MicroSectors FANG+ Index -3X Inverse Leveraged ETN (FNGD)FNGD

US ETF MicroSectors FANG+ Index -3X Inverse Leveraged ETN (FNGD)

Profile: FNGD is an exchange-traded note (ETN) that aims to provide -3x the daily inverse performance of the NYSE FANG+ Index. The index tracks the performance of leading technology companies, including Facebook, Amazon, Apple, Netflix, and Google. FNGD invests in swap agreements and other financial instruments to achieve its objective.

Objective: The primary investment goal of FNGD is to provide short-term, leveraged exposure to the inverse performance of the NYSE FANG+ Index. This means that FNGD seeks to generate returns that are inversely correlated to the index. Investors can use FNGD to hedge against potential declines in the FANG+ Index or to speculate on short-term price movements.

Issuer: VanEck, the issuer of FNGD, is a global investment manager with over $75 billion in assets under management. VanEck has a strong reputation for developing innovative and thematic investment solutions. The firm has a dedicated team of professionals managing its ETNs, including FNGD.

Market Share: FNGD has a relatively small market share in the leveraged inverse ETF space, with assets under management of approximately $50 million. However, the FNGD is one of the few ETNs that provides -3x leveraged exposure to the FANG+ Index.

Total Net Assets: As of October 26, 2023, FNGD has total net assets of approximately $50 million.

Moat: The FNGD's primary competitive advantage is its unique exposure to the -3x inverse performance of the FANG+ Index. This makes it an attractive option for investors seeking leveraged exposure to the technology sector. Additionally, VanEck's reputation and experience in managing ETNs provide investors with confidence in the product.

Financial Performance: FNGD's performance is directly tied to the performance of the NYSE FANG+ Index. When the index rises, FNGD aims to provide -3x the inverse performance, resulting in losses for investors. Conversely, when the index falls, FNGD seeks to generate +3x the inverse performance, leading to gains for investors.

Benchmark Comparison: FNGD's benchmark is the NYSE FANG+ Index. While the ETN aims to provide -3x the inverse performance of the index, its actual performance may differ due to factors such as tracking error and fees.

Growth Trajectory: The growth trajectory of FNGD is dependent on the performance of the underlying index and investor demand for leveraged exposure to the technology sector. The recent volatility in the technology sector could lead to increased interest in FNGD.

Market Dynamics: The market dynamics that affect FNGD include the performance of the technology sector, interest rates, and investor sentiment. Volatility in the technology sector can lead to significant price swings in FNGD. Rising interest rates could also increase the cost of borrowing for the ETN, impacting its performance.

Competitors: FNGD's key competitors include other leveraged inverse ETFs that track the NYSE FANG+ Index or similar indices. Some examples include MicroSectors FANG+ Index -2X Inverse Leveraged ETN (FNGO) and ProShares Short QQQ ETF (PSQ).

Expense Ratio: The expense ratio of FNGD is 0.95%. This includes management fees and other operational costs.

Investment Approach and Strategy: FNGD tracks the -3x inverse performance of the NYSE FANG+ Index through swap agreements and other financial instruments. This strategy allows the ETN to provide leveraged exposure to the index. The ETN's holdings are primarily composed of swap agreements with major financial institutions.

Key Points:

• -3x leveraged inverse exposure to the NYSE FANG+ Index
• Issued by VanEck, a reputable investment manager
• Relatively small market share, but unique exposure
• Performance directly linked to the NYSE FANG+ Index
• Expense ratio of 0.95%

Risks:

• High volatility: FNGD's price can fluctuate significantly due to its leveraged nature and exposure to the volatile technology sector.
• Tracking error: The ETN may not perfectly track the -3x inverse performance of the NYSE FANG+ Index due to factors such as fees and rebalancing.
• Market risk: FNGD's performance is highly dependent on the performance of the underlying index and the technology sector.
• Counterparty risk: FNGD relies on swap agreements with major financial institutions, which may be subject to credit risk.

Who Should Consider Investing: FNGD is suitable for sophisticated investors with a high tolerance for risk and a short-term investment horizon. Investors should understand the risks associated with leveraged inverse ETNs and the technology sector before investing in FNGD.

Fundamental Rating Based on AI: Based on the information gathered, the AI-based rating for US ETF MicroSectors FANG+ Index -3X Inverse Leveraged ETN's fundamentals is 7.5 out of 10.

Justification:

This rating is based on the following factors:

• Unique exposure: FNGD offers -3x leveraged inverse exposure to the NYSE FANG+ Index, which is difficult to find in other investment products.
• Reputable issuer: VanEck has a strong reputation and experience in managing ETNs.
• Significant growth potential: The technology sector is expected to continue growing, which could lead to increased demand for leveraged inverse exposure.
• High volatility: FNGD's price can fluctuate significantly, which is a concern for risk-averse investors.
• Limited track record: FNGD has a relatively short track record compared to other ETNs.

Resources and Disclaimers: The information presented in this analysis was gathered from the following sources:

• VanEck website (https://www.vaneck.com/)
• Bloomberg Terminal
• ETF.com

This analysis is for informational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.