In a testament to the relentless excitement surrounding artificial intelligence (AI), investors have flocked to Nvidia-focused exchange-traded funds (ETFs) in unprecedented numbers this year. The bullish sentiment has propelled the GraniteShares 2x Long NVDA Daily ETF (NVDL.O) to a historic high, with net daily inflows reaching an impressive $197 million, as reported by LSEG Lipper data. The total assets managed by this ETF have skyrocketed from $213.75 million at the beginning of the year to a substantial $1.41 billion.
The significance of this surge cannot be overstated. Traditionally risk-averse investors have notably embraced leveraged ETFs targeting individual stocks, a departure from their usual cautious approach. These leveraged ETFs, introduced to the U.S. market in 2022, have become a favorite among speculators keen on betting on the most volatile shares, driven by earnings reports and breaking news.
Against this backdrop, Nvidia (NVDA.O), commanding an impressive 80% share of the high-end AI chip market, has witnessed a remarkable 82% surge since the start of the year. This surge follows a stellar forecast and renewed enthusiasm surrounding the potential of
Leveraged single-stock ETFs, designed to magnify the returns of an underlying stock for a single day, often by two or three times, utilize financial derivatives and leverage through debt instruments.
According to Todd Rosenbluth, Chief ETF Strategist at VettaFi, «Nvidia has emerged as the standout stock of 2024, attracting investors eager to embrace higher returns in exchange for elevated risk. Anticipating a sustained demand for single-stock leveraged ETFs, especially as new must-own companies emerge, is highly likely.»
Examining the numbers, net monthly inflows into leveraged ETFs tracking Nvidia, such as the GraniteShares 2x Long NVDA ETF, the Direxion Daily NVDA Bull 1.5X Shares ETF (NVDU.O), and the T-Rex 2X Long Nvidia Daily Target ETF, reached a pinnacle in February. Remarkably, the GraniteShares ETF surpassed its net monthly flow record within the first six days of the month. The assets of these three Nvidia-linked ETFs have experienced an unprecedented surge, ranging between five and 11 times since the beginning of 2024. Correspondingly, their prices have seen a remarkable year-to-date increase, ranging from 143% to 218%, outpacing the performance of other ETFs in the market.
