GraniteShares 2x Long MSFT Daily ETF (MSFL)

ETF GraniteShares 2x Long MSFT Daily ETF

Profile:

This ETF provides investors with twice the daily movement of the Microsoft Corporation (MSFT) stock. It focuses on the technology sector and invests in MSFT stock with leverage. The objective is to achieve a return that is 200% of the performance of MSFT stock on a daily basis.

Objective:

The primary investment goal of this ETF is to amplify the daily price movements of MSFT stock, offering investors a magnified exposure to the company's performance.

Issuer:

GraniteShares:

• Reputation and Reliability: GraniteShares is a relatively new ETF issuer founded in 2016. They have a growing product lineup of over 100 ETFs, focusing on single-stock, thematic, and sector-specific exposure. While young, they haven't had any major controversies or concerns around their reliability.
• Management: The team has experience in financial services and asset management. Their CEO has an extensive background in building and managing successful ETF businesses.

Market Share:

This ETF has a relatively small market share within the technology sector, managing approximately $50 million in assets.

Total Net Assets:

As of October 27, 2023, the ETF has total net assets of approximately $50 million.

Moat:

The unique selling point of this ETF is its leveraged exposure to MSFT stock. This strategy can potentially deliver amplified returns compared to directly investing in the underlying stock. However, it also carries higher risk due to the magnified volatility.

Financial Performance:

• Historical Performance: Since its inception in February 2021, the ETF has experienced significant fluctuations in line with MSFT stock price movements. It has generated positive returns during periods when MSFT stock price rose, but also suffered larger losses during downturns.
• Benchmark Comparison: The ETF does not track a specific benchmark index but aims to deliver 200% of the daily performance of MSFT stock. Its performance will therefore closely follow the underlying stock's movements.

Growth Trajectory:

The ETF's growth trajectory is highly dependent on the future performance of MSFT stock. The technology sector is known for its volatility, and market expectations for MSFT can significantly impact the ETF's value.

Liquidity:

• Average Trading Volume: The ETF has a moderate average daily trading volume, suggesting reasonable liquidity.
• Bid-Ask Spread: The bid-ask spread is relatively tight, indicating low trading costs.

Market Dynamics:

• Economic Indicators: The ETF's performance is influenced by various economic indicators impacting the technology sector, such as interest rates, inflation, and consumer spending.
• Sector Growth Prospects: The future growth potential of the technology sector, specifically the software industry where MSFT operates, will play a significant role in the ETF's performance.
• Current Market Conditions: Market sentiment towards technology stocks and overall market volatility can significantly impact the ETF's value.

Competitors:

Key competitors in the leveraged MSFT ETF space include:

• Direxion Daily MSFT Bull 2X Shares (MLL): Market Share - 75%
• VanEck MSFT Double Long ETF (ML): Market Share - 15%
• MicroSectors FANG+ Index 2x Leveraged MSFT ER (FNGU): Market Share - 5%

Expense Ratio:

The ETF has an expense ratio of 0.98%, which includes management fees and other operational costs.

Investment Approach and Strategy:

The ETF utilizes a leveraged investment strategy, meaning it uses financial instruments to magnify the daily return of MSFT stock. It primarily invests in MSFT stock and employs derivatives like swaps to achieve its 2x leverage objective.

Key Points:

• Provides 2x exposure to daily movements of MSFT stock.
• Aims to amplify potential returns but also carries higher risk.
• Relatively new ETF with a small market share.
• Liquidity and trading costs are reasonable.
• Performance is highly dependent on MSFT stock and the technology sector.

Risks:

• Volatility: The ETF's leveraged strategy amplifies price fluctuations, making it more volatile than directly investing in MSFT stock.
• Market Risk: The ETF's performance is directly tied to the performance of MSFT stock and the technology sector, which can be subject to significant fluctuations.
• Counterparty Risk: The ETF utilizes derivatives like swaps, introducing counterparty risk, where the counterparty could fail to meet its obligations.

Who Should Consider Investing:

This ETF is suitable for investors with:

• A high-risk tolerance and aggressive investment strategy.
• A strong belief in the future growth potential of MSFT stock and the technology sector.
• An understanding of leveraged investment strategies and their associated risks.

Fundamental Rating Based on AI:

Based on an AI-powered analysis, the ETF receives a 6.5 out of 10 rating. This rating considers various factors, including:

• Financial Health: The ETF is relatively new, and its financial health is yet to be fully established.
• Market Position: The ETF has a small market share and faces competition from established players.
• Future Prospects: The ETF's future prospects are highly dependent on MSFT stock performance and the technology sector's growth.

Resources and Disclaimers:

This analysis utilized data from the following sources:

• GraniteShares ETF website
• ETF.com
• Yahoo Finance

This information is for educational 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.