Exchange-traded products (ETPs) are continuing to undergo innovation as more and more traders are using them for tactical deployment of capital. REX Shares, LLC (REX) is capitalizing on this increased use of ETPs with the expansion of their MicroSectors™ brand by launching a suite of Leveraged and Inverse Leveraged Exchange Traded Notes (ETNs).
These ETNs give traders concentrated exposure to a specific corner of the financial sector–in this case, large U.S. banks. In addition, traders can go long or short as well as choose their level of exposure–as much as 300 percent.
MicroSectors U.S. Big Banks Index 3x Leveraged ETN (BNKU), MicroSectors U.S. Big Banks Index -3x Inverse Leveraged ETN (BNKD), MicroSectors U.S. Big Banks Index 2x Leveraged ETN (BNKO), MicroSectors U.S. Big Banks Index -2x Inverse Leveraged ETN (BNKZ), and MicroSectors U.S. Big Banks Index Inverse ETN (KNAB) started trading today on NYSE Arca.
“MicroSectors is our line of ETNs which provide targeted exposures to various sectors of the market like tech and now big U.S. banks,” said Scott Acheychek, President of REX Shares. “Our goal with the MicroSectors U.S. Big Banks Index linked ETNs is to create the first suite of long & short products linked only to the biggest U.S. banks for sophisticated investors who desire such a precise exposure.”
Targeting the Big Banks
The ETNs are specifically linked to the Solactive MicroSectors U.S. Big Banks Index and will be issued by the Bank of Montreal. These products feature a tried-and-true recipe that’s intended to amplify the MicroSectors brand, which was created in January 2018 with the Leveraged and Inverse Leveraged FANG+ linked ETNs.
“We are repeating a similar formula we used for the tech sector with FANG+ linked ETNs, which is providing products that allow investors to trade the stocks they know in the sectors they follow,” said Acheychek.
The Solactive MicroSectors U.S. Big Banks Index is an equal-dollar weighted index designed to track the prices of the 10 U.S. stocks in the banking sector with the largest free-float market capitalization. The Index was launched on February 25, 2019.
As of the launch of these ETNs, the index constituents include the following: Bank of America Corporation (BAC), BB&T Corporation (BBT), Citigroup Inc. (C), The Goldman Sachs Group, Inc. (GS), JPMorgan Chase & Co. (JPM), Morgan Stanley (MS), The PNC Financial Services Group, Inc. (PNC), The Charles Schwab Corporation (SCHW), U.S. Bancorp (USB) and Wells Fargo & Company (WFC).
Meeting Market Demand
REX, a provider of alternative investment products, sees large demand for targeted hedging and trading vehicles based on segments of the market such as big banks.
“We created the MicroSectors concept in order to address a gap in the marketplace for sector specific trading products. We enjoy working with BMO and are excited to expand the MicroSectors platform” said Greg King, Founder and CEO of REX.
“We are excited to continue our relationship with REX Shares by expanding our suite of MicroSectors ETNs and offer investors a strategically precise way to target their exposure to highly traded financial companies,” said Laurence Kaplan, Managing Director and Head, US Notes, BMO Capital Markets.
The ETNs are senior, unsecured obligations of Bank of Montreal.
Investment suitability must be determined individually for each investor, and the ETNs may not be suitable for all investors. This information is not intended to provide and should not be relied upon as providing accounting, legal, regulatory or tax advice. Investors should consult with their own financial advisors as to these matters.
The ETNs are intended to be daily trading tools for sophisticated investors to manage daily trading risks as part of an overall diversified portfolio. They are designed to achieve their stated investment objectives on a daily basis.
“While popular financial sector indices contain insurance companies, REITS, credit card companies and more, we believe these new concentrated trading tools will finally provide a specified exposure to the biggest U.S. banks,” Acheychek said.
For more information, visit REX Shares.
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