Defiance Daily Target 2X Long SMCI ETF (SMCX)

Overview

The Defiance Daily Target 2x Long SMCI ETF (SMCI) aims to provide daily investment results, before fees and expenses, that correspond to twice (2x) the daily performance of SMCI (Super Micro Computer Inc.) stock. It is designed for aggressive investors seeking magnified daily exposure to a single technology stock. It leverages derivatives to amplify returns, both positive and negative. This ETF is not intended as a long term investment.

Reputation and Reliability

Defiance ETFs is a relatively new but growing issuer known for its thematic and leveraged/inverse ETFs. They are considered moderately reputable, but their leveraged products are inherently high-risk.

Management Expertise

Defiance's management team has experience in creating and managing various types of ETFs. However, the success of their leveraged products depends heavily on market timing skills.

Goal

To seek daily investment results, before fees and expenses, that correspond to twice (2x) the daily performance of Super Micro Computer, Inc. (SMCI) stock.

Investment Approach and Strategy

Strategy: The ETF employs a leveraged strategy using financial instruments such as swap agreements to achieve its 2x daily target. It does not track a broad index, but rather amplifies the daily movements of a single stock.

Composition The ETF's assets primarily consist of swap agreements, futures contracts, and other derivatives designed to provide leveraged exposure to SMCI. It may also hold cash or money market instruments.

Market Share: SMCI is the only ETF focused specifically on the single stock, thus it owns 100% of the single stock leveraged market.

Total Net Assets (AUM): 78670570

Key Competitors

• GraniteShares 2x Long NVDA Daily ETF (NVDL)
• Direxion Daily Semiconductor Bull 3x Shares (SOXL)
• Direxion Daily Technology Bull 3X Shares (TECL)

Competitive Landscape

The competitive landscape consists of ETFs offering leveraged exposure to specific stocks. SMCI faces competition from other leveraged ETFs focused on technology or related sectors, such as semiconductors. SMCI's advantage lies in its pure-play exposure to a single stock, while disadvantages stem from the risks associated with leverage and single-stock concentration.

Historical Performance: Historical performance data is highly volatile due to the leveraged nature of the ETF. Past performance is not indicative of future results, and significant losses are possible.

Benchmark Comparison: A true benchmark comparison is not applicable as the ETF targets 2x daily performance of a single stock. The relevant comparison is to 2x daily return of SMCI.

Expense Ratio: 1.15

Average Trading Volume

The average trading volume for SMCI is moderate, but varies depending on market conditions and investor interest in SMCI.

Bid-Ask Spread

The bid-ask spread can be volatile, reflecting the underlying volatility of the SMCI stock and the leveraged nature of the ETF.

Market Environment Factors

SMCI's performance is influenced by factors affecting the technology sector and, more specifically, Super Micro Computer Inc. These include technological innovation, supply chain dynamics, and overall market sentiment towards growth stocks.

Growth Trajectory

The growth trajectory is entirely dependent on investor interest and the performance of SMCI. It is unlikely to track to any stable or predictable growth pattern, and leveraged ETFs are generally not appropriate to be used for tracking growth.

Competitive Edge

SMCI's competitive edge lies in providing a readily accessible and leveraged exposure to the single stock Super Micro Computer. It caters to investors looking for short-term amplified gains or losses based on the movement of SMCI's stock price. This allows for very focused directional bets on the company without buying the stock directly. The fund's concentrated exposure provides a unique tool for sophisticated traders. However, the fund is subject to high volatility and potential for significant losses, making it unsuitable for risk-averse investors.

Volatility

Volatility is extremely high due to the 2x leverage and the concentration in a single stock.

Market Risk

The primary market risk is the potential for significant losses due to adverse movements in the price of SMCI. Compounding further exacerbates risks.

Ideal Investor Profile

The ideal investor is a sophisticated trader with a high-risk tolerance, a short-term investment horizon, and a strong conviction about the near-term prospects of Super Micro Computer Inc. They should understand the risks of leveraged ETFs and be prepared to actively manage their position.

Market Risk

SMCI is best suited for active traders seeking short-term, leveraged exposure to Super Micro Computer Inc. It is not appropriate for long-term investors or passive index followers.

Defiance Daily Target 2x Long SMCI ETF (SMCI) offers leveraged daily exposure to Super Micro Computer. Designed for short-term, high-risk trading, it is unsuitable for long-term investing due to its inherent volatility and the compounding effect of daily returns. It targets aggressive investors with expertise in managing leveraged positions. Understanding the risks of single-stock exposure and leverage is crucial before investing, as potential losses can be substantial. Investors should actively monitor their positions and be prepared to exit quickly.

Data Sources:

• Defiance ETFs website
• ETF.com
• Morningstar
• Bloomberg

Disclaimers:

The data provided is for informational purposes only and does not constitute financial advice. Leveraged ETFs are inherently risky and may not be suitable for all investors. Past performance is not indicative of future results. Investors should consult with a qualified financial advisor before making any investment decisions.