New exchange traded fund (ETF) provider FactorShares has filed to launch six funds that give a twist on the traditional leveraged and inverse ETF formula.FactorShares’ new ETFs would essentially be a leveraged bet on the spread between two indexes, one of which is always the S&P 500, explains Dave Nadig for Index Universe. For example, the FactorShares S&P 2x US Equity Premium would go long the S&P 500 and short 30-year U.S. Treasuries by using futures, while the FactorShares S&P 2x US Anti-Equity Premium would do the opposite.
The five funds are:
- FactorShares S&P 2x US Equity Premium: Holds a long position in the S&P 500 while shorting 30-year Treasuries.
- FactorShares S&P 2x US Anti-Equity Premium: Holds long positions on Treasuries, short on stocks.
- FactorShares S&P 2x US Equity Anti-USD: Goes long on the U.S. dollar and short on the S&P 500.
- FactorShares S&P GSCI 2x Crude Oil Premium Offers long exposure to crude oil while shorting the S&P500.
- FactorShares S&P GSCI 2x Crude Gold Premium: Offers long exposure to gold while shorting the S&P500.
Nadig brings up some great points about these ETFs: the commodity funds will hold futures contracts, so backwardation and contango will have an impact, and like all leveraged and inverse ETFs these funds will reset daily. Each fund comes with a 0.75% expense ratio.
Leveraged and inverse ETFs are not for everyone, so be sure you’ve read all the caveats before you buy. [Everything You Should Know About Leveraged and Inverse ETFs.]
For more stories aboutnew ETFs, visit our new ETFs category.
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