GraniteShares 2x Long SMCI Daily ETF (SMCL)

Overview

The GraniteShares 2x Long SMCI Daily ETF (SMUI) seeks to provide daily investment results, before fees and expenses, that correspond to two times (2x) the daily performance of NVIDIA shares. It is a leveraged ETF designed for short-term trading focused solely on the performance of a single company.

Reputation and Reliability

GraniteShares is a smaller ETF provider known for its leveraged and inverse single-stock ETFs. They are generally considered reliable, but the complexity of their products requires careful understanding.

Management Expertise

GraniteShares' management team has experience in structuring and managing ETFs, particularly in the leveraged and inverse space. The success of the ETF depends on their ability to accurately track the leveraged performance of the underlying stock.

Goal

To provide daily investment results, before fees and expenses, that correspond to two times (2x) the daily performance of NVIDIA shares.

Investment Approach and Strategy

Strategy: The ETF employs a leveraged strategy to amplify the daily returns of NVIDIA stock. This is achieved through the use of financial instruments such as swap agreements.

Composition The ETF holds derivatives contracts designed to track the 2x daily performance of NVIDIA (SMCI) stock. It may also hold cash.

Market Share: Highly concentrated as it is a single stock leveraged ETF.

Total Net Assets (AUM): 29373579

Key Competitors

• GraniteShares 1.5x Long NVDA Daily ETF (NVDL)
• Direxion Daily Semiconductor Bull 3x Shares (SOXL)
• T-Rex 2X Long NVIDIA Daily Target ETF (NVDU)

Competitive Landscape

The competitive landscape is concentrated, with a few key players offering leveraged exposure to the semiconductor sector or single stocks. SMUI's advantage lies in its specific focus on NVIDIA, while its disadvantage is the higher risk associated with leveraged single-stock ETFs and the greater volatility of SMCI stock compared to the broad market.

Historical Performance: Historical performance is highly dependent on NVIDIA's stock performance and daily market movements. Due to the leveraged nature, returns are magnified, both positively and negatively.

Benchmark Comparison: The ETF's performance should be compared to 2x the daily return of SMCI, not a broad market index. Tracking error may occur due to fees, expenses, and the complexities of leveraged investing.

Expense Ratio: 0.99

Average Trading Volume

The average trading volume for SMUI indicates moderate liquidity, sufficient for most retail investors but potentially limiting for large institutional investors.

Bid-Ask Spread

The bid-ask spread reflects moderate liquidity, indicating a reasonable cost for entering and exiting positions, but can widen during volatile market conditions.

Market Environment Factors

Economic indicators, semiconductor industry trends, and NVIDIA-specific news and events significantly impact SMUI. The ETF is sensitive to changes in investor sentiment toward the company and the sector.

Growth Trajectory

The growth trajectory depends on NVIDIA's sustained growth and investor appetite for leveraged single-stock products. Changes in strategy and holdings are unlikely, as the fund's objective is narrowly defined.

Competitive Edge

SMUI's advantage lies in providing a simple and direct way to gain 2x leveraged exposure to the daily performance of NVIDIA stock. This niche focus may appeal to traders seeking to amplify short-term gains from NVIDIA's movements. However, the ETF carries significant risks due to the volatile nature of leveraged investing and single-stock concentration. Careful risk management and a thorough understanding of the ETF's mechanics are essential.

Volatility

SMUI exhibits very high volatility due to the 2x leverage and the inherent volatility of NVIDIA stock. Daily swings can be substantial, leading to significant gains or losses.

Market Risk

The primary market risk is related to the performance of NVIDIA. Any negative news or events impacting NVIDIA can significantly affect the ETF's value. Compounding and volatility decay are inherent risks in leveraged ETFs, especially when held for longer periods than a single day.

Ideal Investor Profile

SMUI is suitable for sophisticated, short-term traders who understand the risks of leveraged ETFs and have a strong conviction about NVIDIA's short-term performance.

Market Risk

This ETF is best suited for active traders with a high-risk tolerance. It is not appropriate for long-term investors or passive index followers due to the risks of leverage and compounding.

The GraniteShares 2x Long SMCI Daily ETF (SMUI) offers a leveraged bet on the daily performance of NVIDIA shares, targeting short-term traders with a high-risk tolerance. Its performance is directly linked to NVIDIA's stock price movements, amplifying both gains and losses. The ETF's leveraged nature and single-stock concentration make it unsuitable for long-term investment strategies. Understanding the risks of leverage, volatility decay, and compounding is crucial before investing in SMUI.

Data Sources:

• GraniteShares website
• ETF.com
• Morningstar
• SEC Filings

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered financial advice. Investing in ETFs involves risk, including the potential loss of principal. Leveraged ETFs are complex instruments and are not suitable for all investors. Past performance is not indicative of future results.