MicroSectorsTM Oil & Gas Exploration & Production 3X Leveraged ETNs (OILU)

Overview

The MicroSectors Oil & Gas Exploration & Production 3X Leveraged ETNs (OILU) offer leveraged exposure to an index of U.S. companies involved in oil and gas exploration and production. It seeks to magnify daily investment returns, making it suitable for short-term trading strategies.

Reputation and Reliability

REX Shares is the issuer, specializing in leveraged and inverse ETFs. Their reputation is tied to the performance and accuracy of their leveraged products.

Management Expertise

REX Shares has expertise in structuring and managing leveraged and inverse exchange-traded products.

Goal

To seek a return that is 3x the daily performance of the Solactive Oil & Gas Exploration & Production Index.

Investment Approach and Strategy

Strategy: Tracks the Solactive Oil & Gas Exploration & Production Index on a 3x leveraged basis.

Composition Primarily holds financial instruments designed to provide leveraged exposure to the underlying index, including swaps and futures.

Market Share: OILU holds a small market share compared to broader oil and gas ETFs due to its leveraged nature.

Total Net Assets (AUM): 63868358

Key Competitors

• GUSH
• NRGU
• DIG

Competitive Landscape

The leveraged oil and gas ETF space is competitive. OILU offers 3x leveraged exposure, which can attract traders seeking amplified returns but also increases risk. Competitors like GUSH and NRGU offer similar leveraged strategies, requiring investors to compare expense ratios and tracking accuracy. OILU is smaller in AUM compared to competitors and may have higher tracking errors due to the low NAV.

Historical Performance: Historical performance is highly volatile due to the 3x leverage. Performance is dependent on short-term movements of the underlying index. Past performance is not indicative of future results.

Benchmark Comparison: Performance should be compared to 3x the daily performance of the Solactive Oil & Gas Exploration & Production Index. Tracking error can occur due to fees, expenses, and daily rebalancing.

Expense Ratio: 0.95

Average Trading Volume

OILU demonstrates moderate liquidity with an average daily trading volume that varies significantly based on market conditions.

Bid-Ask Spread

The bid-ask spread can be relatively wide, especially during volatile market conditions, impacting trading costs.

Market Environment Factors

Oil and gas prices, geopolitical events, and changes in energy demand significantly impact OILU's performance.

Growth Trajectory

Growth is tied to the oil and gas sector's performance and investor appetite for leveraged products; strategy and holdings remain consistent.

Competitive Edge

OILU's main advantage lies in offering 3x leveraged exposure to the oil and gas E&P sector, appealing to traders seeking short-term gains. This high leverage differentiates it from non-leveraged ETFs, providing a niche product for risk-tolerant investors. However, the leverage also presents significant risks and is not suitable for long-term investment. OILU's performance is highly sensitive to daily fluctuations, and its value can erode quickly due to compounding effects.

Volatility

OILU exhibits extremely high volatility due to its 3x leverage. It is subject to significant price swings.

Market Risk

Market risk is substantial, as the oil and gas sector is sensitive to economic cycles, geopolitical events, and regulatory changes. Compounding can lead to losses even if the underlying index moves in the intended direction over longer periods.

Ideal Investor Profile

OILU is suitable for sophisticated, short-term traders with a high-risk tolerance who understand the complexities of leveraged ETFs.

Market Risk

OILU is best suited for active traders seeking short-term gains, not long-term investors or passive index followers.

OILU provides 3x leveraged exposure to the oil and gas exploration and production sector, targeting active traders seeking amplified daily returns. Its high volatility and leveraged nature make it unsuitable for long-term investment. Performance hinges on the daily movements of the underlying index, and significant risks are associated with compounding and market fluctuations. Investors should fully understand the risks before considering OILU.

Data Sources:

• REX Shares, Solactive, ETF.com, Bloomberg

Disclaimers:

The information provided is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results. Investing in leveraged ETFs involves significant risks, including the potential for substantial losses.