ETFs
Appetite for NVDA and leveraged ETFs high as retail investors focus on mega-caps: Vanda
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Individual investors have shifted more capital into chip stocks, particularly Nvidia (NASDAQ:NVDA) and leveraged technology exchange-traded funds, but an overall lull in stock and ETF purchases by this cohort continued into the second quarter, according to Vanda Research.
Vanda, in a midweek note, said he sees retail traders pouring more capital into semiconductor stocks, primarily AI chip giant Nvidia (NVDA) and the Direxion Daily Semiconductor Bull 3X Shares ETF (SOXL). “With respect to leverage, retail data suggests that the appetite for leveraged ETF products remains high,” with purchases of long leveraged ETFs “unabated,” said Marco Iachini, senior vice president of research at Vanda.
Retail net purchases of leveraged single-stock ETFs reached +$579 million in early June, according to its data. Many market professionals view leveraged products as riskier than others. Individual investors are also looking for leveraged long bets on Nvidia (NVDA) via GraniteShares 2x Long NVDA Daily ETF (NVDL).
“This ETF has now grown to a market cap of over $4 billion, about a third the size of SOXL, in just over six months,” Iachini said. “It also appears that the crowds in this space have attracted the attention of short sellers,” he said.
Exposure to the retail investor market has been reduced around large-cap technology stocks (QQQ)(XLK). But this concentration seems to be paying off since these investors are beating the S&P 500 (SP500) (TO SPY) so far this year, Vanda said. Beat the Invesco QQQ Trust ETF (QQQ) was more difficult. Here is a graph:
“[Unless] Other quintessential retail favorite niches – whether small-cap stocks, crypto, or memes – are starting to outperform more sustainably, we wouldn’t be surprised to see retail continue to pile into this group of large-cap technology stocks,” Iachini said. . NVIDIA (NVDA) has gained about 156% this year, GraniteShares 2x Long NVDA Daily ETF (NVDL) soared by +398%, and (SOXL) increased by +85%.
Overall, overall net purchases of stocks and ETFs are atypically low for this time of year, and “moderate” purchasing activity by retail investors has become confusing lately, Vanda said . Daily net purchases of U.S.-listed securities recently failed to exceed the $1 billion threshold for 45 consecutive trading days, the longest streak in the post-pandemic era, Vanda said. Its VandaTrack tool monitors the retail flows of +9,000 titles in the United States