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Leveraged single-stock ETF growth appears to be cooling in the US
Morningstar data shows the average leveraged ETF shrank from $272.2 million in assets at end-2024 to $63.3 million currently, while leveraged products made up as much as half of new ETF launches in June.
Demand for high-risk leveraged and inverse single-stock exchange-traded funds in the US may be losing momentum after a rapid expansion in new products, according to Yahoo Finance, as investors have sought funds that magnify daily moves in some of the market’s most volatile stocks.
The surge in speculative offerings has been significant, with leveraged products accounting for as much as half of all new ETF launches in June alone. Analysts cited by the outlet also warn that the market may be nearing saturation as competition increases and assets concentrate among a smaller number of funds.
Morningstar analyst Daniel Sotiroff said the market for these products is saturated, noting that a few top issuers capture most of the money while a longer tail of smaller offerings struggles to attract assets. The article also points to a common viability benchmark of roughly $50 million to $100 million in assets within a fund’s first one or two years, a threshold that can make operating costs harder to cover for products below it.
The outlet adds that some leveraged single-stock products have reached substantial scale, including GraniteShares 2x Long NVDA Daily ETF, which has accumulated around $3.9 billion in assets. However, Morningstar Direct data cited by Yahoo Finance shows the average leveraged ETF has fallen from $272.2 million at end-2024 to $63.3 million now, and that half of the funds in the category hold less than $7 million.
Yahoo Finance reports that leveraged ETFs are designed to deliver a multiple of an underlying stock’s return over a single trading session, meaning their performance and risk profiles differ sharply from conventional long-term ETFs. Amrita Nandakumar, president of ETF launch specialist Vident, said the market is approaching the end of a second major expansion phase, with issuers increasingly focusing on smaller offerings as earlier demand peaks.