AXS 1.25X NVDA Bear Daily ETF (NVDS)

US ETF AXS 1.25X NVDA Bear Daily ETF Overview

Profile: AXS 1.25X NVDA Bear Daily ETF (NASDAQ: URBN) is an inverse exchange-traded fund (ETF) that seeks to deliver daily investment results equal to 125% of the inverse (or opposite) of the performance of the NVIDIA Corporation (NVDA) stock. In simpler terms, it aims to magnify the daily opposite movement of NVIDIA's stock price by 125%. The ETF invests in swap agreements and other financial instruments to achieve its objective.

Objective: The primary objective of URBN is to provide short-term, leveraged exposure to the inverse performance of NVIDIA stock. This means that if NVIDIA's stock price falls by 1%, URBN aims to gain 1.25% (1.25 * -1%). Conversely, if NVIDIA's stock price rises by 1%, URBN aims to lose 1.25%.

Issuer:

• Name: Exchange Traded Concepts, LLC (ETC)
• Reputation and Reliability: ETC is a subsidiary of Exchange Traded Concepts, Inc., a registered investment advisor with over 20 years of experience in developing and managing index tracking funds. ETC has a good reputation in the market for providing innovative and transparent ETF products.
• Management: ETC's management team comprises experienced professionals with expertise in ETF design, portfolio management, and risk management.

Market Share: URBN is a relatively small ETF with a market share of less than 0.1% in the inverse/leveraged ETF space.

Total Net Assets: As of November 2023, URBN has total net assets of approximately $2.5 million.

Moat: URBN's unique strategy of providing 1.25x leveraged exposure to the inverse performance of a single stock can be considered a competitive advantage. This niche focus attracts investors seeking short-term, amplified exposure to NVIDIA's price movements.

Financial Performance:

• Historical Performance: Since its inception in April 2023, URBN has experienced a significant decline in value, reflecting the rising trend in NVIDIA's stock price.
• Benchmark Comparison: URBN's performance has been inversely correlated to NVIDIA's stock price, achieving its objective of mirroring the opposite movement with a 125% magnification.

Growth Trajectory: Given the short track record and dependence on NVIDIA's price movement, determining a clear growth trajectory is difficult. However, the increasing popularity of leveraged and inverse ETFs suggests potential growth opportunities for URBN.

Liquidity:

• Average Trading Volume: URBN's average trading volume is relatively low, indicating lower liquidity compared to larger ETFs.
• Bid-Ask Spread: The bid-ask spread is tight, suggesting that trading costs are relatively low.

Market Dynamics: Factors affecting URBN's market environment include:

• NVIDIA's stock price performance: The ETF's performance is directly linked to the opposite movement of NVIDIA's stock price.
• Market volatility: Higher market volatility can amplify the ETF's gains and losses.
• Investor sentiment towards NVIDIA: Investor sentiment towards NVIDIA can significantly impact its stock price and, consequently, URBN's performance.

Competitors: Key competitors in the leveraged and inverse ETF space include:

• ProShares UltraPro Short QQQ (SQQQ): -2x inverse exposure to the Nasdaq-100 Index
• Direxion Daily Semiconductor Bear 3X Shares (SOXS): -3x inverse exposure to the PHLX Semiconductor Sector Index
• TQQQ 3x leveraged exposure to the Nasdaq-100 Index

Expense Ratio: URBN's expense ratio is 0.95%, which is considered average for leveraged and inverse ETFs.

Investment Approach and Strategy:

• Strategy: URBN utilizes swap agreements and other financial instruments to achieve its daily inverse performance objective.
• Composition: The ETF does not hold any physical assets. Instead, it invests in derivatives to generate the desired exposure.

Key Points:

• Inverse exposure to NVIDIA's stock price with 125x leverage.
• Short-term investment horizon.
• High risk and volatility.
• Suitable for experienced investors who understand leveraged and inverse investment strategies.

Risks:

• Volatility: URBN's amplified exposure to NVIDIA's price movements can result in significant swings in its value.
• Market Risk: The ETF is susceptible to market risks associated with NVIDIA's stock price, including company-specific events, sector trends, and overall market conditions.
• Counterparty Risk: URBN relies on swap agreements with financial institutions, exposing it to counterparty risk if the counterparty defaults on its obligations.

Who Should Consider Investing: URBN is suitable for experienced investors who:

• Understand leveraged and inverse investment strategies.
• Have a high-risk tolerance.
• Seek short-term exposure to the inverse performance of NVIDIA's stock price.

Fundamental Rating Based on AI:

Based on an AI-based evaluation of the factors mentioned above, URBN receives a rating of 6 out of 10. This rating reflects the ETF's unique strategy, experienced issuer, and relatively low expense ratio. However, the high risks associated with its volatility, market exposure, and counterparty risk are significant drawbacks.

Resources and Disclaimers:

This analysis utilized data from the following sources:

• AXS 1.25X NVDA Bear Daily ETF website
• ETF.com
• Yahoo Finance

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