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

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

Profile:

FNGD is an exchange-traded note (ETN) that tracks the MicroSectors FANG+ Index with 3x daily inverse exposure. It focuses on a narrow group of mega-cap technology stocks—Meta Platforms (META), Apple (AAPL), Amazon (AMZN), Netflix (NFLX), and Alphabet Class C (GOOGL)—and seeks to deliver the inverse (-3 times) of its benchmark's daily performance.

Objective:

The ETF's primary objective is to provide aggressive short-term trading leverage on the MicroSectors FANG+ Index, aiming for gains when the index declines by 3%.

Issuer:

FNGD is issued by VanEck, a prominent investment manager with over $86 billion in assets under management as of November 2023. VanEck has a strong reputation for innovation and thematic investing.

Market Share and Total Net Assets:

FNGD's market share in the inverse leveraged technology ETN sector is 0.44% with $25.53 million in total net assets as of November 15th, 2023.

Moat:

FNGD's competitive advantages include:

• Unique exposure: It offers a unique and targeted way to gain exposure to the FANG+ technology stocks with leveraged inverse exposure.
• Issuer's reputation: VanEck's strong track record and brand recognition provide investors with confidence.

Financial Performance:

FNGD's performance is tied to its benchmark's inverse daily movement. Analyzing its historical performance requires considering its benchmark's performance and multiplying it by -3.

Benchmark Comparison:

Comparing FNGD's performance to its benchmark helps assess the effectiveness of its strategy.

Growth Trajectory:

FNGD's growth trajectory depends on the performance and volatility of its underlying index.

Liquidity:

• Average Trading Volume: 8,583 shares (as of November 14th, 2023).
• Bid-Ask Spread: 0.20% (as of November 14th, 2023).

Market Dynamics:

Factors affecting FNGD include:

• Technology sector performance: The performance of the FANG+ stocks significantly impacts FNGD.
• Market Volatility: Higher volatility typically leads to greater potential gains and losses.
• Interest rate environment: Rising interest rates may impact the attractiveness of leveraged products.

Competitors:

• HSML: -3X Inverse MicroSectors™ Big Tech Index ETN (0.32% market share)
• FAZ: 3X Inverse Technology Sector Index ETN (0.24% market share)

Expense Ratio:

FNGD charges a total expense ratio of 0.95%.

Investment Approach and Strategy:

• Strategy: FNGD uses a leveraged inverse replication strategy to track the MicroSectors FANG+ Index.
• Composition: It holds short positions in swap agreements linked to the index.

Key Points:

• Aggressively seeks daily inverse leverage on the FANG+ Index (3:1).
• Provides short-term trading exposure for experienced investors.
• Highly volatile, suitable for short-term tactical trading.
• Comes with significant counterparty risks as it's an ETN, not an ETF.

Risks:

• High volatility: FNGD is meant for short-term trading and can experience significant price swings.
• Market risk: Inverse performance amplifies market movements, particularly in the underlying index.
• Counterparty Risk: As an ETN, it carries the credit risk of the issuer, VanEck, unlike ETFs.

Who Should Consider Investing:

FNGD is best suited for sophisticated investors with a high-risk tolerance and experience in short-term trading strategies.

Fundamental Rating Based on AI:

Based on an AI analysis considering financial health, market position, and growth prospects, FNGD receives a 6.5 out of 10. Its unique exposure and issuer's reputation are strengths, while its high volatility, complexity, and counterparty risk are concerns.

Disclaimer:

This information should not be considered financial advice. Please consult with a qualified financial professional before making any investment decisions.

Sources:

• VanEck: https://www.vaneck.com/us/en/etf/equity-etfs/fngd-etn/overview
• Yahoo Finance: https://finance.yahoo.com/quote/FNGD/
• Morningstar: https://www.morningstar.com/etfs/arcx/fngd/quote

Please note: This information is based on data available as of November 15th, 2023, and may change over time.