MicroSectors™ Gold -3X Inverse Leveraged ETN (DULL)

Overview

The MicroSectorsu2122 Gold -3X Inverse Leveraged ETN (GLD3) is designed to provide investors with a leveraged inverse exposure to the daily performance of gold. It aims to deliver three times the inverse (opposite) of the daily percentage change in the price of gold, offering a way to profit from short-term declines in gold prices. This ETN does not invest directly in gold but utilizes financial instruments to achieve its leveraged inverse objective. The target sector is commodities, specifically gold.

Reputation and Reliability

REX Shares is the issuer. REX Shares is known for its niche and leveraged ETPs. Their reputation is built on providing targeted exposure but they are less established than larger ETF providers.

Management Expertise

REX Shares specializes in creating and managing leveraged and inverse products, demonstrating expertise in this specific area.

Goal

The investment goal of GLD3 is to seek daily investment results, before fees and expenses, that correspond to three times the inverse (-3x) of the daily performance of the Solactive Gold Front Month Rolling Futures Index.

Investment Approach and Strategy

Strategy: GLD3 aims to track a multiple (3x) inverse of a gold futures index. It uses derivatives to achieve this leveraged inverse exposure.

Composition The ETN's value is derived from financial instruments linked to gold futures contracts, not direct holdings of physical gold.

Market Share: GLD3 holds a relatively small market share within the leveraged commodity ETF space.

Total Net Assets (AUM): 23320000

Key Competitors

• ProShares UltraShort Gold (GLL)
• DB Gold Double Short ETN (DZZ)

Competitive Landscape

The leveraged gold ETF space is relatively concentrated. GLD3 provides a -3x leveraged inverse exposure, similar to GLL (ProShares UltraShort Gold) which is a -2x inverse, but differs in leverage and specific index tracked. DZZ provides -2x exposure as well. GLD3's advantage lies in offering a higher degree of leverage, attracting traders seeking more aggressive short-term bets. The disadvantage is potentially higher volatility and faster erosion of value if gold prices rise. The competitors are the other inverse and leveraged gold ETFs.

Historical Performance: Historical performance is highly dependent on the price movement of gold. As a leveraged inverse product, GLD3's performance can be very volatile, with significant gains possible during periods of gold price decline, but also substantial losses if gold prices rise.

Benchmark Comparison: The benchmark is the Solactive Gold Front Month Rolling Futures Index. The ETN aims to provide -3x the *daily* performance of this index, so comparisons over longer periods are less meaningful due to compounding effects.

Expense Ratio: 0.95

Average Trading Volume

The average daily trading volume of GLD3 is moderate, indicating sufficient liquidity for most retail investors.

Bid-Ask Spread

The bid-ask spread can vary depending on market conditions and trading volume, representing a cost to trading the ETN.

Market Environment Factors

GLD3 is affected by factors influencing gold prices, including interest rates, inflation expectations, geopolitical events, and currency fluctuations. Investor sentiment towards risk also plays a significant role.

Growth Trajectory

The growth trajectory of GLD3 depends on investor demand for leveraged inverse gold exposure. Changes to strategy or holdings are not expected, as the ETN is designed to provide a specific daily leveraged inverse return.

Competitive Edge

GLD3's competitive advantage lies in its high leverage (-3x) and its focus on providing inverse exposure to gold. This appeals to sophisticated investors and active traders who believe gold prices will decline in the short term. It is a niche product, providing a level of inverse leverage not offered by many other ETFs. The high leverage means potentially higher returns for those who correctly predict a downward movement in gold, but also greater losses if their prediction is wrong.

Volatility

GLD3 is highly volatile due to its leveraged nature. Small changes in gold prices can result in significant gains or losses.

Market Risk

The primary market risk is the risk of gold prices increasing, which can lead to substantial losses in GLD3. Leveraged and inverse ETFs are not designed for long-term holding and are subject to daily compounding, which can erode value over time.

Ideal Investor Profile

The ideal investor for GLD3 is a sophisticated, short-term trader with a strong understanding of leveraged products and a bearish outlook on gold. They should be aware of the risks associated with leveraged investing.

Market Risk

GLD3 is best suited for active traders seeking short-term tactical exposure to gold prices. It is not suitable for long-term investors due to its high volatility and the effects of daily compounding.

GLD3 is a leveraged inverse ETN designed for short-term trading of gold prices. It offers -3x daily exposure to a gold futures index. It's highly volatile and carries significant risk, making it unsuitable for long-term investors. Sophisticated traders with a bearish view on gold and a strong understanding of leveraged products are the ideal users of GLD3, and should be carefully manage the risk associated with such high leverage.

Data Sources:

• REX Shares Website
• ETF.com
• Bloomberg
• SEC Filings

Disclaimers:

This data is for informational purposes only and should not be considered financial advice. Investing in leveraged ETFs involves significant risk, including the potential loss of principal. Consult with a financial advisor before making any investment decisions.