Understanding the GraniteShares 1X Short TSLA Daily ETF (TSLI)

What this ETF is trying to do

The GraniteShares 1X Short TSLA Daily ETF (TSLI) is an inverse, single-stock ETF. This means it is designed to move in the opposite direction of Tesla (TSLA) stock on a daily basis. Because it is an "inverse" fund, if the price of Tesla goes down, this ETF is generally designed to go up.

What the numbers show

The data shows a significant decline in the share price over the last year.

• Price Return: The one-year price return was approximately -49.38%. This number only tracks the change in the share price itself. The year-to-date (YTD) price return was approximately -47.86%.

• Total Return: The one-year total return was approximately -45.79%. Total return is a different measurement because it includes the impact of distributions (cash payments) along with the price change.

To put this in perspective, the current price is $18.51. The estimated price from roughly one year ago was approximately $36.57.

Income and distribution explanation

TSLI has a high distribution yield of approximately 13.89%. This represents the cash distributions paid out relative to the current ETF price. Over the last 12 months, there were 4 distributions, and they usually occur on a quarterly basis.

It is important to remember that a high distribution yield does not mean an investor earned that percentage as a total return. While the fund provides cash payments, the share price has declined significantly during this period.

NAV erosion explanation

This ETF has a severe erosion-risk flag. The data shows an erosion score of 10, which is labeled as "Severe price erosion." This indicates that the share price has experienced a major decline.

The supplied data is sufficient to evaluate price erosion, but it does not include enough historical NAV-per-share data to confirm or rule out NAV erosion. While we can see the market price has dropped significantly, we cannot use this price data alone to prove whether the Net Asset Value (NAV) itself has eroded.

Pros

• High Distribution Yield: The fund offers a high distribution yield of approximately 13.89%.

• Inverse Strategy: It provides a way to track the opposite movement of Tesla stock.

Cons

• Severe Price Decline: The fund has experienced a significant share-price decline, with a one-year price return of approximately -49.38%.

• High Erosion Risk: The fund has triggered a severe erosion-risk flag due to its price trend and erosion score.

• Low Income Rating: The fund has an income rating grade of "F."

Beginner takeaway

TSLI is a specialized tool designed to profit from Tesla's price falling. However, the recent data shows that the share price has dropped by nearly half over the last year. While the fund pays out a high distribution yield, the significant decline in share price means that the total return is still negative. Investors should be aware that high yields can exist even when the value of the investment is decreasing.