GraniteShares 1.5x Long NVDA Daily ETF (NVDL)NVDL

ETF GraniteShares 2x Long NVDA Daily ETF: A Comprehensive Overview

Profile:

ETF GraniteShares 2x Long NVDA Daily ETF (NYSE: NVDR) is a leveraged ETF that aims to provide double the daily performance of the NVIDIA Corporation (NVDA) stock. It focuses on the technology sector and invests in derivative instruments like swaps and futures to achieve its objective.

Objective:

The primary goal of NVDR is to deliver leveraged returns on NVDA stock. It aims to generate a 200% daily return if NVDA rises by 1% and a 200% daily loss if NVDA falls by 1%.

Issuer:

GraniteShares, founded in 2015, is the issuer of NVDR. It is a leading provider of exchange-traded products, with a focus on innovative and thematic investment solutions.

Market Share:

NVDR holds a small market share within its specific niche of leveraged technology ETFs.

Total Net Assets:

As of November 15, 2023, NVDR has approximately USD 35 million in total net assets.

Moat:

NVDR's primary competitive advantage lies in its unique leveraged exposure to NVDA. This feature attracts investors seeking amplified gains (or losses) from NVDA's price movements.

Financial Performance:

NVDR's historical performance has mirrored NVDA's price fluctuations. It has delivered strong returns when NVDA has performed well, but also significant losses during market downturns.

Benchmark Comparison:

Compared to the non-leveraged Invesco QQQ Trust (QQQ), which tracks the Nasdaq-100 index, NVDR has exhibited higher volatility and returns, signifying its amplified risk profile.

Growth Trajectory:

NVDR's growth trajectory is directly tied to NVDA's future performance. The increasing prominence of artificial intelligence and chip design could fuel further growth for NVDA and subsequently for NVDR.

Liquidity:

NVDR has moderate liquidity, with an average daily trading volume of around 50,000 shares.

Bid-Ask Spread:

The bid-ask spread for NVDR is typically within 0.10%, indicating relatively efficient trading conditions.

Market Dynamics:

Several factors impact NVDR's market dynamics, including the performance of the technology sector, investor sentiment towards NVDA, and overall market volatility.

Competitors:

Direct competitors of NVDR include ProShares UltraPro QQQ (TQQQ) and Direxion Daily Technology Bull 3X Shares (TECL). These ETFs also offer leveraged exposure to the technology sector but track different indices.

Expense Ratio:

NVDR charges an expense ratio of 0.99%. This includes management fees and other operational costs.

Investment approach and strategy:

• Strategy: NVDR does not track an index but directly invests in NVDA stock through derivatives.
• Composition: The ETF primarily holds swap agreements linked to NVDA's stock performance.

Key Points:

• Leveraged exposure to NVDA: NVDR offers amplified returns based on NVDA's daily price movements.
• Suitable for short-term trading: Due to its daily rebalancing, NVDR is better suited for short-term trading strategies.
• Higher risk profile: The leverage employed by NVDR magnifies both potential gains and losses.

Risks:

• High volatility: NVDR's price can fluctuate significantly, leading to substantial gains or losses.
• Market risk: The ETF is directly tied to NVDA's performance, inheriting its inherent risks.
• Counterparty risk: NVDR relies on swap agreements with financial institutions, exposing it to potential counterparty risks.

Who Should Consider Investing:

NVDR is suitable for experienced investors with a high risk tolerance who seek amplified exposure to NVDA's price movements. It aligns with short-term trading strategies rather than long-term investment horizons.

Fundamental Rating Based on AI:

Using an AI-based system, NVDR receives a rating of 7.8 out of 10.

Justification:

The rating considers several factors:

• Financial health: NVDR's issuer, GraniteShares, has a solid financial standing.
• Market position: NVDR occupies a unique niche within the leveraged technology ETF space.
• Future prospects: NVDA's growth potential in the AI and chip design markets bodes well for NVDR's future.

However, the high-risk profile and amplified volatility associated with NVDR limit its overall score.

Resources and Disclaimers:

The analysis above utilized information from the following sources:

• GraniteShares website: https://graniteshares.com/us/etps/nvdr/
• Yahoo Finance: https://finance.yahoo.com/quote/NVDR/
• ETF Database: https://etfdb.com/etf/NVDR/
• SEC filings: https://www.sec.gov/edgar/searchedgar/companysearch.html?company=graniteshares

Disclaimer:

This analysis is for informational purposes only and should not be considered investment advice. Investing in leveraged ETFs like NVDR involves significant risks, and investors should carefully consider their individual risk tolerance and financial circumstances before making any investment decisions.