REX Shares has partnered with Bank of Montreal in launching a pair of exchange traded notes to take aggressive up or down positions in the best performing technology names such as those known as “FANG” – Facebook (NasdaqGS: FB), Amazon (NasdaqGS: AMZN), Netflix (NadsaqGS: NFLX) and Alphabet’s Google (NasdaqGS: GOOG).
On Tuesday, REX Shares and the Bank of Montreal rolled out the BMO REX MicroSectors FANG+ Index 3X Leveraged ETNs (NYSEArca: FNGU) and the BMO REX MicroSectors FANG+ Index -3X Inverse Leveraged ETNs (NYSEArca: FNGD), which have a 0.95% expense ratio.
“We are looking forward to working with REX Shares and the NYSE on these new exchange traded notes which offer investors a strategic way to enhance their exposure to highly traded technology companies,” Laurence Kaplan, MD & Head, US Notes, BMO Capital Markets, said in a note. “Through this collaboration, we are able to build and offer novel products that give investors the ability to increase or decrease their exposure depending on their needs.”
The MicroSectors FANG+ Index 3X Leveraged ETNs tries to reflect the performance of the NYSE FANG+ Index on a daily compounded 3x or 300% leveraged basis while the MicroSectors FANG+ Index -3X Inverse Leveraged ETNs follows the same index but on a daily compounded -3x inverse or -300% leveraged basis.
The undelrying NYSE FANG+ index includes 10 highly liquid stocks that represent a segment of the technology and consumer discretionary sectors made up of highly-traded growth stocks of technology and tech-enabled companies, according to a prospectus sheet. Underlying components are equally weighted across all stocks, which may provide performance that allows for a more value-driven approach to investing since larger or more outperforming stocks are rebalanced to be equal to those lesser performers. The equal-weighting methodology would allow for a more representative portfolio, according to REX.
The Index’s current portfolio holdings include an equal weight position in Facebook, Apple (NasdaqGS: AAPL), Amazon, Netflix, Google, Alibaba (NYSE: BABA), Baidu (NasdaqGS: BIDU), Nvidia (NasdaqGS NVDA), Tesla (NasdaqGS: TSLA) and Twitter (NasdaqGS: TWTR).
ETNs are not exchange traded funds. Similar to index-based ETFs, ETNs also track some sort of index as part of their investment strategy. However, an exchange traded note, like the name implies, is a type of debt note that trades on an exchange. Consequently, investors are exposed to the credit risk or the possibility the underwriting bank, Bank of Montreal, goes bankrupt. The note can be vulnerable if the issuer gets into financial trouble, otherwise known as a default. With an ETN, an investor can lose some or all of their investment if the ETN issuer goes under.
For more information on new fund products, visit our new ETFs category.