Double-Leveraged ETFs: A New Dimension in Risk Management

Strategic Insights -

Investment firm AXS Investments, LLC has filed with the SEC to introduce a series of double-leveraged exchange-traded funds (ETFs) that track the performance of individual U.S.-listed equity securities. Each fund aims to provide daily returns twice that of the underlying security, offering a unique investment opportunity for traders and investors. The proposed ETFs will track the performance of prominent companies such as Tesla, NVIDIA, and Nike, among others.

Key Takeaways:

  • The proposed ETFs will offer daily returns that are two times the daily return (or two times the inverse daily return) of a single underlying U.S. equity security.
  • The funds will track the performance of prominent companies such as Tesla, Inc. (TSLA), NVIDIA Corporation (NVDA), ConocoPhillips Company (COP), and others.
  • AXS Investments, LLC, the funds' investment adviser, will seek to achieve these investment objectives by entering into one or more swap agreements with major global financial institutions.
  • The funds will invest between 40% and 80% of their portfolio in collateral investments such as U.S. government securities and money market funds.
  • The proposed ETFs will be listed on an exchange to be determined, pending SEC approval.
  • The filing is part of a broader trend of increasing complexity in financial products, offering investors and traders new tools for risk management and speculative trading.
  • Specialist advice should be sought about specific circumstances, as the content of this article is intended to provide a general guide only.

Statistics:

  • Each fund will offer daily returns that are two times the daily return (or two times the inverse daily return) of the underlying security.
  • The funds will track the performance of 10 prominent companies, including Tesla, NVIDIA, and Nike.
  • The funds' investment adviser, AXS Investments, LLC, will delegate the achievement of these investment objectives to major global financial institutions through swap agreements.
  • The funds will invest between 40% and 80% of their portfolio in collateral investments, such as U.S. government securities and money market funds.
  • The proposed ETFs are seeking SEC approval to list on an exchange to be determined.

Sources:

  • Mondaq Ltd, "Double-Leveraged ETFs: A New Dimension in Risk Management" (2022), accessed via mondaq.com.