A new launch from US ETF provider GraniteShares enjoys market timing in all its forms. GraniteShares has come to the London Stock Exchange, just as the country reels from more Brexit news and faces a General Election, with short and leveraged single stock daily ETPs based on the LSE’s best blue-chip stocks.
A new launch from US ETF provider GraniteShares enjoys market timing in all its forms. GraniteShares has come to the London Stock Exchange, just as the country reels from more Brexit news and faces a General Election, with short and leveraged single stock daily ETPs based on the LSE’s best blue-chip stocks.
GraniteShares was founded in 2016 by ETF serial entrepreneur William Rhind with the intention of being a disruptor in the ETF industry. The single stock daily ETP structure cannot be used in the US, so the UK has been the focus of this launch.
Rhind says: “We couldn’t have timed it better in the UK where there is potential for market turmoil coming into a General Election and no asset management firm is giving investors the tools to hedge in this current market.
“Whatever the outcome of the General Election, there has never been a more important time for investors to think about seeing this turmoil as an opportunity rather than a threat.”
The short and leverage ETP market has seen investor inflows grow from USD2.4 billion to USD75 billion between 2006 and 2019.
The GraniteShares daily ETPs are providing long and short exposure to a selection of companies listed on the London Stock Exchange, including AstraZeneca, BAE Systems, Glencore and Rolls Royce. Historically, access to leverage on single companies has been the domain of specialists such as hedge funds.
“I have been involved in the ETF industry for 20 years,” Rhind says. “Over that time, I have seen the evolution of the product set in all the permutations you can think of but when it comes to providing tools for active investors, short and leveraged exposures have been provided on broad equity indices but not on individual stocks. This product makes leveraged investing in stocks something that is just as easy as buying and selling ETFs.”
Rhind says it has never been done before. “What is so fascinating is that we are in the heart of the FinTech scene in New York, funded by one of the most famous FinTech investors (Bain Capital Ventures) and most of the well-known innovations in the FinTech space have been consumer front end businesses, giving consumers access to a platform. What we are trying to do is provide the back-end experience, democratising access to margin for investors who invest or trade in stocks.”
Rhind sees a huge trend in DIY investing. “But DIY investing is not about a specific type of investor, it’s about empowerment in the age of the internet; where people are more informed and sophisticated, and, with products like these ETPs, have access to the same tools as hedge fund managers.”
The way the ETPs work is to track a single stock, taking into account underlying price data and taking into account corporate actions, and through investment bank swap contracts offer 3x short or leveraged exposure. The ETPs, with fees of 0.99 per cent, are available 3x time long or 3x short on AstraZeneca; BAE Systems; Barclays; BP; Diageo; Glencore; Lloyds Banking Group; Rio Tinto; Royal Dutch Shell; Rolls Royce and Vodafone.
“These products are liquid, transparent and listed on an exchange. You don’t have to open a margin account, it’s as easy as buying any other ETF and allows you the potential to amplify your investment returns,” Rhind says, just noting one degree of caution that using leverage brings a higher degree of risk into a portfolio. “Any investment can make money or lose money so people should read the prospectus carefully – it is for sophisticated investors who understand stocks and using leverage.”
