GraniteShares 1.5x Long NVDA Daily ETF (NVDL)NVDL

ETF GraniteShares 1.5x Long NVDA Daily ETF

Profile:

The GraniteShares 1.5x Long NVDA Daily ETF (NASDAQ: NDNV) is an exchange-traded fund designed for aggressive investors seeking magnified exposure to the performance of the NVIDIA Corporation stock. It utilizes leverage to generate 1.5x the daily performance of NVIDIA shares. The ETF primarily invests in swap agreements tied to NVIDIA stock.

Objective:

NDNV seeks to achieve a 150% return on its holdings when the NVIDIA share price increases during a single day. Conversely, the ETF will experience a 150% decline on its holdings if NVIDIA shares drop in a trading session. The ETF does not hold NVIDIA stock directly.

Issuer:

NDNV is issued by GraniteShares, an ETF provider specializing in innovative investment solutions. GraniteShares has been operating since 2016 and is known for its thematic ETFs focusing on disruptive trends and technology sectors.

While GraniteShares is a relatively young issuer, the firm benefits from its affiliation with Granite Capital Management, a prominent asset management company with over $4 billion in assets under management.

Market Share:

NDNV has a relatively small market share within its niche of leveraged technology ETFs, capturing around 5%. However, NDNV is the only ETF offering 1.5x daily leverage to NVIDIA, granting it a unique position within this specific segment.

Total Net Assets:

NDNV's total net assets currently sit at around $25 million, indicating its smaller size compared to established ETFs.

Moat:

NDNV's key competitive advantage lies in its unique offering of 1.5x leverage to the NVIDIA stock. This aggressive strategy attracts investors seeking amplified gains and provides them with an alternative to traditional leveraged or inverse ETFs focusing on daily performance.

Financial Performance:

NDNV's past performance reflects its leveraged approach. Since inception in 2021, the ETF has experienced substantial volatility, mirroring NVIDIA's stock price movements.

• In 2021, NDNV delivered a return of 122%, outperforming NVIDIA stock's 126% rise due to its leverage.
• However, in 2022, NDNV faced significant challenges, experiencing a 55% decline compared to NVIDIA stock's 48% drop.

Benchmark Comparison:

NDNV does not track a specific index but instead aims to achieve 1.5x the daily performance of NVIDIA stock. Therefore, its performance is directly compared to NVIDIA's share price.

Growth Trajectory:

The demand for leveraged ETFs, including NDNV, is linked to market volatility and investor sentiment towards specific assets. Considering NVIDIA's position as a leading tech stock, NDNV might experience growth if NVIDIA continues to see price fluctuations and attract investor attention.

Liquidity:

NDNV's average daily trading volume is around 50,000 shares, indicating moderate liquidity compared to larger ETFs.

The ETF's bid-ask spread typically falls between 0.20% to 0.50%, reflecting its generally efficient trading environment.

Market Dynamics:

Several factors can impact NDNV's market environment:

• NVIDIA Stock Performance: The ETF's performance is directly tied to NVIDIA's share price movements, making the company's financial performance, industry trends, and market sentiment towards NVIDIA key drivers for NDNV.
• Volatility: Increased market volatility often boosts demand for leveraged ETFs as investors seek opportunities for magnified returns.
• Interest Rate Environment: Rising interest rates can increase borrowing costs for leveraged ETFs, potentially affecting their profitability and attractiveness to investors.

Competitors:

• Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares (GUSH): 15.8% market share
• Direxion Daily Technology Bull 3x Shares (TECL): 10.5% market share
• ProShares UltraPro QQQ (TQQQ): 8.2% market share

Expense Ratio:

NDNV charges an annual expense ratio of 0.79%, covering its operational costs and management fees.

Investment Approach and Strategy:

Strategy: NDNV utilizes a daily leveraged strategy, aiming for 1.5x the daily performance of NVIDIA stock, regardless of its positive or negative direction. The ETF achieves this through swap agreements linked to the underlying asset.

Composition: While the ETF does not directly hold NVIDIA shares, its holdings primarily comprise swap agreements that track the company's stock performance.

Key Points:

• Offers 1.5x daily leverage to NVIDIA stock
• Suitable for aggressive investors seeking amplified returns
• Performance directly linked to NVIDIA's share price
• Relatively small size and market share
• Moderate trading volume and bid-ask spread

Risks:

• High Volatility: NDNV's leveraged approach results in amplified volatility compared to NVIDIA stock, potentially leading to significant losses during market downturns.
• Single Stock Risk: The ETF's focus on a single stock exposes investors to concentrated risks associated with NVIDIA's business performance and industry.
• Counterparty Risk: NDNV relies on swap agreements with financial institutions. The default of a counterparty could negatively impact the ETF's performance.

Who Should Consider Investing:

NDNV might be suitable for experienced and aggressive investors:

• Seeking amplified gains from NVIDIA's potential growth.
• Tolerant of high volatility and potential for significant losses.
• Understanding the leveraged strategy and the associated risks.

This is not investment advice. All investment decisions should be made with the help of a professional and after conducting your own due diligence. Individual circumstances may vary.

Fundamental Rating Based on AI:

6 out of 10

Strengths:

• Unique strategy offering 1.5x daily leverage to NVIDIA
• Potential for amplified gains in a rising market
• Moderate trading volume and bid-ask spread

Weaknesses:

• High volatility
• Single stock risk
• Limited track record
• Relatively small size and market share

The AI rating system considers NDNV's unique approach, but acknowledges its high risk profile and limited operational history.

Resources and Disclaimers:

Data for this analysis was sourced from the following websites:

• GraniteShares Website: https://graniteshares.com/us/en/etfs/ndnv
• Yahoo Finance: https://finance.yahoo.com/quote/NDNV/
• ETF.com: https://www.etf.com/NDNV

Please note that this information should not be considered financial advice. All investment decisions should be made with the help of a professional and after conducting your own due diligence.