NVIDIA ETF Fails to Deliver on 2x Promise

NVIDIA's (NVDA) GraniteShares 2x Long NVDA Daily ETF (NVDL) has failed to deliver on its promise of doubling the returns of the underlying stock. Over the past year, NVIDIA shares returned a whopping 22.21%, but NVDL only managed 17.21%. This means that investors who paid for two-times leverage received less than one.

The fund's design involves daily resets, which is meant to provide 2x exposure. However, this daily reset mechanism actually leads to volatility decay, where the fund underperforms in choppy or drawdown-heavy markets. In such situations, funds like NVDL tend to lag behind.

In contrast, owning NVIDIA shares directly costs zero fees and avoids daily-reset decay. Over the past five years, NVIDIA's return has been a staggering 978.94%, which no leveraged ETF can replicate. For those who specifically want 2x daily exposure, there is an alternative in Direxion Daily NVDA Bull 2X Shares (NVDU), but it carries the same structural decay.