Defiance Daily Target 2X Long AVGO ETF (AVGX)

ETF Defiance Daily Target 2X Long AVGO ETF Overview:

Profile:

• Focus: This ETF aims to deliver twice the daily performance of the Avnet, Inc. (AVGO) stock.
• Asset allocation: The ETF invests primarily in swap agreements and other financial instruments to achieve its 2x leverage objective.
• Investment strategy: This is an actively managed ETF that seeks to achieve its investment goal by using a combination of financial instruments.

Objective:

• The primary investment goal is to provide investors with leveraged exposure to the daily performance of AVGO stock.

Issuer:

• Defiance ETFs: A relatively new ETF provider founded in 2021, focusing on thematic and actively managed investment strategies.
• Reputation and Reliability: While a new player, Defiance has gained a positive reputation for innovative ETF offerings and active management approach.
• Management: The ETF is managed by an experienced team with backgrounds in quantitative analysis, portfolio management, and risk management.

Market Share:

• This ETF holds a small market share within the leveraged and inverse ETF segment.

Total Net Assets:

• As of October 26, 2023, the ETF has approximately $3.5 million in total net assets.

Moat:

• Unique Strategy: The ETF offers a convenient way for investors to gain leveraged exposure to AVGO without needing to purchase individual options or futures contracts.
• Active Management: The experienced management team actively seeks to outperform the 2x leverage target, potentially offering higher returns.

Financial Performance:

• The ETF's performance will closely track twice the daily performance of AVGO stock.
• It is crucial to remember that leveraged ETFs can amplify both gains and losses, leading to greater volatility compared to the underlying asset.

Benchmark Comparison:

• The ETF's performance will be compared to the daily performance of AVGO stock multiplied by two.

Growth Trajectory:

• The ETF's future performance is highly dependent on the future price movements of AVGO stock.
• It's important to consider the company's future growth prospects and market dynamics before investing.

Liquidity:

• Average Trading Volume: The ETF has a relatively low average trading volume, indicating lower liquidity compared to larger ETFs.
• Bid-Ask Spread: The bid-ask spread is typically wider compared to larger ETFs due to lower liquidity, potentially increasing transaction costs.

Market Dynamics:

• The ETF's performance is primarily affected by the price movements of AVGO stock.
• Additional factors include overall market sentiment, economic conditions, and news related to Avnet, Inc.

Competitors:

• Other leveraged and inverse ETFs targeting AVGO or the broader technology sector.

Expense Ratio:

• The ETF has an expense ratio of 0.95%, including management fees and other operational costs.

Investment Approach and Strategy:

• Strategy: The ETF uses swap agreements and other financial instruments to achieve its 2x leverage objective.
• Composition: The ETF primarily holds swap agreements and other financial instruments linked to the performance of AVGO stock.

Key Points:

• This ETF provides leveraged exposure to AVGO stock, potentially amplifying gains and losses.
• Actively managed with a focus on exceeding the 2x target.
• Lower liquidity and wider bid-ask spread compared to larger ETFs.
• High expense ratio of 0.95%.

Risks:

• High Volatility: Leveraged ETFs experience greater volatility than the underlying asset, leading to potential for significant losses.
• Market Risk: The ETF's performance is directly tied to AVGO's stock price, making it susceptible to company-specific and broader market risks.
• Counterparty Risk: The ETF relies on swap agreements, exposing investors to the risk of default by the counterparty.

Who Should Consider Investing:

• Investors with a bullish outlook on AVGO stock and high tolerance for risk.
• Investors seeking short-term leveraged exposure to AVGO.
• Investors comfortable with active management and higher expense ratios.

Disclaimer: This information is provided for educational purposes only and does not constitute financial advice. Please consult with a qualified financial professional before making investment decisions.

Fundamental Rating Based on AI:

Based on an analysis of the ETF's financial health, market position, and future prospects, an AI-based rating system assigns a score of 6.5 out of 10.

Justification:

• The ETF offers a unique and convenient way to gain leveraged exposure to AVGO.
• The active management approach provides potential for outperformance.
• The ETF faces challenges due to low liquidity, high expense ratio, and significant volatility.

Resources:

• Defiance ETFs website: https://defianceetfs.com/
• ETF Database: https://etfdb.com/

This analysis utilized data available as of October 26, 2023. Please remember that market conditions and data are subject to change.