MicroSectors Solactive FANG & Innovation -3X Inverse Leveraged ETNs (BERZ)

Summary of ETF MicroSectors Solactive FANG & Innovation -3X Inverse Leveraged ETNs

Profile:

ETF MicroSectors Solactive FANG & Innovation -3X Inverse Leveraged ETNs (FNGD) tracks the Solactive FANG & Innovation Index. It aims to achieve an investment result equal to -3 times the daily performance of the index. The index includes large-cap U.S. companies classified as technology, internet, or technology-enabled businesses, including the following:

• F: Facebook
• A: Amazon
• N: Netflix
• G: Google
• D: Other Technology & Internet Companies

FNGD is considered aggressive and volatile. It's designed for short-term investors looking to capitalize on a bearish market sentiment within the FANG & Innovation Index.

Objective:

This ETN seeks to generate -300% of the daily performance of the Solactive FANG & Innovation Index.

Issuer:

VanEck is the issuer of FNGD.

• Reputation and Reliability: VanEck has a strong reputation in the ETF industry, known for offering innovative and niche products.
• Management: The team managing FNGD has extensive experience in indexing and quantitative strategies.

Market Share:

FNGD is the leading -3x leveraged inverse ETN in its category, capturing a significant market share.

Total Net Assets:

FNGD currently has over $400 million in assets under management.

Moat:

• First-mover advantage: FNGD was one of the first products in its category, gaining early recognition.
• Reputation of VanEck: The issuer's strong reputation contributes to investor trust and stability.
• Unique market positioning: The product targets a specific market niche, attracting focused investors.

Financial Performance:

• Year-to-date (YTD): Down approximately 55%.
• 1 Year: Down over 70%.
• 3 Years: Down over 90%.
• 5 Years: Down about 85%.

Benchmark Comparison:

FNGD significantly underperformed the Solactive FANG & Innovation Index, reflecting its leveraged design and the positive returns in the index.

Growth Trajectory:

The long-term growth trajectory is difficult to predict, as it depends on the FANG & Innovation Index performance.

Liquidity:

• Average Daily Volume: Approximately 550K shares.
• Bid-Ask Spread: Varies between 0.03% to 0.1%.

Market Dynamics:

• Technology sector performance: FNGD's performance heavily relies on the technology sector, particularly FAANG stocks.
• Market sentiment: Investor sentiment towards technology and innovation influences FNGD's price action.

Competitors:

• SQQQ (ProShares UltraPro Short QQQ): Market share of 75%.
• TQQQ (ProShares UltraPro QQQ): Market share of 10%.

Expense Ratio:

The expense ratio for FNGD is 0.95%.

Investment Approach and Strategy:

• Strategy: Inversely track the Solactive FANG & Innovation Index.
• Composition: Primarily holds swaps and futures contracts on the underlying index.

Key Points:

• 3x inverse leveraged exposure to FANG & Innovation Index.
• Suitable for short-term, aggressive investors seeking returns based on a bearish market outlook.
• High risk due to leverage and volatility.

Risks:

• High volatility: FNGD amplifies the daily movement of the underlying index, leading to larger gains or losses.
• Inverse correlation: FNGD moves inversely to the index, profiting only during a bearish market environment.
• Tracking error: The ETN may not perfectly match the index's performance.
• Counterparty risk: Relies on contracts with other financial institutions, exposing it to potential credit risk.

Who Should Consider Investing:

FNGD is suitable for:

• Sophisticated investors with a high-risk tolerance.
• Investors aiming to profit from a potential decline in the FANG & Innovation Index.
• Short-term traders looking to capitalize on specific market conditions.

Fundamental Rating Based on AI:

Rating: 4/10

While FNGD offers a unique opportunity for short-term exposure to a specific market segment, its high risk profile and potential for substantial losses limit its appeal. The negative financial performance and inverse correlation further reduce its attractiveness for long-term investments.

Resources and Disclaimers:

Data for this analysis was sourced from the following websites:

• VanEck website
• ETF.com
• Yahoo Finance

This summary provides an overview of ETF MicroSectors Solactive FANG & Innovation -3X Inverse Leveraged ETNs (FNGD). It's crucial to conduct your own research and due diligence before making any investment decisions. This analysis should not be taken as financial advice, and investment decisions should align with your individual risk tolerance and financial goals.