Single-Stock ETFs Among Year's Best Performers

Aggressive bets paid off handsomely in 2023. And nothing says aggressive like leveraged exposure to a single stock wrapped paradoxically inside an exchange-traded fund. 

With the first single-stock ETFs launching in July 2022, this marks the first full year for the unique strategy that enables investors to easily gain leveraged or short exposure to some of the most popular stocks. 

With just a few trading left in the year, single-stock ETFs represent three of the five best-performing ETFs for 2023. 

Leverage, as we all know, can cut both ways. But when it’s moving in your favor it can fuel the likes of the 566% gain by the GraniteShares 1.5x Long Daily ETF (CONL), which offers 150% exposure to Coinbase Global Inc. (COIN). 

The third-best performing ETF this year is the GraniteShares 1.5x Long NVDA Daily ETF (NVDL), which gained more than 434% by levering up shares of Nvidia Corp. (NVDA). 

And coming in at number five is the GraniteShares 1.5x Long META Daily ETF (FBL), which gained more than 336% by pumping up the performance of Meta Platforms Inc. (META). 

With Meta and Nvidia being part of the Magnificent Seven stocks and Coinbase being a cryptocurrency play, the message here is that big performance gets big attention and probably shouldn’t be a big part of any diversified portfolio. 

Single-Stock ETFs and Leverage

There’s a reason you don’t see any single-stock ETFs for General Motors Co. (GM), which is up 0.009% this year. 

For context, investors could have enjoyed a 427% run by owning Coinbase stock directly this year. Nvidia shares, unlevered, gained 231%, while Meta stock is up 174%. 

All due credit is given to astute ETF issuers like GraniteShares who can collect fees above 1% for serving traders what they want to eat, but these strategies should be approached with caution. 

In order to start each trading day with the stated leverage in place, the ETFs are rebalanced at the end of each day. And that daily rebalancing creates tracking that won’t compute one-for-one with the underlying stock. 

GraniteShares founder and chief executive Will Rhind says you don’t have to be trader to buy single-stock ETFs, but you should be on your toes. 

“We’re not saying they’re just for day trading and or that they’re not for buy-and-hold investors, we’re saying people shouldn’t use them unless they’re monitoring their portfolio on a regular basis,” he said. “You have to have high conviction and you have to pay attention.” 
And for those high-conviction investors, GraniteShares will soon be serving up more red meat, having filed earlier this month to up the leverage on its single-stock ETF suite to 200%. 

Also, the second- and fourth-best performing ETFs this year, while not single-stock ETFs, they do boast big leverage. 

The MicroSectors FANG+ Index 3x Leveraged ETN (FNGU) is up 452% this year and the MicroSectors FANG & Innovation 3x Leveraged ETN (BULZ) is up 394%. 

Contact Jeff Benjamin at [email protected] and find him on X at @BenjiWriter