Due of the hype around artificial intelligence, investors have flocked to Nvidia-focused exchange-traded funds (ETFs) this year; on Wednesday, inflows into a bullish fund that tracks the chip maker’s shares reached a record high.

LSEG Lipper data shows that net daily inflows into the GraniteShares 2x Long NVDA Daily ETF reached a record of $197 million. The ETF’s managed assets increased from $213.75 million at the beginning of the year to $1.41 billion.

Leveraged exchange-traded funds (ETFs) tracking individual stocks that seek to generate returns over very short time horizons have generally been avoided by risk sensitive investors.

Since their launch in the United States in 2022, these exchange-traded funds (ETFs) have gained popularity among investors who wish to wager on the most volatile stocks based on earnings and other news. 

With a strong prediction and a revived enthusiasm for AI, Nvidia, which holds roughly 80% of the market for high-end AI chips, has seen an almost 82% increase since the beginning of the year.

Utilising a single stock ETFs use financial derivatives and debt as leverage to attempt to multiply the returns of an underlying stock for a single day, usually by two or three times.

According to Todd Rosenbluth, chief ETF strategist at VettaFi, “Nvidia has been the hottest stock in 2024 and many investors are eager to seek out higher returns in exchange for added risk.”

“We expect to see continued demand for single stock leveraged ETFs as a new wave of must-own companies emerge.”

A record was set in February for net monthly inflows into leveraged exchange-traded funds (ETFs) that follow Nvidia, including the GraniteShares 2x Long NVDA ETF, the Direxion Daily NVDA Bull 1.5X Shares ETF, and the T-Rex 2X Long Nvidia Daily Target ETF.

In the first six days of the month, the GraniteShares ETF has already surpassed its net monthly flow record.

The three ETFs associated with Nvidia have seen asset jumps of five to eleven times since the beginning of 2024. Their values have increased by 143% to 218% so far this year, outpacing those of other ETFs.

(Adapted from ThePrint.in)