GraniteShares 2x Long NVDA Daily ETF (NVDL) plunged 26.1% in January due to leveraged ETF risks

From Nasdaq: 2025-02-06 00:08:43

In January 2025, the GraniteShares 2x Long NVDA Daily ETF (NVDL) fund crashed by 26.1%. This highlights the risks of leveraged ETFs, amplifying downturns more than positive returns. The fund aims to double Nvidia’s stock returns, with $4.8 billion in assets under management, showing impressive results since inception in December 2022.

Nvidia stock has seen a 591% return since the ETF’s inception, nearly doubling it with minor shifts due to management fees. However, the fund more than doubled Nvidia’s market pain in January 2025 when a Chinese competitor unveiled a powerful large language model. Leveraged ETFs pose high risks, especially when stocks decline.

The iShares US Regional Banks (IAT) index fund faced a deep dip during the inflation crisis, with the Direxion Daily Regional Banks Bull 3x (DPST) fund down 55% over the same period. While holding leveraged ETFs for the long term may seem tempting with high-growth stocks, the downside can be much harsher than the upside. January’s events with leveraged Nvidia funds underscore this risk.



Read more at Nasdaq: Why GraniteShares 2x Long NVDA Daily ETF Plunged Last Month