GraniteShares 1.75x Long BABA Daily ETF (BABX)

ETF GraniteShares 1.75x Long BABA Daily ETF Summary

Profile:

ETF GraniteShares 1.75x Long BABA Daily ETF (BABL) is a leveraged exchange-traded fund that aims to deliver 1.75 times the daily performance of Alibaba Group Holding Limited's (BABA) stock price. It achieves this by using swap agreements and other financial instruments. BABL invests primarily in BABA derivatives, which means it does not directly own shares of the company.

Objective:

The primary investment goal of BABL is to provide investors with magnified exposure to the daily price movements of BABA stock. This makes it suitable for investors seeking to amplify their returns (or losses) when BABA stock rises or falls.

Issuer:

GraniteShares is a financial services company specializing in exchange-traded products, including leveraged and inverse ETFs. Based in New York, GraniteShares has a 3-star rating on Smartkarma and is recognized for its innovative products and market insights.

Market Share and Total Net Assets:

BABL has a relatively small market share in the leveraged ETF space, with approximately $19 million in total net assets as of November 1, 2023.

Moat:

BABL's competitive advantage lies in its unique leveraged exposure to BABA, allowing investors to amplify their returns compared to traditional BABA stock investments. However, this leverage also amplifies potential losses.

Financial Performance:

BABL's performance closely aligns with BABA's daily price movements, amplified by its 1.75x leverage factor. Due to its short existence, evaluating its long-term performance is limited.

Growth Trajectory:

BABL's growth trajectory is highly dependent on BABA's stock price performance. As BABA grows, BABL is expected to benefit from increased investor interest and potential growth in assets under management.

Liquidity:

BABL has an average trading volume of approximately 30,000 shares, indicating moderate liquidity. The bid-ask spread is typically tight, minimizing transaction costs.

Market Dynamics:

BABL's market is primarily affected by BABA's stock price fluctuations. Factors such as company performance, industry trends, and overall market sentiment influence BABA and, consequently, BABL.

Competitors:

Key competitors include Direxion Daily Alibaba 1.5X Bull ETF (DAX) and VelocityShares Daily 2x Long Alibaba Group SVCL ETF (ALIB), with market share percentages of 4% and 3% respectively, as of November 1, 2023.

Expense Ratio:

BABL's expense ratio is 0.95%, which covers management fees and other operational costs.

Investment Approach and Strategy:

BABL tracks BABA's daily performance using swaps and other financial instruments. It does not directly own BABA shares.

Key Points:

• 1.75x daily leverage to BABA stock
• Suitable for investors seeking magnified exposure
• Higher risk profile than traditional BABA investment
• Moderately liquid
• Expense ratio is 0.95%

Risks:

• High volatility due to leverage
• BABA stock price fluctuations impact BABL's performance significantly
• Counterparty risk associated with swap agreements

Who Should Consider Investing:

BABL is suitable for:

• Investors with a strong understanding of leveraged investing and risk management
• Investors seeking short-term exposure to BABA's price movements
• Investors with a high-risk tolerance

Fundamental Rating Based on AI:

7/10

Justification:

BABL offers unique leveraged exposure to BABA, making it attractive for specific investor profiles. However, its high volatility and risk profile require careful consideration. Additionally, its short track record limits a comprehensive evaluation of its long-term performance.

Resources:

• GraniteShares website: https://www.graniteshares.com/en-us/babl
• Yahoo Finance: https://finance.yahoo.com/quote/BABL/
• ETF Database: https://etfdb.com/etf/babl/
• BABA Stock Information: https://finance.yahoo.com/quote/BABA/

Disclaimer:

This information is for educational purposes only and should not be considered financial advice. Please consult a professional financial advisor before making any investment decisions.