The Bank of Montreal is offering a competitor to its own suite of leveraged and inverse big tech exchange-traded notes.
The MicroSectors Solactive FANG Innovation 3X Leveraged ETN (BULZ) and the MicroSectors Solactive FANG & Innovation -3X Inverse Leveraged ETN (BERZ) launched Wednesday on the NYSE Arca. Both notes are capped at $100 million, carry daily expense ratios of 0.95% and reach maturity in 20 years.
BULZ and BERZ follow the Solactive FANG Innovation Index, which in turn holds the 15 largest U.S. technology stocks with weightings ranging between 5.94% of Amazon to 8.05% of AMD. It’s similar to the NYSE FANG+ Index, which follows the top 10 technology companies at an equal weighting of 10% each.
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BMO currently runs six other ETNs with the NYSE FANG+ Index as its underlying, and at different levels of inverse or leveraged returns. All of those products are due to expire in 2038.
The FANG-following products offer a far more concentrated exposure to dominant tech companies compared to similar inverse and leveraged products following the Invesco QQQ Trust (QQQ), which follows 103 companies and includes the FANG constituents.
The MicroSectors FANG+ Index 3X Leveraged ETN (FNGU) has returned 26.93% year-to-date, while the MicroSectors FANG+ Index -3X Inverse Leveraged ETN (FNGD) has posted year-to-date losses of 48.56%. However, the actual returns will vary for each investor holding these products due to the daily compounding function of inverse and leveraged ETNs.
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