GraniteShares 2x Long AMD Daily ETF (AMDL)AMDL

Summary of US ETF GraniteShares 2x Long AMD Daily ETF

Profile

The GraniteShares 2x Long AMD Daily ETF (AMDM) is an actively managed exchange-traded fund that aims to deliver twice the daily performance of the American depositary receipts (ADRs) of Advanced Micro Devices Inc. (AMD), one of the world's leading semiconductor companies. It achieves this by employing a leveraged investment strategy that utilizes financial instruments like swaps.

Objective

The primary objective of AMDM is to offer investors amplified exposure to the daily price movements of AMD stock. This ETF caters to investors who believe in the short-term bullish outlook for AMD and seek magnified returns by doubling their daily exposure. However, it's crucial to remember that the leveraged strategy also magnifies losses if AMD's stock price declines.

Issuer

GraniteShares, the issuer of AMDM, is a relatively young asset management firm established in 2020 and headquartered in New York. Despite being new, GraniteShares boasts expertise in developing innovative and thematic ETFs, currently managing over 20 ETFs across various sectors and strategies.

Market Share

While GraniteShares holds a modest footprint in the overall ETF landscape, AMDM itself has established a notable presence within its niche market. It commands a significant share of the AMD-focused leveraged ETF segment, attracting a considerable portion of investors seeking amplified exposure to AMD.

Total Net Assets

As of October 2023, AMDM manages over $24.8 million in total net assets, reflecting the growing investor interest in the fund and the continued relevance of its leveraged AMD exposure strategy.

Moat

Competitive Advantages:

• Unique Leverage Strategy: AMDM offers double the daily exposure compared to its direct competitors with similar investment objectives, enabling amplified gains for investors bullish on AMD's short-term prospects.
• Experienced Management: GraniteShares, despite its young age, possesses a strong team with extensive experience in managing diverse and innovative ETF products, including leveraged offerings.
• Niche Market Focus: By targeting AMD specifically, AMDM caters to a well-defined group of investors seeking concentrated exposure to this leading semiconductor company, potentially generating higher returns within this niche segment.

Financial Performance

Historical Performance:

AMDM has delivered impressive historical returns, outperforming the broader market and its non-leveraged counterparts. This reflects the effectiveness of its leveraged strategy when AMD stock price appreciates. However, investors need to acknowledge the amplified risk of losses during market downturns.

Benchmark Comparison:

Compared to the S&P 500, AMDM has demonstrated superior performance over shorter timeframes. However, it's crucial to note that this outperformance may not persist over extended periods due to the volatility associated with the leveraged approach.

Growth Trajectory

AMDM's growth trajectory is closely tied to AMD's stock performance and market sentiment towards the semiconductor industry. With the ongoing technological advancement and growing demand for AMD products, the ETF possesses potential for continued growth.

Liquidity

Average Trading Volume:

AMDM enjoys healthy trading volume, facilitating easy entry and exit for investors. This liquidity is critical in ensuring efficient execution of trades without significantly impacting market prices.

Bid-Ask Spread:

AMDM maintains a reasonably tight bid-ask spread, indicating low transaction costs associated with buying or selling the ETF. Lower spreads benefit investors by reducing the impact on their returns.

Market Dynamics

Factors Affecting the Market Environment:

• AMD Stock Performance: The ETF's performance directly hinges on AMD's stock price. Positive developments for AMD, such as new product launches, strong financial results, and industry tailwinds, would likely drive the ETF upwards. Conversely, negative events could lead to substantial price declines.
• Semiconductor Industry Growth: The continued advancement and adoption of technologies like artificial intelligence, cloud computing, and 5G networks contribute positively to the growth prospects of the semiconductor industry as a whole, potentially benefiting companies like AMD and the ETF.
• Economic Indicators: Macroeconomic factors such as interest rate movements, inflation levels, and global economic growth can impact investor sentiment towards the technology sector and influence AMD's stock performance, thereby affecting the ETF.

Competitors

• Direxion Daily Semiconductor Bull 3X Shares (SOXL): Market share - XX%, Total Net Assets - $XX million
• ProShares UltraPro QQQ (TQQQ): Market share - XX%, Total Net Assets - $XX million
• Direxion Daily S&P Semiconductor Bull 2X Shares (SPSU): Market share - XX%, Total Net Assets - $XX million

Expense Ratio

The expense ratio for AMDM stands at 0.99% annually. It covers the management fees and operational costs associated with running the ETF.

Investment Approach and Strategy

Strategy:

AMDM follows a customized index replication approach, aiming to deliver twice the daily performance of the Solactive US Large Cap Semiconductor Index, which tracks a basket of leading US-listed semiconductor companies, including AMD.

Composition:

The ETF primarily invests in swap agreements that reference the performance of AMD's ADRs. These swaps allow AMDM to achieve its leveraged exposure objective without directly holding large quantities of the underlying stock.

Key Points

• AMDM provides amplified exposure to AMD stock price movements, aiming for double the daily returns.
• The ETF caters to investors with a bullish short-term view on AMD and a tolerance for increased volatility.
• GraniteShares, with its innovative and thematic ETF expertise, manages AMDM.
• AMDM commands a significant share of the AMD-focused leveraged ETF segment, with over $24.8 million in total assets under management.
• The ETF demonstrates strong historical performance, exceeding benchmarks like the S&P 500, especially in shorter timeframes.
• Growth prospects for AMDM are linked to AMD's future performance and the broader semiconductor industry's trajectory.
• Investors can trade the ETF with ease due to its healthy trading volume and narrow bid-ask spread.

Risks

Volatility:

Leverage magnifies both potential gains and losses.

Market Risk:

AMD stock price fluctuations and overall market conditions significantly impact the ETF.

Who Should Consider Investing

This ETF suits investors who:

• Desire amplified exposure to short-term price movements of AMD stock.
• Possess a strong bullish outlook for AMD in the near term.
• Have a high tolerance for risk and volatility.
• Understand the complexities of leveraged investment strategies.

Fundamental Rating Based on AI

Rating: 7.5/10

AMDM's AI-based fundamental rating of 7.5 out of 10 reflects a positive assessment of its overall fundamentals. The rating considers various factors, including:

• Financial health: AMDM exhibits strong financials with a healthy expense ratio and experienced management.
• Market position: It holds a notable share within its niche market and demonstrates impressive historical performance.
• Future prospects: AMDM's growth potential is tied to the continued success of AMD and the promising future of the semiconductor industry.

Resources and Disclaimers

Disclaimer: This summary provides general information and should not be considered investment advice. Investors are advised to conduct thorough research and consider their risk tolerance and financial goals before making investment decisions.

Sources:

• https://graniteshares.com/etf/graniteshares-2x-long-amd-daily/
• https://finance.yahoo.com/quote/AMDM/
• https://www.etf.com/etfanalysis/graniteshares-2x-long-amd-daily-etf-amdm