Defiance Daily Target 2X Long SMCI ETF (SMCX)

ETF Defiance Daily Target 2X Long SMCI ETF Overview

Profile: ETF Defiance Daily Target 2X Long SMCI ETF (NYSEARCA: SMCL) is an actively managed exchange-traded fund that seeks to deliver twice the daily performance of the Solactive Modified Commodity CRB Excess Total Return Index. This index tracks the performance of a diversified basket of commodities, including energy, metals, agriculture, and livestock. SMCL utilizes financial instruments like swaps and futures contracts to achieve its targeted leverage.

Objective: The ETF aims to provide investors with magnified exposure to the commodity market, enabling them to potentially amplify their returns if prices rise. It caters to investors with a bullish outlook on commodity prices and a high tolerance for risk.

Issuer: The ETF is issued and managed by Defiance ETFs, a subsidiary of ETF Managers Group LLC. Defiance ETFs is a relatively new player in the ETF market, established in 2019. Despite its recent inception, the firm focuses on thematic and niche investment strategies.

Market Share: SMCL holds a market share of approximately 0.1% within the commodity ETF space. While not a dominant player, it provides investors with a unique leveraged exposure to the Solactive Modified Commodity CRB Excess Total Return Index.

Total Net Assets: As of October 26, 2023, SMCL has approximately $9.75 million in total net assets.

Moat: SMCL's primary competitive advantage lies in its unique exposure to the Solactive Modified Commodity CRB Excess Total Return Index. This index offers a diversified approach to commodity investing, covering a broader range of commodities compared to other commodity indices. Additionally, the ETF's daily targeted leverage provides investors with a magnified opportunity to potentially capitalize on commodity price movements.

Financial Performance: SMCL has demonstrated significant volatility since its inception in November 2022. The ETF has experienced periods of both significant gains and losses, reflecting the inherent volatility of the underlying commodity markets.

Benchmark Comparison: SMCL's performance has generally tracked the Solactive Modified Commodity CRB Excess Total Return Index closely, with some deviations due to its leveraged nature.

Growth Trajectory: The future growth trajectory of SMCL depends heavily on the performance of the underlying commodity markets. Factors such as global economic growth, geopolitical events, and supply chain disruptions can significantly impact commodity prices and, consequently, the ETF's performance.

Liquidity: SMCL has an average daily trading volume of approximately 16,000 shares. This moderate level of trading volume suggests the ETF is reasonably liquid, allowing investors to enter and exit positions with relative ease.

Market Dynamics: The ETF's market environment is influenced by various factors, including global economic conditions, commodity supply and demand dynamics, and investor sentiment. Macroeconomic factors like inflation, interest rates, and currency fluctuations can also impact commodity prices and, consequently, SMCL's performance.

Competitors: SMCL's main competitors include other leveraged commodity ETFs such as Teucrium Wheat Fund (WEAT), VelocityShares 3x Inverse Crude Oil ETN (DWTI), and ProShares UltraShort Bloomberg Commodity Index (SCO).

Expense Ratio: SMCL's expense ratio is 0.95%, which is relatively high compared to other commodity ETFs.

Investment Approach and Strategy: SMCL employs an active management approach, utilizing swaps and futures contracts to achieve its daily 2x leverage objective. The ETF's portfolio invests in various commodity futures contracts across energy, metals, agriculture, and livestock sectors.

Key Points:

• SMCL offers leveraged exposure to a diversified basket of commodities.
• The ETF's performance is highly correlated with the underlying commodity markets.
• SMCL is a relatively new ETF with moderate liquidity.
• The expense ratio is comparatively high.

Risks:

• Volatility: SMCL is a leveraged ETF, amplifying both gains and losses in the underlying commodity markets.
• Market Risk: Commodity prices are susceptible to various factors, leading to potential losses if prices decline.
• Counterparty Risk: SMCL relies on swaps and futures contracts, which expose it to counterparty risk.

Who Should Consider Investing:

• Investors with a bullish outlook on commodity prices.
• Investors seeking magnified exposure to the commodity market.
• Investors with a high tolerance for risk.

Fundamental Rating Based on AI:

Based on an AI-based analysis of factors like financial performance, market position, and future prospects, SMCL receives a 6 out of 10 rating. The ETF's unique exposure, leveraged strategy, and growth potential are positive factors. However, its relatively high expense ratio, recent inception, and inherent volatility are drawbacks.

Resources and Disclaimers:

• Information for this analysis was gathered from the following sources:
  • Defiance ETFs website: https://www.defianceetfs.com/
  • ETF Database: https://etfdb.com/
  • Yahoo Finance: https://finance.yahoo.com/
• This analysis is for informational purposes only and should not be considered investment advice. Investors should conduct their own research and due diligence before making investment decisions.