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

Overview

The MicroSectors FANG+ Index -3X Inverse Leveraged ETN (ticker: FNGD) is an exchange-traded note that seeks to provide three times the inverse of the daily performance of the NYSE FANG+ Index. This index represents a concentrated portfolio of highly traded growth stocks in the technology and consumer discretionary sectors. It offers a leveraged bearish investment strategy, aiming to profit from a decline in the value of the FANG+ stocks.

Reputation and Reliability

The issuer, REX Shares, is known for providing leveraged and inverse products. While innovative, these products are considered higher risk.

Management Expertise

REX Shares specializes in complex investment strategies and has expertise in structuring leveraged and inverse ETNs.

Goal

To seek three times the inverse (-3x) of the daily performance of the NYSE FANG+ Index.

Investment Approach and Strategy

Strategy: The ETN employs a leveraged inverse strategy, magnifying daily returns (or losses) of the FANG+ Index by three times. It is designed for short-term trading.

Composition The ETN's value is linked to the performance of the NYSE FANG+ Index, which includes 10 highly liquid stocks: Facebook/Meta, Apple, Amazon, Netflix, Google (Alphabet), Tesla, Baidu, Alibaba, NVIDIA and Microsoft.

Market Share: FNGD's market share is relatively small compared to broad market ETFs but significant within the niche leveraged inverse sector.

Total Net Assets (AUM): 166700000

Key Competitors

• ProShares UltraPro Short QQQ (SQQQ)
• Direxion Daily Technology Bear 3X Shares (TECS)
• ProShares Short QQQ (PSQ)

Competitive Landscape

The leveraged inverse ETF market is highly competitive. FNGD offers focused exposure to FANG+ stocks, providing higher potential returns (and risks) compared to broader market inverse ETFs like SQQQ. However, FNGD is more susceptible to volatility and idiosyncratic risks related to its concentrated holdings.

Historical Performance: Historical performance is highly volatile due to the leveraged nature of the ETN. It is essential to consider that daily resets prevent it from accurately tracking -3x returns over longer periods.

Benchmark Comparison: Due to the leveraged nature, a direct benchmark comparison is difficult. The ETN should be compared to a hypothetical -3x leveraged FANG+ Index return on a daily basis.

Expense Ratio: 0.95

Average Trading Volume

FNGD has a moderate average trading volume, which can fluctuate based on market volatility.

Bid-Ask Spread

The bid-ask spread for FNGD can be relatively wide, especially during volatile market conditions, reflecting the higher risk and leveraged nature of the ETN.

Market Environment Factors

Economic indicators, interest rate changes, sector-specific news (technology and consumer discretionary), and overall market sentiment significantly impact FNGD's performance. The performance of major technology companies also affect the ETFu2019s performance.

Growth Trajectory

Growth is dependent on investor demand for bearish technology exposure. Changes in strategy are unlikely, as the ETN is designed to track -3x daily performance.

Competitive Edge

FNGDu2019s competitive edge lies in its specific focus on providing -3x leveraged inverse exposure to the FANG+ Index. This targeted approach appeals to traders seeking to capitalize on short-term declines in major technology and growth stocks. Its concentration on highly visible companies makes it an easy-to-understand investment vehicle for experienced traders. However, this focus also increases volatility and risk compared to broader market ETFs.

Volatility

FNGD exhibits high volatility due to its leveraged nature. Its returns can deviate significantly from the underlying index over time, especially with longer holding periods.

Market Risk

Market risk is significant due to its concentrated exposure to technology and consumer discretionary stocks. Downturns in these sectors, or negative news affecting individual FANG+ companies, can significantly impact the ETN's value.

Ideal Investor Profile

FNGD is suitable for sophisticated investors with a high-risk tolerance who seek short-term, leveraged inverse exposure to technology and growth stocks. It is not appropriate for buy-and-hold investors.

Market Risk

FNGD is best suited for active traders seeking short-term tactical opportunities. It is not designed for long-term investment.

MicroSectors FANG+ Index -3X Inverse Leveraged ETN (FNGD) is a high-risk, high-reward ETN designed for short-term trading strategies. It provides a -3x leveraged inverse exposure to the NYSE FANG+ Index, offering an opportunity to profit from declines in major technology and growth stocks. Due to its leveraged nature and daily reset mechanism, it is not suitable for long-term investors and requires a high degree of market awareness and risk management. Investors should carefully consider the risks involved before investing in FNGD.

Data Sources:

• REX Shares
• NYSE
• SEC Filings
• FactSet

Disclaimers:

This analysis is for informational purposes only and does not constitute investment advice. Leveraged and inverse ETFs are complex financial instruments and involve a high degree of risk. Past performance is not indicative of future results. Consult with a qualified financial advisor before making any investment decisions.