[11/28/23] GraniteShares’ Moves Put Concentrated Funds in Spotlight

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WEEKLY ROUNDUP OF ETF FILINGS, LAUNCHES & CLOSURES

While most ETF assets are invested in broad, highly diversified funds, last week saw a focus on highly concentrated exchange-traded funds.

Single stock ETFs are the most concentrated funds available, and last week $1.5 billion fund manager GraniteShares doubled down when it filed with the Securities and Exchange Commission to increase the leverage on some of its one-stock funds. The company wants to increase the leverage of its Nvidia Corp., Meta Platforms Inc. and Tesla Inc. ETFs from the current 1.5 times to two times. 

The firm offers both long and short versions of these funds. They are meant to be a cheaper and easier way to get leveraged and/or short exposure to these firms, rather than investors taking out a short or leveraged position on their own.

The entire U.S. stock market this year has been quite concentrated. The cap-weighted SPDR S&P 500 ETF Trust (SPY) gained just over 20% year-to-date compared to just 4.8% from equal-weighted Invesco S&P 500 Equal Weight ETF (RSP). The narrowness of this year’s gains was underscored by the fact that, through the end of October, if the top 10 biggest stocks in the S&P 500 were excluded, the index’s returns went from more than 10% positive, to slightly negative.

Investors who think this trend will turn around may be interested in Vanguard Total Stock Market ETF (VTI), which provides exposure to roughly the entirety of the U.S. stock market.

By Gabe Alpert

Below is a roundup of the key developments in the ETF industry during the week ending Nov. 24, 2023:  

DWS' Xtrackers Unit Launches Thematic Tech ETF The fund covers 14 segments of technology that the U.S. Defense Department deems to be critical.

Wegovy, Ozempic Makers Targeted With New ETF Tema’s HRTS exposes investors to popular obesity drugs.

GraniteShares Ups Leverage on Tesla, Nvidia Single-Stock ETFs to 200% The SEC recently started allowing firms to offer double leverage.

Investors Avoiding SPY’s Concentrated Holdings Lost Big in 2023 The S&P 500 ETF beat its equal-weighted counterpart by 15 points. But can it last?

ETF Investors Dumped $13 Billion in Gold This Year High Treasury yields cut the lure of the precious metal.

FEATURED FUND

Vanguard Total Stock Market ETF (VTI)

The fund seeks to track a market-cap-weighted portfolio that provides total market exposure to the US equity space.

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PODCAST

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