GraniteShares files to increase leverage on 17 ETFs

GraniteShares plans to increase the leverage for 17 short and long funds to 200 per cent, along with changing each of the fund’s names by January 22, according to a filing.

Two of the funds will increase their leverage from 175 per cent to 200 per cent: the GraniteShares 1.75x Short AAPL Daily ETF and the $4.9mn GraniteShares 1.75x Long TSLA Daily ETF.

The GraniteShares 1.25x Short AMD Daily ETF will increase from 125 per cent to 200 per cent. The remainder of the funds will increase from 150 per cent to 200 per cent.

Total assets were not available for some of the funds.

This article was previously published by Ignites, a title owned by the FT Group.

Graniteshares did not return requests for comment and clarification.

Neena Mishra, director of ETF research for Zacks Investment Research, said it was rare for asset managers to increase leverage on funds. With higher leverages, volatility increases as well, she explained.

“These are the ones with more leverage, so they would be more volatile,” Mishra said. “These are fairly new products in the market, and in terms of trends, it’s not common because these products have not been around for a long time. They have been out for a little more than over a year.”

If the calls were made right, increased leverage can increase investor returns, Todd Rosenbluth, head of research at VettaFi, explained, but he added that a market move in opposite way to a fund’s bet would amplify losses by the leverage amount.

Investors have shifted to single-stock leveraged and inverse ETFs “to make a tactical trade on individual companies in an efficient manner”, Rosenbluth said.

“These funds will potentially provide more upside with the enhanced leverage but remain risky,” he said.

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