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Most Volatile US ETF: Leveraged MSTR Fund Reaches Top 1% of Funds, Takes in $40M in Single Trading Day
- MSTX was the first leveraged ETF offering 1.75x exposure to MicroStrategy’s stock, attracting record inflows on its launch day.
- MSTU, a 2x leveraged ETF, launched one month later and quickly gained US$72 million in assets under management (AUM) within a week.
- Both MSTX and MSTU have strong liquidity, with MSTX now in the top 8% of 2024 ETFs by AUM, reaching US$357 million.
- MSTU continues to grow rapidly, recently hitting $100 million AUM after a significant trading day, ranking in the top 1% of 2024 ETF launches.
MSTX was the first leveraged exchange-traded fund (ETF) designed to offer amplified exposure to Michael Saylor’s MicroStrategy Inc. (MSTR). It offers 1.75 times (175%) of the daily return of MicroStrategy’s stock.
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This means if MicroStrategy’s share price increases by 1% in a day, MSTX is expected to increase by 1.75%. Similarly, if the stock falls, the ETF will fall by 1.75%.
That’s a pretty wild bet, yet it was one of the most successful ETF launches in US history. Eric Balchunas, Senior ETF Analyst at Bloomberg, noted on 15 August that the fund experienced a record number of inflows on its first trading day.
MSTX saw $22m in volume today, which may be a Day One record for a leveraged ETF. What a country.
Eric Balchunas, Senior ETF Analyst at Bloomberg Leveraged Funds Move into Top Ranks of ETFs Launched in 2024
And then it got even wilder when the 2x MicroStrategy ETF MSTU launched just a month later – that fund offers twice (200%) of the daily return of MSTR’s stock. After one week of trading the fund had US$72 million (AU$104.6 million) in assets under management (AUM).
Balchunas said that impressive start puts MSTU in the top 20% of all ETFs launched in 2024 – for comparison the 1.75x leveraged MSTX is in the top 8% with US$357 million (AU$519 million) AUM. He admitted the demand for these funds had surprised him:
Both have robust liquidity too. I didn’t think there was room for both (esp so quickly), it just how much ‘need for speed’ there is out there.
Eric Balchunas, Senior ETF Analyst at Bloomberg But it gets even better, because MSTU just saw its most impressive trading day yet, with US$40 million (AU$58.2 million) in a single day, which puts it in the top 1% of funds. The fund now has more than US$100 million (AU$145.5 million) AUM.
Balchunas commented on the baffling situation and the increasing demand for leveraged products related to companies with significant Bitcoin investments:
This would make sense if there wasn’t a levered MSTR ETF on market already with ample liquidity, but there is (MSTX). It’s one of those ETF physics-defying situations, and why we will see issuers continue to push the volatility envelope.
Eric Balchunas, Senior ETF Analyst at Bloomberg Bitcoin Has Brush with US$60k Mark
Meanwhile, the digital asset behind all this, Bitcoin, has been struggling to keep up momentum. While BTC is up 122% year-on-year, it has only managed to gain 3% in the past month.
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After reaching a local top at US$66,367 (AU$96,652) on 28 September, Bitcoin has declined by almost 10%, falling as low as US$60,031 (AU$87,462) overnight and currently trades for US$60,920 (AU$88,758) at the time of writing.
Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
