Single-Stock ETFs Dominate the Best Week's Rally of 2024

Donald Trump’s win and the Fed’s latest rate cut fueled the best week of 2024 for the U.S. stock market. The S&P 500 and the Dow Jones capped their biggest weekly gain since early November 2023, up 4.7% each. The broad market index topped the 6,000 level for the first time, while the blue-chip index crossed the 44,000 level. The tech-heavy Nasdaq Composite Index touched 19,000 post-election for the first time and climbed more than 5% last week. Meanwhile, the small cap-focused Russell 2000 Index rose more than 8%.

The market is betting that the second Trump administration will provide a boost to stocks, given his more market-friendly policies. During his campaign, Trump proposed corporate tax rate cuts, deregulation and other policies that favor domestic growth, which would provide more stimulus to the U.S. economy. The anticipation of greater tariff barriers and a step to move manufacturing back home will drive stocks higher (read: ETFs Set to Soar on Trump's Presidential Victory).

While the rally was broad-based, a few stocks soared in anticipation of the so-called Trump trade. In particular, Tesla (TSLA) reclaimed $1 trillion in market capitalization for the first time since 2022 as investors bet that Tesla and CEO Elon Musk will benefit from a potential Trump administration. Shares of the electric carmaker soared 29% last week, marking the best weekly performance since the week ended Jan. 27, 2023.

AI darling NVIDIA (NVDA) became the first company to exceed $3.6 trillion in market capitalization and joined the Dow Jones Industrial Average last Friday, replacing chipmaker Intel (INTC). The reshuffle reflects a notable milestone, suggesting continued growth for the chipmaker. Most analysts believe NVIDIA will become far more valuable in the future due to its dominance in the billion-dollar AI chip market (read: ETFs to Buy on NVIDIA's Historic Journey to $3.6 Trillion). 

The world’s largest cryptocurrency also soared, topping $80,000 for the first time. Trump embraced digital assets during his campaign and vowed to make the United States “the crypto capital of the planet.” The value of Bitcoin has now risen by more than 80% this year. 

Given the huge rally in a few individual stocks, single-stock ETFs also surged. 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 $3.5 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 last week. The solid trend is likely to continue given the same trends prevail. 

GraniteShares 2X Long COIN Daily ETF (CONL) – Up 104.5%

GraniteShares 2x Long COIN Daily ETF seeks two times (200%) the daily percentage change of the common stock of Coinbase Global (COIN). It has amassed $517.5 million in its asset base while charging 1.15% in annual fees.

GraniteShares 2x Long PLTR Daily ETF (PTIR) – Up 85.3%

GraniteShares 2x Long PLTR Daily ETF seeks two times the daily percentage change of the common stock of Palantir Technologies (PLTR). It has accumulated $27.3 million in its asset base since its inception in September and charges 1.15% in annual fees.

T-REX 2X Long Tesla Daily Target ETF (TSLT) – Up 62%

T-REX 2X Long Tesla Daily Target ETF seeks daily leveraged investment results to magnify (200%) the daily performance of Tesla. It has AUM of $391.9 million and charges 1.05% in annual fees (read: Tesla ETFs Soar on Trump Win: Should You Buy, Hold or Sell?).

Defiance Daily Target 2x Long MSTR ETF (MSTX) – Up 35%

Defiance Daily Target 2x Long MSTR ETF seeks daily leveraged investment results of two times the daily percentage change in the share price of MicroStrategy (MSTR). It charges 1.29% in annual fees and has AUM of $593.1 million.

Direxion Daily NVDA Bull 2X Shares (NVDU) – Up 18.4%

Direxion Daily NVDA Bull 2X Shares seeks to magnify (200%) the daily performance of NVIDIA. It has amassed $640.6 million in its asset base and charges 95 bps in annual fees.

Downside Risk to Single-Stock Investing

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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