MicroSectors FANG+ ETN (FNGS)

Overview

The MicroSectors FANG+ ETN (FNGS) is an exchange-traded note that provides leveraged exposure to the NYSE FANG+ Index, which represents a concentrated portfolio of highly traded growth stocks in the technology and consumer discretionary sectors. It offers a multiple of the daily performance of the index, and is designed for short-term trading rather than long-term investment. The asset allocation is heavily concentrated in the largest tech companies.

Reputation and Reliability

The issuer, REX Shares, specializes in creating leveraged and inverse ETFs and ETNs. While relatively new compared to established issuers, they are known for their focused product offerings.

Management Expertise

REX Shares has a team experienced in structuring and managing complex ETF/ETN products, especially those offering leveraged or inverse exposure.

Goal

To seek leveraged daily investment results, before fees and taxes, that correspond to three times (3x) the daily performance of the NYSE FANG+u2122 Index.

Investment Approach and Strategy

Strategy: The ETN employs a leveraged strategy, aiming to provide 3x the daily performance of the NYSE FANG+ Index. It uses financial derivatives to achieve this leveraged exposure.

Composition The ETN's assets consist primarily of derivative contracts designed to replicate the leveraged performance of the underlying index. It does not directly hold the stocks in the index.

Market Share: FNGS's market share within the leveraged technology ETF/ETN space is moderate, but significant within the niche of FANG+ focused leveraged products.

Total Net Assets (AUM): 640000000

Key Competitors

• Direxion Daily Technology Bull 3X Shares (TECL)
• ProShares UltraPro QQQ (TQQQ)
• BMO REX Microsectors FANG Index ETF (FHNG)

Competitive Landscape

The leveraged ETF market is highly competitive, with several providers offering similar products tracking various indices. FNGS differentiates itself by focusing on the FANG+ index, providing concentrated exposure to mega-cap tech companies. Its leveraged nature carries greater risk than non-leveraged competitors. FHNG is similar but tracks the index at 1x leverage.

Historical Performance: Historical performance is highly dependent on the daily movements of the NYSE FANG+ Index, with magnified gains and losses due to the leverage factor. Performance over longer periods can deviate significantly from 3x the index return due to the effects of compounding.

Benchmark Comparison: The ETN aims to deliver 3x the daily performance of the NYSE FANG+ Index. Tracking error and the effects of compounding can lead to deviations over longer periods.

Expense Ratio: 0.95

Average Trading Volume

FNGS generally has a high average trading volume, allowing investors to buy and sell shares easily.

Bid-Ask Spread

The bid-ask spread for FNGS is typically tight, reflecting its high trading volume and liquidity.

Market Environment Factors

Economic growth, interest rate movements, and technological innovation can all significantly impact the performance of the FANG+ companies, and consequently FNGS. Sentiment towards growth stocks and technology companies will be a key driver.

Growth Trajectory

The growth trajectory of FNGS is tied to the performance of the NYSE FANG+ Index. The ETN's leveraged structure can lead to amplified returns in periods of strong growth, but also amplified losses in declining markets.

Competitive Edge

FNGS offers a targeted and leveraged exposure to a concentrated group of highly influential tech companies. This focused exposure allows investors to make concentrated bets on the performance of the FANG+ companies. The 3x leverage amplifies daily returns. However, this leverage also significantly increases the risk of losses. This makes it attractive for short-term, high-risk trading strategies.

Volatility

FNGS is characterized by high volatility due to its leveraged structure and the inherent volatility of the technology sector.

Market Risk

The ETN is subject to significant market risk due to its concentrated holdings and leveraged exposure. Sharp declines in the technology sector or individual FANG+ stocks could lead to substantial losses.

Ideal Investor Profile

FNGS is suitable for sophisticated investors with a high-risk tolerance who seek short-term, leveraged exposure to the FANG+ stocks. It is not appropriate for buy-and-hold investors.

Market Risk

FNGS is best suited for active traders seeking to capitalize on short-term market movements in the technology sector. It is not a suitable investment for long-term investors or passive index followers.

The MicroSectors FANG+ ETN (FNGS) is a leveraged ETN providing 3x daily exposure to the NYSE FANG+ Index. Its concentrated holdings in mega-cap tech companies and leveraged structure make it a high-risk, high-reward investment. FNGS is best suited for sophisticated traders seeking short-term gains and is not appropriate for long-term investors. The leveraged nature amplifies both gains and losses, requiring careful monitoring and risk management. The returns are highly dependent on the daily movements of the FANG+ index and effects of compounding, not the index's longer term average returns.

Data Sources:

• REX Shares Website
• NYSE FANG+ Index Fact Sheet
• ETF.com
• Bloomberg
• SEC Filings

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Investing in leveraged ETNs involves significant risk of loss. Consult with a qualified financial advisor before making any investment decisions.