Thanks @Tihomir
How long would you say it takes to depreciate in performance to the underlying level?
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@MaxZorin The performance of GraniteShares ETPs is linked to the performance of the underlying, i.e. single stock or basket (FAANG, GAFAM, FATANG).
If the underlying goes up it will be reflected positively in the Value per ETP and vice versa. So, it cannot be concluded when or how long it will take to go up or down. All eyes on market dynamics.
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Now I think you have misunderstood my questions. I was referring to this statement by @Marc45
Leveraged ETP are designed for short term investment.
You can keep a leveraged ETP in your portfolio over the next few years BUT you must take into account that the performance will NOT be equal to 3 times the underlying.
This is due to the fact that Leveraged ETP track the daily performance and after more than one day, there is compounding impact.
I wanted to know if held long enough, would the leverage drop below x1 the underlaying, and how long it takes to go from x3 to x1 etc?
Thanks very much.
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GraniteShares ETPs are designed to provide returns that are a multiple of the percentage change in the underlying for a particular time period, a daily basis.
This periodic resetting means that a constant leverage factor is maintained over that period.
There is no such thing of passing from x3 leverage factor to x1. Leverage factor is constant across GraniteShares product suite.
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Then now i am confused as to why it is bad to keep it long term. You seem to be contradicting each other.
BUT you must take into account that the performance will NOT be equal to 3 times the underlying.
This is due to the fact that Leveraged ETP track the daily performance and after more than one day, there is compounding impact.
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It is not bad to keep it long term, you just have to understand the compounding impact if you want to keep it lonf term.
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I think that the mentions about the leverage ETPs not being good for the long term, is that it have a compounding effect and it resets every day.
A 3x ETP won’t give 3x in long term due to the daily reset and the compounding effect (and the fees). The longest the period invested, less leveraged effect it will have.
Example:
XYZ Stock
1 day: 2%
1 month: 5%
3 months: 11%
6 months: 18%
3x XYZ ETP
1 day: 6%
1 month: 13%
3 months: 28%
6 months: 47%
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That’s correct!
Leveraged ETPs are designed to track daily performance, so over the time, the performance may be different as you illustrate it with your example.
Furthermore, from a compliance point of view we have to recommend the less risky usage of the product. Compounding impact is an additional risk.
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I found this interesting article 
Week ending 25th June, top performing #singlestockETPs
Top long: +3x #Tesla +23.7%
Top short: -3x #Nio +10.2%
Full weekly report of GraniteShares: GraniteShares Europe on LinkedIn: weekly report
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Interesting report. Well done.
It give me an idea of a financial contest or a fantasy financial league.
Maybe T212 and/or financial companies could create an initiative (with possible marketing awareness/results), with people using the T212 Practice App or a Virtual Pie, to create and manage a virtual portfolio, made of the financial instruments present in T212 (stocks, ETFs, ETPs, ITs). It could have several categories:
- Stocks
- ETFs
- ETPs
- ITs
- Mixed financial instruments
It will create more dynamism on Trading 212 and on the financial instrument issuers (mainly the ETFs, ETPs and ITs issuers). The related companies could have press marketing announcing the event and with regular (weekly?) updates (maybe a media collaboration between the related parties).
As ETPs are a relative new financial instruments, it could be a good marketing and informative initiative.
If T212 use a Virtual Pie, it could show their innovation to outside people and bring more customers.
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Are you talking about a 212 version of say these:
http://www.stockchallenge.co.uk
Its a really good idea - have a league table of pie’s. It would be good if 212 created a ‘league pie’ under the practice session, anyone that set up a pie in the league was automatically added and reported and ranked monthly/quarterly/semi/annually against others? Could even go so far to copy practice pie’s into real accounts.
To be in the monthly review, you would need to not have reset your account for a full month, similar quarterly/semi/annual reporting.
If you had poor performance, you could reset back to the starting 10k cash or whatever, and start again in the league tables?
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that’s a really good idea, I will share it with my colleagues at GraniteShares.
I think it is something that can be organized by Trading212 and sponsored by ETF/ETP issuer
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A post was merged into an existing topic: Leverage shares vs Graniteshares ETPs
Hi I have 2 questions. On nvidea what will happen to my existing position as they stock split? Also on Vodafone X3 I can’t seem to set a reasonable price limit… it says too far away from price
Hi bmbm365,
Thank you for your question and sorry for my late answer (I was in vacation).
GraniteShares did a reverse-split on the 3STS (Tesla Short 3x ETP) because the value was very low (0.00066$). We are far from this very low value with NVIDIA and Vodafone.
if a reverse-split happen, like it happen with 3STS… It will happen that if you have 1500 securities that are worth $0.00066 each, after it, you will have 1 securities worth $1 each.
In any case, you will be informed here on the forum and on GraniteShares website a few week in advance.