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Single-stock ETFs have gained immense popularity this year amid the stock market surge and the big tech wave. Unlike traditional ETFs, which typically track a broad index or sector, single-stock ETFs provide exposure to the performance of one specific company by using derivatives. This allows investors to gain exposure to a particular stock without having to buy the stock directly.
Single-stock ETFs tap the gambling mindset that exists in markets. There are currently four dozen single-stock ETFs on the market with a combined $3.3 billion in assets, according to Morningstar data. Five firms, AXS, Direxion, YieldMax, GraniteShares and Innovator, provide all the single-stock ETFs currently available on the market.
We have highlighted five single-stock ETFs that have outperformed the market in 2023. The solid trend is likely to continue in the New Year as well.
GraniteShares 1.5x Long COIN Daily ETF (CONL - Free Report) ) – Up 723.3%
GraniteShares 1.5x Long COIN Daily ETF seeks 1.5 times (150%) the daily percentage change of the common stock of Coinbase Global Inc (COIN - Free Report) . It has accumulated $42.3 million in its asset base while trading in an average daily volume of 376,000 shares. GraniteShares 1.5x Long COIN Daily ETF charges 99 bps in annual fees (read: Bitcoin ETFs Set to Explode in 2024 After a Marvelous 2023).
GraniteShares 1.5x Long NVDA Daily ETF (NVDL - Free Report) ) – Up 432.4%
GraniteShares 1.5x Long NVDA Daily ETF magnifies exposure to a single trade, seeking 1.5 times (150%) the daily percentage change of the common stock of NVIDIA (NVDA - Free Report) . It has an expense ratio of 1.15% and trades in a volume of 540,000 shares a day on average. GraniteShares 1.5x Long NVDA Daily ETF has amassed $256.7 million in its asset base.
GraniteShares 1.5x Long Meta Daily ETF (FBL - Free Report) ) – Up 199.1%
GraniteShares 1.5x Long Meta Daily ETF tracks 1.5 times the performance of the stock of Meta Platforms (META - Free Report) . It has accumulated $14.2 million in its asset base and charges 1.15% in annual fees. GraniteShares 1.5x Long Meta Daily ETF trades in an average daily volume of 16,000 shares (read: NVIDIA, Meta & 2023's Best-Performing ETFs).
With AUM of $1 billion, Direxion Daily TSLA Bull 1.5X Shares is by far the largest U.S.-listed single-stock ETF on the market today. TSLL offers 1.5 times (150%) the daily percentage change of the common stock of Tesla (TSLA - Free Report) , charging 95 bps in annual fees. It trades in an average daily volume of 15 million shares.
Direxion Daily AMZN Bull 1.5X Shares ETF tracks 1.5 times the performance of the shares of Amazon (AMZN - Free Report) , charging 95 bps in annual fees. It trades in volume of 218,000 shares a day on average and has accumulated assets worth $53.1 million.
More Gains Ahead?
These best-performing ETFs are the leveraged plays on the so-called "Magnificent Seven" stocks, which are expected to rise further in 2024, driven by the artificial intelligence (AI) boom and cloud computing growth. Goldman Sachs predicts the seven stocks to outshine the remaining 493 stocks in the S&P 500 in 2024 (read: Magnify Gains in 2024 With "Magnificent Seven" ETFs).
The craze for AI is expected to stay in 2024 with many experts believing that the AI journey of these market leaders has just begun, and more innovations in this field will unfold. Cloud computing remains a promising area with the cloud infrastructure services market projected to grow from $122 billion in 2023 to $446 billion by 2032.
Further, these stocks have superior fundamentals with faster growth rates, higher profit margins, cleaner balance sheets and reasonable valuations.
For CONL, the prospect also looks bright as the bitcoin is expected to continue its bullish run in 2024, given broad enthusiasm about U.S. interest rate cuts and the imminent regulatory approval for Bitcoin ETFs.
Downside Risks
While single-stock ETFs offer a focused way to invest in a company, they come with significant risks due to their lack of diversification and exposure to the volatility of a single stock. They are typically more suited for experienced investors who understand and are willing to accept these risks. Here is the risk associated with these ETFs:
High Risk: If the specific company underperforms, investors could lose a substantial amount of money.
Lack of Diversification: One of the key principles of risk management in investing is diversification. Single-stock ETFs go against this principle, as they are invested entirely in one company.
Market Volatility: A single-stock ETF is subject to the volatility of the individual stock, which can be influenced by company-specific news and events.
Management Fees: While typically lower than mutual funds, ETFs still come with management fees, which can eat into your investment returns over time, especially in a narrowly focused fund like a single-stock ETF.
