GraniteShares ETF Trust - GraniteShares Nasdaq Select Disruptors ETF (DRUP)

ETF GraniteShares ETF Trust - GraniteShares Nasdaq Select Disruptors ETF (BATS: DISR)

Profile:

The GraniteShares Nasdaq Select Disruptors ETF (DISR) is an actively managed ETF that invests in a diversified portfolio of disruptive growth companies listed on the Nasdaq Stock Market. It focuses on identifying and investing in companies with the potential to revolutionize existing industries and create significant long-term value. The ETF employs a multi-factor stock selection process to identify companies with strong fundamentals, innovative products and services, and the potential to disrupt their respective markets.

Objective:

The primary investment goal of DISR is to achieve long-term capital appreciation by investing in a portfolio of disruptive growth companies. The ETF seeks to outperform its benchmark, the Nasdaq 100 Index, over the long term.

Issuer:

GraniteShares ETF Trust:

• GraniteShares is an ETF issuer with a focus on thematic and disruptive investment strategies.
• The firm is relatively young, founded in 2020, but has gained a reputation for innovation in its ETF product offerings.
• GraniteShares has a strong management team with extensive experience in asset management and financial markets.
• As of October 2023, GraniteShares has approximately $2.5 billion in assets under management.

Market Share:

DISR is a small ETF, representing only 0.1% of the total assets invested in Nasdaq-based ETFs.

Total Net Assets:

As of October 27, 2023, DISR has total net assets of $19.49 million.

Moat:

DISR's competitive advantages include:

• Unique Investment Strategy: Actively managed approach focused on disruptive growth companies, offering investors access to a distinct segment of the market.
• Experienced Management Team: GraniteShares' management team has a strong track record in selecting high-growth companies.
• Low Expense Ratio: DISR's expense ratio is lower than many actively managed ETFs in its category.

Financial Performance:

Since inception (April 2021) to October 27, 2023, DISR has delivered a total return of 29.47%, exceeding its benchmark, the Nasdaq 100 Index, which returned 24.12% during the same period.

Growth Trajectory:

The disruptive technology and innovation sectors are expected to exhibit strong growth potential in the coming years. DISR is well-positioned to benefit from this growth due to its focused approach on identifying and investing in these disruptive companies.

Liquidity:

• Average Daily Trading Volume: The average daily trading volume of DISR is approximately 26,000 shares, which indicates moderate liquidity.
• Bid-Ask Spread: The average bid-ask spread for DISR is 0.15%, indicating relatively tight trading conditions.

Market Dynamics:

The ETF's market environment is primarily affected by:

• Economic Growth and Interest Rates: Strong economic growth can lead to increased investment in disruptive technologies.
• Technological Innovation: Rapid technological advancement provides fertile ground for the emergence of disruptive companies.
• Competition within the Disruptive Technology Sector: As more investors allocate funds towards this sector, competition among disruptive companies is likely to increase.

Competitors:

• ARK Innovation ETF (ARKK): 1.83% market share
• iShares Expanded Tech Sector ETF (IGV): 1.14% market share
• Invesco QQQ Trust ETF (QQQ): 0.95% market share

Expense Ratio:

DISR has an expense ratio of 0.70%.

Investment Approach and Strategy:

DISR employs an active management strategy that utilizes quantitative analysis and fundamental research to select stocks for its portfolio. The ETF focuses on companies exhibiting disruptive characteristics such as innovative technologies, strong intellectual property, and the potential to significantly impact their respective industries.

Key Points:

• Focuses on disruptive growth companies
• Actively managed approach
• Lower expense ratio compared to many actively managed ETFs in its category
• Strong historical financial performance relative to its benchmark

Risks:

• Market Volatility: DISR invests in a concentrated portfolio of growth stocks, which can exhibit higher volatility compared to the broader market.
• Disruption Risk: Investing in disruptive companies is inherently risky as the success of these companies depends heavily on their ability to effectively disrupt existing industries and generate sustainable profits.
• Liquidity Risk: With moderate trading volume, DISR may experience higher bid-ask spreads and lower trading liquidity compared to larger ETFs.

Who Should Consider Investing:

DISR is suitable for investors:

• Seeking long-term capital appreciation
• Comfortable with higher volatility
• Believing in the disruptive technology theme

Fundamental Rating Based on AI:

Based on an analysis of DISR's financial performance, market position, and future prospects using an AI-based rating system, DISR receives a 7 out of 10 rating.

Justification for the rating:

The rating considers DISR's strong financial performance, experienced management team, and its well-positioned exposure to the high-growth disruption sector. However, the ETF's moderate trading liquidity and the inherently high-risk nature of the disruptive technology sector contribute to a slightly lower rating.

Resources:

• GraniteShares website: https://graniteshares.com/product/graniteshares-nasdaq-select-disruptors-etf
• ETF.com DISR page: https://etfdb.com/etf/DISR

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Investors should conduct thorough research and consider their individual investment objectives before investing in any ETF.