New Leveraged ETFs to Target AI, Semiconductor Manufacturing
Two prominent providers are bringing 2x strategies to the world of software investing.
Sign up for exclusive news and analysis of the rapidly evolving ETF landscape.
AI investing is booming. Why not double it?
Defiance and GraniteShares, two prominent fund managers in the US, filed last week for a slew of new leveraged exchange-traded funds designed to return twice the performance of their holdings, which mainly focus on the software industry and semiconductor manufacturing. The filings reflect the surging popularity of products tracking AI infrastructure and data center construction. One of the most successful fund launches in recent memory, DRAM, focuses specifically on computer memory. But there aren’t as many products combining the AI boom with the rise in leveraged products, which could see increased interest as the buildout accelerates.
Memory, Leveraged
The Defiance filings will double returns based on the performance of companies like quantum computing company Horizon Quantum, circuit board manufacturer Jabil and semiconductor makers MaxLinear and STMicroelectronics. Some of the other Defiance filings include:
- A 2x leveraged fund that invests in Symbotic, a robotics company.
- Another 2x fund that tracks Everpure, a California-based data storage business.
- A computing-focused ETF, which will invest in AI infrastructure and processing technologies.
Still, there is some precedent for fund launches that are designed to leverage AI. The Leverage Shares 3x Long Artificial Intelligence (AI) ETP, an Irish fund, launched in 2024 with only $9 million in AUM but a YTD return of 95%. There are also leveraged US funds that target AI exposure, like the GraniteShares 2x Long NVDA Daily ETF (NVDL), which holds Nvidia’s stock.
Double Vision. GraniteShares also filed for its own 2x leveraged products across an array of other industries, including indoor air quality tech, oncology and nuclear energy. The wide variety points to the growing popularity of leveraged products, although experts have warned that they’re not for everyone, and shouldn’t be held too long. The UK’s Financial Conduct Authority even put out a statement earlier this year calling on firms to review their leveraged funds. “Regularly review the value your products provide,” the FCA stated. “Where you identify issues or poor outcomes, we expect firms to take appropriate action, such as adjusting pricing or restricting access where necessary.”
