Defiance Daily Target 2X Short SMCI ETF (SMCZ)

Overview

The Defiance Daily Target 2x Short SMCI ETF (SMCI) is designed to deliver twice the inverse of the daily performance of SMCI stock. It is a leveraged inverse ETF, intended for short-term trading strategies and not long-term investments. It focuses exclusively on SMCI and uses financial instruments to achieve its daily objective.

Reputation and Reliability

Defiance ETFs is a relatively new issuer, but is known for innovative thematic ETFs.

Management Expertise

Defiance ETFs' management team has expertise in ETF creation and management, with a focus on niche and thematic investment strategies.

Goal

To seek daily investment results, before fees and expenses, that correspond to two times (2x) the inverse (-2x) of the daily performance of shares of NVIDIA Corporation (NVDA).

Investment Approach and Strategy

Strategy: This ETF seeks to provide daily leveraged inverse exposure to SMCI stock, using derivatives and other financial instruments.

Composition The ETF primarily holds financial instruments such as swap agreements and other derivatives designed to provide leveraged inverse exposure to SMCI.

Market Share: SMCI is a very niche product providing daily leveraged inverse exposure, making a market share calculation in the broad ETF space less relevant.

Total Net Assets (AUM): 2688515

Key Competitors

• NVDL
• SOXS
• WEBS
• SMCI

Competitive Landscape

The competitive landscape consists of other single-stock leveraged ETFs. These funds are designed for short-term tactical trading and not long-term investments. SMCI's advantage is its specific focus on SMCI stock, while its disadvantage is its concentrated exposure, making it very risky.

Historical Performance: Highly volatile due to the 2x leveraged inverse nature of the fund. Historical performance is not indicative of future results due to the daily reset.

Benchmark Comparison: The ETF's performance should be compared against -2x the daily return of SMCI stock.

Expense Ratio: 1.85

Average Trading Volume

The average daily trading volume is moderate, which can impact execution costs depending on the size of the trade.

Bid-Ask Spread

The bid-ask spread can be relatively wide, reflecting the leveraged and niche nature of the fund, impacting trading costs.

Market Environment Factors

The ETF's performance is highly dependent on the price movements of SMCI stock and is also affected by factors influencing the semiconductor sector.

Growth Trajectory

The ETF's growth is tied to investor interest in short-term trading of SMCI, and any changes to the underlying stock will affect the ETF.

Competitive Edge

Defiance Daily Target 2x Short SMCI ETF offers a unique investment instrument to investors who want to bet against SMCI's daily performance with 2x leverage. This ETF allows sophisticated investors to express a short-term bearish view on SMCI without directly shorting the stock, which can have margin and regulatory implications. The ETF's defined structure limits potential losses to the invested capital, mitigating the risk of unlimited losses associated with direct short selling. The ETF structure also provides easy access for retail investors through a brokerage account.

Volatility

Very high volatility due to the 2x leverage and inverse exposure.

Market Risk

Significant market risk due to the concentrated exposure to SMCI and the leveraged nature of the fund. Compounding can cause significant divergence from the stated objective over longer holding periods.

Ideal Investor Profile

Sophisticated and active traders with a high-risk tolerance who understand the risks associated with leveraged inverse ETFs and have a short-term bearish outlook on SMCI.

Market Risk

Not suitable for long-term investors or passive index followers. Best suited for active traders looking to express short-term views.

Defiance Daily Target 2x Short SMCI ETF is a leveraged inverse ETF designed for sophisticated traders seeking to profit from short-term declines in SMCI stock. Its 2x leverage amplifies both gains and losses, making it a high-risk investment. It is not suitable for long-term investors due to the effects of compounding and daily reset. Its performance is directly tied to SMCI stock's movements, and investors should carefully consider their risk tolerance before investing. The high expense ratio further reduces potential returns.

Data Sources:

• Defiance ETFs website
• ETF.com
• Bloomberg

Disclaimers:

This analysis is for informational purposes only and does not constitute financial advice. Investing in ETFs involves risk, including the possible loss of principal. Leveraged and inverse ETFs are not suitable for all investors. Consult with a qualified financial advisor before making any investment decisions.