, a new type of Exchange Traded Fund (ETF) has caused a sensation: the Single Stock Leveraged ETF. Unlike typical ETFs that purchase a basket of stocks, these funds focus on a single stock and add directional leverage to greatly increase returns.
Since the beginning of this year, the $T-REX 2X LONG NVIDIA DAILY TARGET ETF(NVDX.US)$, which is based on the symbol of $NVIDIA$, has risen by 425%, even as NVIDIA's stock price dropped 16% in the last few days. During this period, leveraged bets on this chip manufacturer have deteriorated, and the fund plummeted 30% during NVIDIA's sell-off. The total management assets of $T-REX 2X LONG NVIDIA DAILY TARGET ETF(NVDX.US)$ and $Direxion Daily Nvda Bear 1X Shares(NVDD.US)$ combined reach $5 billion. This is a huge number for an ETF, and the strong rise in NVIDIA's stock price in the past year has propelled this special ETF category into the ranks of large funds.$NVIDIA (NVDA.US)$$T-REX 2X LONG NVIDIA DAILY TARGET ETF(NVDX.US)$$T-REX 2X LONG NVIDIA DAILY TARGET ETF (NVDX.US)$Since reaching a record high in August 2022, the $T-REX 2X LONG TESLA DAILY TARGET ETF(TSLT.US)$, the $Direxion Daily TSLA Bull 2X Shares(TSLL.US)$, and the $GraniteShares 2x Long TSLA Daily ETF(TSLR.US)$, which total $1.5 billion assets under management, have taken opposite directions. While the NVIDIA call ETFs still emphasize the potential upside of leveraged ETFs, the call funds focused on Tesla highlight the downward trend. The Tesla bull 2X stock ETF has fallen 70%, while Tesla's stock price has fallen 37% during this period.
Given the leverage they carry, these funds are destined to be short-term intraday trading tools. However, retail investors are also getting involved.
On the r/LETFs forum on Reddit, which has 27,000 members, a recent post asked whether an ETF focusing on NVIDIA is a good 'buy and hold' option. 'I have been investing in NVDL for nearly three months. The ROI is very high, but is it a good ETF to hold for the long term?'
$GraniteShares 2x Long NVDA Daily ETF (NVDL.US)$, $T-REX 2X LONG NVIDIA DAILY TARGET ETF (NVDX.US)$ and $Direxion Daily Nvda Bear 1X Shares (NVDD.US)$The total management assets of the combined ETFs reach $5 billion. This is a huge number for an ETF, and the strong rise in NVIDIA's stock price in the past year has propelled this special ETF category into the ranks of large funds.
However, this success has not been fully reflected in other single-stock leveraged ETFs targeting large-cap technology stocks.
Three ETFs providing double-leveraged call options on Apple stock have attracted only $157 million in assets, while all leveraged call option ETFs targeting Alphabet, Amazon, Meta, and Microsoft have attracted only $444 million in assets. Only single-stock ETFs with a focus on Tesla have broken the $1 billion mark in assets under management.
$T-REX 2X LONG TESLA DAILY TARGET ETF (TSLT.US)$, $Direxion Daily TSLA Bull 2X Shares (TSLL.US)$ and $GraniteShares 2x Long TSLA Daily ETF (TSLR.US)$The total assets under management of the Tesla call funds, which have a total management asset scale of $1.5 billion, have fallen 37% during the same period that the Tesla bull 2X stock ETF has fallen by 70%. However, while the NVIDIA call ETFs still emphasize the potential upside of leveraged ETFs, the call funds focused on Tesla highlight the downward trend.
Editor/Somer