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All performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than original cost. For the fund's most recent month end performance, please call 1(844) 476-8747.

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FAQs

What are short and leveraged single stock ETFs?

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.

How does the Leverage Factor work?

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:

Scenario Underlying Stock: TSLA GraniteShares 1.25x Long TSLA Daily ETF
Rising Market +1% +1.25%
Falling Market -1% -1.25%

 

Who might use short and leveraged single stock ETFs?

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.

What is the purpose of daily rebalancing?

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:

+2x Long Daily ETF Day 0 Day 1 Day 2
Daily change in underlying stock   5% -4%
NAV 2x Long Daily ETF $100.00 $110.00 $101.20
Rebalanced exposure $200.00 $220.00 $202.40
-2x Short Daily ETF Day 0 Day 1 Day 2
Daily change in underlying stock   5% -4%
NAV 2x Short Daily ETF $100.00 $90.00 $97.20
Rebalanced exposure -$200.00 -$180.00 -$194.40

 

 

 

+2x Long Daily ETF Day 0 Day 1 Day 2
Daily change in underlying stock   5% -4%
NAV 2x Long Daily ETF $100.00 $110.00 $101.20
Rebalanced exposure $200.00 $220.00 $202.40
-2x Short Daily ETF Day 0 Day 1 Day 2
Daily change in underlying stock   5% -4%
NAV 2x Short Daily ETF $100.00 $90.00 $97.20
Rebalanced exposure -$200.00 -$180.00 -$194.40

This daily rebalancing leads to compound returns.

What is the potential impact of compounding on returns for holding periods longer than one day?

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

Market Conditions Underlying Stock 2x Leverage no compounding 2x Long Daily ETF Performance Deviation
Trending Up        
Day 1 3.00% 6.00% 6%  
Day 2 3.00% 6.00% 6%  
Return over 2 days 6.09% 12.18% 12.36% 0.18%
Trending Down        
Day 1 -3.00% -6.00% -6.00%  
Day 2 -3.00% -6.00% -6.00%  
Return over 2 days -5.91% -11.82% -11.64% 0.18%

 

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

Market Conditions Underlying Stock 2x Leverage no compounding 2x Long Daily ETF Performance Deviation
Volatile Up        
Day 1 5.00% 10.00% 10%  
Day 2 -3.00% -6.00% -6%  
Return over 2 days 1.85% 3.70% 3.40% -0.30%
Volatile Down        
Day 1 -5.00% -10.00% -10.00%  
Day 2 3.00% 6.00% 6.00%  
Return over 2 days -2.15% -4.30% -4.60% -0.30%

 

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.

How can investors trade short and leveraged daily 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.

What are the costs associated with short and leveraged single-stock ETFs?

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.  

Is capital at risk and can investors lose more than their initial investment?

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

What are some of the benefits and features of these short and leveraged daily ETFs?

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
How might an investor use the ETFs?

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

How do short and leveraged daily ETFs differ from other leveraged instruments?

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

+1.5x Long Daily ETF Short and leveraged Single-stock ETFs Listed Futures/Options Structured products
Leverage Limited Range +2/-1 x Potentially more than 10x Potentially more than 10x
Multiple market makers competing on flow
Maximum bid/ask spread 5 (stock exchange monitored)
At least one market marker 6 quoting continuously
Credit risk Maximum is the collateral posted with swap provider Maximum is the margin posted with broker Fully exposed to issuer credit risk
Traded through traditional brokerage account Yes
Minimum trade size 1 share 1 contract (generally $1k+) Generally $1k+
Loses limited to initial investment
Margin calls
Who is involved in the GraniteShares Short and Leveraged single-stock ETFs

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

Function Entity
Issuer GraniteShares ETF Trust
Administrator SS&C ALPS Services
Custodian BBH

 

What is the credit risk when investing in Short and Leveraged single-stock ETFs?

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.