The Zhitong Finance App learned that in the speculative field of ETF investment, a new face has taken a dominant position.

Thanks to the continued boom in artificial intelligence, Nvidia (NVDA.US) now dominates ETFs tracking a company, accounting for more than half of all assets in so-called single-stock ETFs, totaling more than $6 billion. Meanwhile, according to J.P. Morgan Chase and Bloomberg Intelligence, funds centered around Tesla (TSLA.US) account for only one-fifth of all assets in the industry, down from two-thirds last year.

Despite the rebound in the electric car maker's stock price, its position in the minds of short-term traders has declined. Today, they are increasingly attracted to trading the wealth provided by the world's leading chip design company through such leveraged ETFs.

Overall, ETFs focused on Nvidia have received $4.4 billion in capital inflows so far this year, which is roughly six times that of the full year of 2023, according to Bloomberg Intelligence. Meanwhile, this year's inflows only track Tesla's capital of slightly more than $1 billion, compared to $2.8 billion last year.

The J.P. Morgan Chase research team, which includes Bram Kaplan, wrote in a recent report: “Given investors' focus on the subject of artificial intelligence and the strong performance of the stock, funds that track Nvidia have become more popular.”

According to information, a single-stock ETF was launched two years ago to provide rich or reverse returns to its target companies. Currently, there are about 60 such funds listed in the US, with total assets of approximately $13 billion. In addition to Tesla and Nvidia, some fund tracking includes companies such as Apple (AAPL.US), Amazon (AMZN.US), and Microsoft (MSFT.US).

When regulators allowed such funds to launch in 2022, they said it posed a “special risk” because of concerns about how retail traders might use them. In fact, Bloomberg Intelligence data shows that they have become so popular that an issuer even wants to launch a 2x MicroStrategy (MSTR.US) ETF, which, if launched, will become the most volatile fund listed in the US.

Amrita Nandakumar, president of Vident Asset Management, said: “As an industry, we should continue to worry that retail investors still don't fully understand the design use of single-stock ETFs, that is, for intraday trading rather than as part of a long-term investment strategy.”

Last year, funds linked to Tesla held most of the single-stock ETF assets, which also accounted for a large portion of the daily trading volume in this category. Its famous volatility is likely to attract many traders — after a 65% drop the previous year, this type of fund rose 102% in 2023.

But this year it's all about Nvidia and the artificial intelligence craze it sparked and continues to drive. The GraniteShares 2x Long NVDA Daily ETF (NVDL.US) is a single stock ETF focused on Nvidia. The fund provides investors with a daily return of twice the underlying stock, and this year's performance was outstanding. The fund has risen 400% so far this year, and its assets have grown from around $0.21 billion at the beginning of the year to nearly $5 billion. Today, it remains at the top of the list of ETFs with the highest daily trading volume.

Will Rind, founder and CEO of GraniteShares, recently said: “If you love Nvidia, you'll love Nvidia twice as much. You have to go where your passion is. Market hot spots are all dominated by Nvidia, which is why I think Nvidia is the most important stock in the world right now. So needless to say, we're building an ecosystem around Nvidia.”