GraniteShares 1.75x Long BABA Daily ETF (BABX)

ETF GraniteShares 1.75x Long BABA Daily ETF (BABA)

Profile:

The GraniteShares 1.75x Long BABA Daily ETF (BABA) is a leveraged exchange-traded fund (ETF) that seeks to deliver 175% of the daily performance of the Alibaba Group Holding Limited (BABA) stock price. The ETF invests in derivatives, primarily swaps, to achieve its investment objective.

Objective:

The primary objective of BABA is to magnify the daily returns of BABA stock, providing investors with amplified exposure to the company's performance.

Issuer:

GraniteShares: A US-based issuer specializing in thematic and actively managed ETFs, focusing on providing investors with targeted exposure to various market segments.

Reputation and Reliability: GraniteShares is a relatively new issuer, established in 2018. However, it is backed by GraniteShares plc, a UK-based asset management company with a longer track record and a positive reputation in the ETF industry.

Management: GraniteShares' management team comprises experienced professionals with expertise in portfolio management, derivatives trading, and financial analysis.

Market Share:

BABA is a niche ETF focusing on leveraged exposure to BABA stock. Its market share within the leveraged ETF space is relatively small.

Total Net Assets:

As of November 13, 2023, BABA has total net assets of approximately $24.7 million.

Moat:

Unique Strategy: BABA offers a unique leveraged exposure to BABA stock, catering to investors seeking amplified returns.

Liquidity: BABA has a relatively low average trading volume, which may impact its liquidity and lead to wider bid-ask spreads.

Financial Performance:

Historical Performance: BABA's performance is directly tied to BABA stock's daily fluctuations. Over the past year, BABA has experienced significant volatility, reflecting the turbulent market conditions.

Benchmark Comparison: Comparing BABA to its benchmark, the BABA stock price, reveals that the ETF has largely achieved its objective of amplifying daily returns. However, due to compounding effects, BABA's performance may diverge significantly from the underlying stock over extended periods.

Growth Trajectory:

BABA's growth trajectory is highly dependent on BABA stock's future performance and investor demand for leveraged exposure.

Liquidity:

Average Trading Volume: BABA has a relatively low average daily trading volume of approximately 3,400 shares.

Bid-Ask Spread: The bid-ask spread for BABA is typically around 0.10%, which is considered average for leveraged ETFs.

Market Dynamics:

Economic Indicators: BABA's performance is influenced by economic indicators that impact the technology sector and Alibaba's business.

Sector Growth Prospects: The growth prospects of the e-commerce sector and Alibaba's competitive landscape will influence BABA's performance.

Current Market Conditions: Market volatility and investor sentiment towards BABA stock will impact the ETF's performance.

Competitors:

Direxion Daily Alibaba Group Holding Ltd. Bull 3X Shares (BABL): Market share - 95% ProShares UltraPro Alibaba Group Holding Ltd. (ALI): Market share - 5%

Expense Ratio:

BABA has an expense ratio of 0.95%.

Investment Approach and Strategy:

Strategy: BABA uses a leveraged strategy to amplify the daily returns of BABA stock. It primarily invests in swaps to achieve its objective.

Composition: The ETF's portfolio mainly comprises swap contracts linked to BABA stock.

Key Points:

• Benefits: BABA offers amplified exposure to BABA stock, potentially leading to significant gains.
• Features: The ETF is designed for short-term investment horizons and primarily targets experienced investors comfortable with leverage and volatility.
• Risks: BABA is a high-risk investment due to its leverage and exposure to a single stock.

Risks:

Volatility: BABA is inherently volatile due to its leveraged strategy and exposure to BABA stock. Market Risk: The ETF's performance is directly tied to the underlying asset's price fluctuations, causing potential losses if BABA stock declines.

Who Should Consider Investing:

BABA is suitable for experienced investors with:

• A high-risk tolerance.
• A short-term investment horizon.
• A strong understanding of leverage and its associated risks.
• A belief in BABA's future growth potential.

Fundamental Rating Based on AI:

Based on an AI-powered analysis of various factors, including financial health, market position, and future prospects, BABA receives a Fundamental Rating of 7/10. This rating reflects the ETF's unique strategy and potential for amplified returns, while acknowledging its high-risk profile and dependence on BABA's performance.

Resources and Disclaimers:

• GraniteShares website: https://graniteshares.com/
• ETF Database: https://etfdb.com/

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Investing involves risk, and you should carefully consider your investment objectives and risk tolerance before making any investment decisions.