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5 Best-Performing Single-Stock ETFs of 2023
Single-stock ETFs have gained immense popularity this year amid the stock market surge and the big tech wave. Unlike traditional ETFs, which typically track a broad index or sector, single-stock ETFs provide exposure to the performance of one specific company by using derivatives. This allows investors to gain exposure to a particular stock without having to buy the stock directly.
Single-stock ETFs tap the gambling mindset that exists in markets. There are currently four dozen single-stock ETFs on the market with a combined $3.3 billion in assets, according to Morningstar data. Five firms, AXS, Direxion, YieldMax, GraniteShares and Innovator, provide all the single-stock ETFs currently available on the market.
We have highlighted five single-stock ETFs that have outperformed the market in 2023. The solid trend is likely to continue in the New Year as well.
GraniteShares 1.5x Long COIN Daily ETF (CONL - Free Report) ) – Up 723.3%
GraniteShares 1.5x Long COIN Daily ETF seeks 1.5 times (150%) the daily percentage change of the common stock of Coinbase Global Inc (COIN - Free Report) . It has accumulated $42.3 million in its asset base while trading in an average daily volume of 376,000 shares. GraniteShares 1.5x Long COIN Daily ETF charges 99 bps in annual fees (read: Bitcoin ETFs Set to Explode in 2024 After a Marvelous 2023).
GraniteShares 1.5x Long NVDA Daily ETF (NVDL - Free Report) ) – Up 432.4%
GraniteShares 1.5x Long NVDA Daily ETF magnifies exposure to a single trade, seeking 1.5 times (150%) the daily percentage change of the common stock of NVIDIA (NVDA - Free Report) . It has an expense ratio of 1.15% and trades in a volume of 540,000 shares a day on average. GraniteShares 1.5x Long NVDA Daily ETF has amassed $256.7 million in its asset base.
GraniteShares 1.5x Long Meta Daily ETF (FBL - Free Report) ) – Up 199.1%
GraniteShares 1.5x Long Meta Daily ETF tracks 1.5 times the performance of the stock of Meta Platforms (META - Free Report) . It has accumulated $14.2 million in its asset base and charges 1.15% in annual fees. GraniteShares 1.5x Long Meta Daily ETF trades in an average daily volume of 16,000 shares (read: NVIDIA, Meta & 2023's Best-Performing ETFs).
Direxion Daily TSLA Bull 1.5X Shares (TSLL - Free Report) ) – Up 146.6%
With AUM of $1 billion, Direxion Daily TSLA Bull 1.5X Shares is by far the largest U.S.-listed single-stock ETF on the market today. TSLL offers 1.5 times (150%) the daily percentage change of the common stock of Tesla (TSLA - Free Report) , charging 95 bps in annual fees. It trades in an average daily volume of 15 million shares.
Direxion Daily AMZN Bull 1.5X Shares ETF (AMZU - Free Report) ) – Up 121.7%
Direxion Daily AMZN Bull 1.5X Shares ETF tracks 1.5 times the performance of the shares of Amazon (AMZN - Free Report) , charging 95 bps in annual fees. It trades in volume of 218,000 shares a day on average and has accumulated assets worth $53.1 million.
More Gains Ahead?
These best-performing ETFs are the leveraged plays on the so-called "Magnificent Seven" stocks, which are expected to rise further in 2024, driven by the artificial intelligence (AI) boom and cloud computing growth. Goldman Sachs predicts the seven stocks to outshine the remaining 493 stocks in the S&P 500 in 2024 (read: Magnify Gains in 2024 With "Magnificent Seven" ETFs).
The craze for AI is expected to stay in 2024 with many experts believing that the AI journey of these market leaders has just begun, and more innovations in this field will unfold. Cloud computing remains a promising area with the cloud infrastructure services market projected to grow from $122 billion in 2023 to $446 billion by 2032.
Further, these stocks have superior fundamentals with faster growth rates, higher profit margins, cleaner balance sheets and reasonable valuations.
For CONL, the prospect also looks bright as the bitcoin is expected to continue its bullish run in 2024, given broad enthusiasm about U.S. interest rate cuts and the imminent regulatory approval for Bitcoin ETFs.
Downside Risks
While single-stock ETFs offer a focused way to invest in a company, they come with significant risks due to their lack of diversification and exposure to the volatility of a single stock. They are typically more suited for experienced investors who understand and are willing to accept these risks. Here is the risk associated with these ETFs:
High Risk: If the specific company underperforms, investors could lose a substantial amount of money.
Lack of Diversification: One of the key principles of risk management in investing is diversification. Single-stock ETFs go against this principle, as they are invested entirely in one company.
Market Volatility: A single-stock ETF is subject to the volatility of the individual stock, which can be influenced by company-specific news and events.
Management Fees: While typically lower than mutual funds, ETFs still come with management fees, which can eat into your investment returns over time, especially in a narrowly focused fund like a single-stock ETF.