Short and leveraged exposure to US tech giants for sophisticated investors
GraniteShares has listed 18 Exchange Traded Products (ETPs) on the London Stock Exchange offering three-times leveraged and inverse exposures to popular US-listed stocks; they have a total expense ratio of 0.99%
GraniteShares offer short and leveraged exposure to single stocks in a collateralised ETP wrapper, thereby removing the complexities associated with obtaining leveraged returns on single stocks.
Traded through a share dealing account, the ETPs provide investors with transparent, quick and easy market access, enabling them to take positions with some of the most recognised companies listed on exchanges in the UK, US and Continental Europe.
Its latest products enable sophisticated investors leveraged and inverse exposures at a fraction of the underlying price to companies including Apple, Amazon, Facebook, Tesla and Netflix.
The range of ETPs is listed at $5.00 per share while most of the underlying stocks trade at prices in excess of $200. On 2 July, Tesla closed at a value of $1,208.66 while Facebook and Apple closed at $233.42 and $354.11, respectively.
In announcing their launch Will Rhind (pictured), founder and CEO at GraniteShares commented: ‘With increased market volatility and a stellar performance from leading companies within the US tech sector, many of which are familiar household names and widely followed by UK investors, now is a great time to launch our new products.
‘If sophisticated investors believe that these stocks still have a long way to go in terms of growth and performance, they can use our products to multiply returns. However, if at any stage they think they are in a bubble and they expect their share prices to fall, we enable them to position to benefit from falling prices as well.’
At the end of 2019, the global short and leveraged ETP market was worth roughly $77bn, according to data from ETFGI. Out of the 20 largest products in the world, 12 are listed in the US, 6 listed in Asia and only two in Europe; GraniteShares believes there is potential to grow the European leveraged and inverse market in the UK and Continental Europe.
Speaking at the launch of the firm’s European launch in 2019, Will Rhind, CEO of GraniteShares, said leveraged and inverse ETPs are just another tool in the toolkit for investors.
Speaking to ETF Stream, Rhind said: ‘With Brexit and market volatility surrounding global events, it is timely to introduce these leveraged exposures to European investors.’
The original ETPs launched offered European investors exposure to 3x long or 3x short to what GraniteShares believed to be the 11 most popular securities in the UK; the latest launches add to its original offering in response to client feedback.
‘We hope to develop a community surrounding our platform and will get feedback from the users on what more they would like,’ said Rhind. ‘This is just the beginning and the first offering in the market and we hope to offer exposure to the most popular UK names.’
GraniteShares expects the typical user of these ETPs will be sophisticated investors, as they can carry greater risks; for example if the underlying security was to change by 2%, the 3x leveraged products magnify that loss, or gain to 6%.
Given that swings of 10% or more have not been unheard of in the Covid induced market volatility, few would welcome losses of 30%, so it is vital that the investor understands the risks: ‘The products are more directed at active investors and a trading-based community rather than the typical buy and hold investors due to the complexity of the products,’ said Rhind.
‘These products are directed at people who understand risk and will go through these issues with their financial advisors,’ he added.
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