New launch: YieldBOOST ETF on Tesla (TSYY)

<p><strong>New launch</strong>: <a class="text-black ps-2" href="https://graniteshares.com/institutional/us/en-us/etfs/tsyy/" tabindex="-1">YieldBOOST ETF on <i>Tesla</i> (TSYY)</a></p>
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The ETFs are designed to give investors leveraged or short exposure to the daily share price moves, both up and down, of individual companies listed on the Nasdaq Stock Exchange and other major U.S. stock exchanges.

Leveraged ETFs seek to deliver a multiple of the daily underlying share price move, i.e. 2 times (+200%) or 1.25 times (+125%). This is referred to as a the “Leveraged Factor”.

Short or Inverse single stock ETFs seek to deliver daily investment results of -1 times (-100%) or -2 times (-200%) the daily percentage change of the underlying share price move.

Taking the example of the GraniteShares 1.25x Long TSLA Daily ETF, if the common stock of Tesla Inc, (TSLA) rises by 10% over a day, the ETF would expect to rise by 12.5%, excluding fees and other adjustments. However, if Tesla (TSLA) falls by 10% over a day, then the ETP will fall by 12.5%, excluding fees and other adjustments. 

Hypothetical Example:

The typical user profile is a sophisticated investor, who understands leverage and how daily rebalancing leads to compound returns. The Funds are not intended to be used by, and are not appropriate for, investors who do not intend to actively monitor and manage their portfolios.

The ETFs seek to replicate the daily performance of an underlying common stock multiplied by a leveraged factor.  To achieve that objective the funds’ “notional market exposure” is rebalanced at the end of each day to match the fund value multiplied by the leverage factor.

For instance, if a 2x long daily ETF is worth $100 at the end of a day, its notional market exposure will be adjusted (or rebalanced) to $200.

The process is carried out each day as illustrated in the tables below:

This daily rebalancing leads to compound returns.

This daily rebalancing leads to compound returns.

The Fund aims to replicate the leveraged daily returns of the Underlying Stock and the Fund’s performance for periods greater than a trading day will be the result of each day’s returns compounded over the period, which is very likely to differ from the Underlying Stock’s performance, before fees and expenses. Compounding affects all investments but has a more significant impact on funds that aims to replicate leverage daily returns. For a Fund aiming to replicate 1.5 times the daily performance of an Underlying Stock, if adverse daily performance of the Underlying Stock reduces the amount of a shareholder’s investment, any further adverse daily performance will lead to a smaller dollar loss because the shareholder’s investment had already been reduced by the prior adverse performance. Equally, however, if favorable daily performance of the Underlying Stock increases the amount of a shareholder’s investment, the dollar amount lost due to future adverse performance will increase because the shareholder’s investment has increased.

The effect of compounding becomes pronounced as the Underlying Stock volatility and the holding period increase. The impact of compounding will impact each shareholder differently depending on the period of time an investment in the Fund is held and the volatility of the Underlying Stock during shareholder’s holding period of an investment in the Fund.

Taking the example of a 2x long exposure, we look how this might play out under different market conditions:

Trending markets: hypothetical performance, excluding fees and other adjustments

Trending markets

Volatile and directionless markets: hypothetical performance, excluding fees and other adjustments

Volatile and directionless markets

Under volatile conditions, the performance deviation will be exacerbated by an increase in the volatility of the underlying stock.

Note. These charts are for illustration purposes to show the potential impact of daily rebalancing on returns for holding periods of longer than a single trading day.  Further details about compounding and its effects are available in the Prospectus relating to the ETFs.

Investors can trade short and leveraged single-stock ETFs through online brokerage platforms and apps, stockbrokers and or financial advisors. In short, any investment service offering access to ETFs listed on a stock exchange.

Are they eligible for domestic tax wrappers such as IRAs & 401Ks?
ETFs are eligible for tax wrappers such as IRAs. Please contact your broker or 401k provider for more information on availability.

Product costs are detailed on the relevant product fact sheets and prospectus on each product page.
The ETFs management fees are 0.99% and 1.30% per annum.
The Total Expense Ratio for the ETFs is 1.15% and 1.50% per annum.
In addition, trading commissions including a bid-offer spread on exchange will generally be charged for purchases and sales of the ETPs.

IMPORTANT: Please note that management fees and expense ratios are required to be quoted on an annualized basis i.e. assuming a 365 day holding period. Short and Leveraged single-stock ETFs are not designed to be buy and hold funds and therefore the costs for shorter holding periods, including as little as one day, will be significantly lower than advertised.  

Capital is at risk, but in contrast to some other types of leveraged instrument, investors cannot lose more than their initial investment.

