Nvidia’s recent financial results have rekindled interest in the artificial intelligence (AI) sector within the U.S. stock market. It’s hardly surprising that daring investors, hungry for risk, are actively seeking avenues to enhance their involvement with the foremost player in the chip manufacturing industry.
For those investors who favor exchange-traded funds (ETFs) offering a potentially high risk-reward ratio and who wish to gain amplified daily exposure to specific companies, it might be prudent to contemplate single-stock ETFs.
These ETFs closely track the performance of companies such as Nvidia, Tesla, or Advanced Micro Devices, providing a strategic opportunity to capitalize on the escalating excitement surrounding these firms. This insight comes from William Rhind, the CEO of Granite Shares, an established ETF provider.
Single-stock ETFs, as the name implies, monitor the progress of an individual company’s stock. In contrast to conventional ETFs that encompass a variety of stocks or assets to spread out the investment, single-stock ETFs focus exclusively on a solitary entity. These ETFs often offer leveraged exposure, tracing around 1.5 to 2 times the daily movement of the underlying company’s stock.
To illustrate, consider the GraniteShares 1.5x Long Nvidia Daily ETF. Launched in December, this ETF has amassed a portfolio of over $260 million.
Its objective is to yield a price return 1.5 times greater than that of Nvidia stock over a single day. However, it’s essential to note that losses can also be amplified, turning the utilization of leverage into a high-risk investment choice.