Shares of Nvidia Corp. (NVDA) hit a record high after a year of choppy trading. The largest leveraged ETF tied to the stock, GraniteShares 2x Long NVDA Daily ETF (NVDL), is still below last year’s levels. Nvidia closed above $170, with the U.S. government allowing it to resume shipments to China, unlocking billions in potential sales.

The closing price was 26% higher than in June 2024, marking a real breakout for Nvidia. However, NVDL, the leveraged ETF aiming to provide 2x the daily return of Nvidia stock, closed at $81, still 4% below its peak in June 2024.

Daily rebalancing decay affects leveraged ETFs like NVDL, causing compounding losses that diverge from the underlying stock, leading to investor disappointment. NVDL’s assets under management have dropped to $4.4 billion, down from $6.7 billion in November 2024, with $2.2 billion pulled out this year.

Investors should be cautious of the double-upside promise of leveraged ETFs, as the divergence between NVDL and Nvidia highlights the risks associated with these products. Timing and path matter significantly, even if the stock direction is correct.

Read more at Yahoo Finance: Nvidia Breaks Out, but Leveraged ETF NVDL Lags Behind