Possible Benefits include:

  • Ability to leverage long3 and short1 exposures on popular quoted shares
  • Listed on exchange with competitive, independent pricing
  • ETF structure
  • Transparent
  • Cost-effective
  • No margin calls4
  • Losses cannot exceed amount invested

There are a number of possible ways that an investor could use the ETFs ranging from short-term tactical applications through to strategic, longer-term implementation.


Volatility:  active traders can capture and magnify intra-day moves
Swing-trading:  typically a short-term strategy, two to five days, where investors take positions in relation to an identified technical range
Hedging:  for investors who wish to hedge risk on a stock position, which they hold directly or through a third-party fund or index-tracking ETF
Event driven:  in a takeover situation, for example, an investor may go long the company being acquired and go short the acquiror
Relative value:  situations where an investor simultaneously runs a long and short position, which could be long a stock versus another stock or an index, or vice versa
Portfolio tilts:  an investor may look to overweight or underweight individual stock exposure to take advantage of the fact that index returns can be driven by a small number of stocks
Momentum:  magnify returns when stocks are driven by momentum
Long-term trends:  take positions in stocks that are at the forefront of technological or societal change with the scope to appreciate significantly over multi-year periods

Some of the key differences are highlighted in the table below:

The funds are series of a 40-act registered entity. It is a highly regulated structure, under which the portfolio is disclosed daily on the issuer’s website. Registration statements such as the prospectus as well as the financial statements are also available on the issuer’s website.

More information can be found on graniteshares.com

 

The ETFs use derivates7 in order to obtain leverage. The derivatives used by the funds do not require upfront cash transfer to the derivatives counterparty. The potential credit result from gains that would remain unsettled while the derivatives counterparty was to go bankrupt. The fund manager aims to reduce the credit risk by limiting the overall amount of the unsettled gains.

12-Month Trailing Yield:  The distribution yield an investor would have received if they had held the fund over the last twelve months, assuming the most recent NAV.  The 12-month Trailing Yield is calculated by summing any income, capital gains and return of capital distributions over the past twelve months and dividing by the sum of the most recent NAV and any capital distributions made over the same period. 

30-Day Sec Yield:  A standard yield calculation developed by the Securities and Exchange Commission that allows for fairer comparisons among bond funds. It is based on the most recent month end. This figure reflects the interest earned during the period after deducting the Fund’s expenses for the period.

Business Development Companies ("BDCs"): A business development company is an organization that invests in small- and medium-sized companies as well as distressed companies. A BDC helps the small- and medium-sized firms grow in the initial stages of their development. With distressed businesses, the BDC helps the companies regain sound financial footing.

Closed-end Funds ("CEFs"): A closed-end fund is a portfolio of pooled assets that raises a fixed amount of capital through an initial public offering (IPO) and then lists shares for trade on a stock exchange.

Distribution Yield:  Is the annual yield an investor would receive if the most recent distribution remained the same going forward. The yield represents a single distribution from the fund and does not represent total return to the fund. The distribution yield is calculated by annualizing the most recent distribution and dividing it by the most recent NAV.

Gold Benchmark - LBMA Gold Price PM. ICE Benchmark Administration (IBA) is the administrator for the LBMA Gold Price

Market Price: The current price at which shares are bought and sold. Market returns are based upon the last trade price.

Master Limited Partnerships (“MLPs”): Master limited partnerships are a business venture that exists in the form of a publicly traded limited partnership. They combine the tax benefits of a private partnership—profits are taxed only when investors receive distributions—with the liquidity of a publicly-traded company (PTP).

NAV: The dollar value of a single share, based on the value of the underlying assets of the fund minus its liabilities, divided by the number of shares outstanding. Calculated at the end of each business day.

Real Estate Investment Trusts ("REIT’s"): A real estate investment trust is a company that owns, operates, or finances income-generating real estate. Modeled after mutual funds, REITs pool the capital of numerous investors. This makes it possible for individual investors to earn dividends from real estate investments—without having to buy, manage, or finance any properties themselves.

Definitions

  1. Short refers to a “Short Position” where investor seeks to profit from a fall in a company stock price.
  2. Leverage refers to a “Leveraged Position” where investor seeks to magnify exposure to a rise or fall in a company stock price.
  3. Long refers to a “Long Position” where the investor seeks to profit from a rise in a company stock price.
  4. Margin Call: A demand by a broker that an investor deposit further cash or securities to cover possible losses.
  5. Bid/Ask Spread: The term "bid and ask" (also known as "bid and offer") refers to a two-way price quotation that indicates the best potential price at which a security can be sold and bought at a given point in time.
  6.  Marker Maker: A dealer in securities or ETFs who undertakes to buy or sell at specified prices at all times.
  7. Derivatives: The term derivative refers to a type of financial contract whose value is dependent on an underlying asset, group of assets, or benchmark. A derivative is set between two or more parties that can trade on an exchange or over-the-counter (OTC)

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