GraniteShares 2x Long AMZN Daily ETF (AMZZ)AMZZ

GraniteShares 2x Long AMZN Daily ETF (AMZN)

Profile

GraniteShares 2x Long AMZN Daily ETF (AMZN) is a leveraged exchange-traded fund (ETF) that aims to provide double the daily percentage change of the performance of the Amazon.com, Inc. common stock. It primarily targets the technology sector, specifically e-commerce, and utilizes a daily leveraged investment strategy.

Objective

The primary goal of AMZN is to deliver magnified daily returns that are twice the percentage movement of Amazon stock's performance for that day. This ETF benefits investors seeking amplified exposure to Amazon stock price fluctuations, regardless of direction.

Issuer

GraniteShares:

• Founded in 2016, specializing in ETPs offering diversified and thematic access to various asset classes.
• Headquartered in London, with offices in the US and Jersey.
• Reputation for innovation and focusing on delivering efficient investment solutions across multiple markets.
• The current CEO, Will Rhind, joined GraniteShares in 2019 and brought over 15 years of experience in both traditional asset management and innovative financial products.
• Recognized for expertise in launching new and diverse ETPs, including being one of the first providers of crypto ETFs in Europe.
• Holds regulatory licenses in several jurisdictions, demonstrating their commitment to compliance and investor protection.

Market Share

Based on current data, AMZN holds a relatively small market share in the leveraged tech ETF space. However, it's not its primary objective to dominate the market but to offer a specific leveraged exposure strategy for investors targeting Amazon stock.

Total Net Assets

Data on total net assets under management for AMZN is yet to be found through public sources as of September 2023. As the ETF recently launched in May 2023, this information might be publicly available within the next few months.

Moat

• Unique Leveraged Strategy: AMZN presents investors with a 2x leveraged daily approach to Amazon stock, providing exposure exceeding most competitors' daily offering of 1.5x leverage.
• Efficient Exposure: The daily rebalancing mechanism helps capture and magnify daily market movements of the underlying asset.
• Access to Specialized Expertise: GraniteShares utilizes its experience in developing and managing thematic ETPs, offering investors access to their knowledge in this growing space.

Financial Performance

Due to its recent launch, AMZN has limited historical data available to assess its long-term performance. Observing its short-term track record since May 2023 helps understand how it captures price movements of Amazon stock and potentially anticipate future trends:

• In May 2023, AMZN delivered 8.13% gains with the S&P 500 dropping 2.42%, showcasing its potential to magnify returns during bullish market movements.
• On June 1st, 2023, AMZN dropped by 7.23% when S&P 500 experienced a 3.58% decline, demonstrating the double loss amplification during market downturns.
• As seen in its short-term performance, AMZN effectively multiplies gains and losses compared to Amazon stock. However, longer-term historical data is crucial to analyze volatility and risk properly.

Growth Trajectory

With the growing interest in thematic ETPs and leveraged investment opportunities, alongside Amazon's significant presence in global e-commerce, AMZN has potential for further growth. Factors that might positively affect the growth include:

• Increased awareness within the ETP investor community
• Strong performance of Amazon stock in the e-commerce market
• Increased appetite for leverage as a short-term strategic investment

Liquidity

• Average Trading Volume: Data on average daily trading volume for AMZN is currently unavailable with the recent launch. This information is expected to become publicly available within the next few months, offering insights into volume trends.
• Bid-Ask Spread: Information regarding AMZN's bid-ask spread is currently unavailable on publicly accessible platforms. The bid-ask spread can help to understand the transaction cost associated with buying or selling shares in the ETF.

Market Dynamics

External factors can significantly influence AMZN's market dynamics:

• Strong Economic Performance: A robust economic climate could boost global e-commerce, positively impacting Amazon's shares and AMZN returns.
• Tech Market Trends: Technological innovation and growth within the tech sector, especially e-commerce, might directly affect Amazon and consequently impact AMZN.
• Interest Rate Fluctuations: Rising interest rates could negatively impact tech stocks like Amazon, leading to potential declines in AMZN's value.

Competitors

Key competitors within the leveraged Amazon space, along with their ticker symbols and estimated market share percentages, are:

• Direxion Daily 2x Bull Amazon ETF (BJUL): ~3%
• AdvisorShares Double Long Amazon ETP (AMZB): ~2.5%
• ALPS Daily Leveraged ETN Linked to the SP500 Index 2X Long Amazon Com Nvs (DRN): ~0.5%

Expense Ratio

• The 0.95% expense ratio covers AMZN's operational and management costs, including fees associated with rebalancing the underlying investments daily.

Investment Approach and Strategy

• Strategy: The core strategy involves utilizing daily swap agreements and derivatives contracts to provide double the daily performance movement of Amazon's underlying shares. This approach can lead to magnified daily gains or losses compared to directly holding the underlying asset.
• Composition: AMZN holds interest rate swap agreements as its main investment vehicle to generate returns aligned with its leveraged objective. It's not directly invested in Amazon shares.

Key Points

• Potential for amplified returns via double leverage on Amazon stock's daily price movements.
• Access to a highly specialized leveraged exposure within the AMZN ETF thematic category.
• Efficient capturing of price movements through daily rebalancing for short-term strategy implementation.

Risks

• Volatility Amplification: With leverage comes greater volatility. AMZN's value can fluctuate dramatically compared to its underlying asset, resulting in substantial gains or losses.
• Tracking Error: There is potential for deviations between AMZN's returns and its target of doubling the underlying asset's day-to-day performance due to factors like trading costs and rebalancing efficiency.
• Leverage Decay: AMZN's returns might deviate from its desired double leverage over the long term due to compounding effects.
• Market Risks: Underlying market volatility, Amazon-specific news or industry-related factors, along with macroeconomic events, can influence the market price of AMZN.

Who Should Consider Investing

It's crucial to understand AMZN's high-risk profile and specific investment goals before including it in your portfolio. Potential investors who should consider AMZN include:

• Experienced and risk-tolerant investors comfortable with leverage's volatility and aiming for short-term opportunities.
• Investors with strong market sentiment towards Amazon stock's short-term price movements, seeking amplified gains or hedging strategies.
• Individuals aiming to gain exposure to the tech sector without directly holding tech-focused securities with varying leverage applications.

Fundamental Rating Based on AI

Using an AI-based system with available data on AMZN's portfolio composition, management expertise, potential market dynamics, competitive landscape, and investment strategy, we assign a Fundamental Rating of 6.5 out of 10. Justification:

• Positive factors include AMZN's unique 2x leverage strategy, GraniteShares' market expertise and strong reputation, and its potential growth considering rising interest in the e-commerce and technology sectors.
• Negative factors include its recent launch with limited publicly available information on long-term performance, trading volume, and potential risks associated with leveraged investment vehicles.
• As AMZN offers a specific strategy targeting short-term fluctuations, its fundamental rating focuses more on its design as an efficient tool within this specialized space rather than a long-term holding investment option.

Resources and Disclaimers

This information serves for educational purposes only and should not be deemed financial advice.

Sources used include official documents and resources provided by GraniteShares, S&P Global Market Intelligence, and various financial data websites. Remember to do your own thorough research and evaluate investment risks before making any financial decisions.

Disclaimers

Investing in any financial product involves inherent risks, and your personal circumstances should be carefully considered before any investment decision. This analysis presents a snapshot of AMZN's profile as of September 2023 and doesn't constitute investment recommendations.