(Bloomberg) — Another firm has jumped in the race to offer the first U.S. exchange-traded fund that will allow investors to place leveraged bets on a single stock.
GraniteShares is planning 19 funds that will offer double the daily returns on single companies, including Coinbase Global Inc., Palantir Technologies Inc. and Tesla Inc., and one fund that will offer Tesla’s inverse, according to a Friday filing with the Securities and Exchange Board of India. . exchange Commission.
The firm is already the largest provider of single-stock exchange-traded products in the world, with multiple listings in Europe. Its SEC request comes after similar filings by both AXS Investments and Direxion in the past month, bringing the total number of recently employed single-stock funds to 62.
GraniteShares is “like ‘Wait this is our thing,'” said Eric Balchunas, senior ETF analyst at Bloomberg Intelligence. “Time is of the essence when you have these products” in the race to gain liquidity.
Uncertainty about whether the SEC will approve single-stock funds hasn’t deterred the filing rush. The Precidian ETFs Trust filed for a significant number of ETFs in 2017, each corresponding to a foreign company’s U.S. depository receipts, but this is still pending approval by the authorities.
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There are existing leveraged and inverse ETFs, which use derivatives to increase returns or reverse performance, typically targeting an index or fund. But, they were falling out of favor after getting caught in the ups and downs of the previous market. Now they are making a comeback.
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The GraniteShares lineup includes funds that target some of the most commonly traded stocks such as Tesla, Apple Inc., Nvidia Corp. and overlapping with planned offerings from Amazon.com Inc., AXS and Direxion.
The GraniteShares slate also includes a product that will be tied to Coinbase, which is “a potentially big hit, as it will be the closest way to do leveraged bitcoin,” Balchunas said, noting that there are currently no accepted leveraged bitcoin futures. Huh. ETF.
Some of GraniteShares’ planned funds will also target US depository receipts of foreign companies, including Alibaba Group Holding Ltd and Chinese electric vehicle maker NIO Inc.
The latest filing is an indication of how intensely competitive the $6.9 trillion US ETF market has become.
“It symbolizes how little white space is left on the ETF menu,” said Ben Johnson, director of global ETF research at Morningstar. “For years, ETF providers have been slicing, dicing, and now reducing global market exposure to come up with as many new ETF ideas as possible.”
