(Bloomberg) -- As levered-up US investors sustained eye-popping losses in tech stocks and related ETFs on Monday, they could take some comfort from the fact that another batch of speculative traders across the Atlantic had it even worse.
Amid a bruising global rout sparked by anxiety over the rise of China’s DeepSeek AI model, the London-listed Leverage Shares 3x NVIDIA ETP slumped 52%, wiping out more than half of its $172 million in assets before trading was halted on Monday. That eclipsed even twice-levered US single-stock funds like GraniteShares 2x Long NVDA Daily ETF (ticker NVDL), which was on course to drop a record 36% as of Monday afternoon.
All types of leveraged products were caught in the global market rout caused by DeepSeek, which over the weekend rose to the top of Apple’s app store charts. Analysts said the model represents a serious competitor to products from American firms like OpenAI that are costlier to run.
In Europe, investors have access to more highly-levered products, including some that offer five times the daily return of their underlying holdings. American traders, meanwhile, are limited to double-levered ETFs on single companies, though some triple-levered products exist.
The drop in the Leverage Shares 3x product underscores how “concentration can cut both ways,” said Athanasios Psarofagis at Bloomberg Intelligence. “It’s been a good run, but sometimes you’ll be subject to these idiosyncratic days.”
Exchange-traded products such as the ones tied to Nvidia use derivatives to amplify returns or provide inverse performance and have notoriously been caught up in previous market meltdowns. Still, retail investors have flocked to them, drawn in by the desire to chase big returns. Monday’s wipe-out might not dissuade such investors from trading them, Psarofagis added. “Investors are well aware of the risks.”
And for investors who get the direction right, they can pay off. The Nvidia fund’s bearish equivalent, which delivers three-times the inverse of the stock’s performance, was up 58%. That product, though, is much smaller, having started the day with less than $6 million in assets.
--With assistance from Denitsa Tsekova, Bailey Lipschultz and Sam Potter.
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