ETFs that track the performance of Nvidia, a prominent player in the AI industry, have seen significant growth this year. These unique leveraged ETFs are focused solely on Nvidia, offering investors the potential for higher returns through added directional leverage. The T-REX 2X Long NVIDIA Daily Target ETF has seen a significant 425% increase in value this year, despite a recent 16% correction in Nvidia’s stock price.
While these leveraged ETFs are typically seen as short-term trading instruments, some retail investors are considering them as long-term investments. With a total of $5 billion in assets under management, ETFs such as the GraniteShares 2x Long NVDA ETF and the Direxion Daily NVDA Bull 2X Shares ETF have attracted a large amount of investor interest due to Nvidia’s strong stock performance over the past year.
In comparison to leveraged ETFs targeting other mega-cap tech stocks like Apple, Alphabet, Amazon, and Microsoft, the Nvidia-focused ETFs have seen significantly more inflow of funds. This success has led them to join the ranks of single-stock leveraged ETFs with over $1 billion in assets under management, along with Tesla-focused ETFs.
While Nvidia ETFs have showcased the potential for leveraging gains, ETFs focused on Tesla have highlighted the risks associated with leveraged investments. The Direxion Daily TSLA Bull 2X Shares ETF, for example, has experienced a 70% decrease from its all-time high in August 2022, while Tesla’s stock price has dropped by 37% over the same period.
Overall, the surge in popularity of leveraged ETFs tracking Nvidia’s performance reflects the growing interest in single-stock investment vehicles with added leverage. Retail investors are increasingly drawn to the potential for higher returns, despite the inherent risks involved in leveraged trading strategies. As these ETFs continue to attract significant assets under management, the debate over their suitability for long-term holding versus short-term trading remains a topic of discussion among investors.
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https://markets.businessinsider.com/news/stocks/leveraged-nvidia-stock-etfs-boom-nvdl-magnificent-seven-tesla-apple-2024-6