With USD10 billion under management and a range of funds totalling close to 150, GraniteShares has recently moved away from its core activities in short and leveraged ETPs to launch high yield income producing ETFs.
GraniteShares’ CEO, Will Rhind, explains that the firm first started with the idea of the leveraged single stock ETP in Europe back in 2017, when such products were not allowed in the US. The outcome is that the bulk of what the company does in Europe is short and leveraged while in the US, the firm does have more what he calls ‘traditional ETFs’.
Nowadays short and leveraged is growing fast in the US and GraniteShares is seeing increasing business in Asia which has ‘fantastic market dynamics’ Rhind says.
“It correlates ultimately to growth whereby economies are growing and the demographics are in favour of a younger population generating wealth,” he says. “The biggest differentiator is that there is an appetite for investing and taking risk which we don’t see in Europe in the same way.”
Investor data within the US reveals that the firm has a mix of what it calls DIY investors, whether retail or professionals who work for existing firms and are investing PA, or retired people who are active traders and managing more of their own money and then institutions and hedge funds.
“The leveraged single stock business is more now very much accepted by the market and now it’s just a question of launching products people want, so the stocks they want, and keeping an eye out on trends that might be relevant.”
GraniteShares has most recently launched the GraniteShares YieldBOOST COIN ETF (Ticker: COYY), which aims to generate income from options strategies linked to the 2x Long COIN Daily ETF (Ticker: CONL). To generate income, COYY sells put options on leveraged ETFs connected to the 2x Long COIN Daily ETF.
“This is our version of ultra-high yields,” Rhind says, explaining that it is a put spread strategy selling a put option and simultaneously buying a put option, using options on underlying leveraged ETFs.
“You get two or three times the income of a non-leveraged equivalent exposure however YieldBOOST ETFs are not leveraged themselves. These are buy and hold products not trading products but some of the highest yielding ETFs in the market. In the YieldBOOST family, ETFs can generate yields of around 50 per cent of broad basket underlyings to 100 per cent plus for single asset underlyings with COYY at 180 per cent per annum.
“It’s a question for the investor – where do you want to add a high level of income into your portfolio? Where does it make sense and the trend we are seeing is that the days of buying a lacklustre mutual fund that claimed to give you growth and income are over.”
The range was launched late last December and has some USD200 million under management.
GraniteShares is exposed to tech stock market volatility and had a tricky time of it earlier this year. “The tech stock market volatility affected us badly when the market went down but we still outperformed on a relative basis as people bought the dips so the inflows offset some of the falls. Our assets went no lower than USD6.5 billion in April and now they are over USD10 billion,” Rhind says.
“It’s not up to us to decide what stocks people should or shouldn’t be buying,” he says. “We are a manufacturer, so we aim to give people what they want, trying to keep up with the trends that are out there within reason.”
The big focus for the firm is the YieldBOOST offering: “It’s really exciting and there are lots of fun things going on in the options income space.”
Launching new products is a constant push for the firm with a raft of products filed and waiting to launch.
The firm just launched three new leveraged single-stock ETFs, offering 2x daily long exposure to PDD Holdings (PDDL), ServiceNow (NOWL), and Broadcom (AVGU).
The timing speaks to something broader, the firm says, which is that there is investor appetite for tools that target individual tech names riding strong tailwinds. PDD’s e-commerce reach via Temu and Pinduoduo, ServiceNow’s push into AI-powered workflows, and Broadcom’s recent momentum in semis and infrastructure software are all drawing heavy trader attention, the firm says.
These products have a strong focus on the Asian investors. Rhind says: “The difference between Asia and Europe is that there is more of an interest in investing and wanting to take risk and build wealth and being highly engaged in stocks – that zeitgeist is present in the way it is not present in Europe where a nanny state mentality around retail investors makes investing almost a dirty word in certain countries. That attitude curtails education at exactly the time people need it most. Retail investors should have the opportunity to be as educated as possible as opposed to the walls coming up and market participants being disincentivised to engage with the channel.”
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