GraniteShares Ups Leverage on Tesla, Nvidia Single-Stock ETFs to 200%
The SEC recently started allowing firms to offer double leverage.
GraniteShares, a fund manager with $1.48 billion in assets under management in 15 ETFs, is seeking to increase its leverage on a slew of single-stock ETFs to 200% after the first Tesla Inc. double leveraged ETF launched last month.
The firm filed with the Securities and Exchange Commission on Wednesday to increase leverage on a group of single-stock ETFs up to 200%. The funds include 1.5 long and 1.5 short of companies like Nvidia, Meta Platforms Inc. and Tesla.
As high-flying tech stocks like Nvidia have posted record returns year to date, many investors are eager to increase their exposure to, or bets against, some of the biggest names in the technology industry.
“It's a matter of keeping up with the competition,” explained etf.com analyst Sumit Roy. “Traders of leveraged ETFs want the maximum bang for their buck, and in general, the higher the leverage, the more popular an ETF is with the crowd that trades these ETFs.”
The SEC only recently started to allow firms to put double leverage on single-stock ETFs of companies like Tesla and Nvidia. Initially, 1.5 was the maximum for ETFs that track single companies. Yet after being rejected multiple times, Rex Shares and Tuttle Capital Management launched double leveraged single-stock Tesla and Nvidia funds in October.
In August, the SEC warned investors of the risks of investing in single-stock funds, writing that “investors holding these funds will experience even greater volatility and risk than investors who hold the underlying stock itself.”
Leveraged ETFs
Despite the SEC's warning, in September, ETF firm Direxion launched Tesla and Nvidia single-stock ETFs that offered 1.5 leverage long exposure.
And although single-stock ETFs have been on the market for only about 16 months, many niche traders are looking for as much leverage as they can possibly get.
Contact Lucy Brewster at [email protected].
