Our Short & Leveraged Single-Stock ETPs could be challenging for some investors looking for new innovative products to add to their portfolio. In this six-part educational series, we describe the idea behind our products, their construction, features and their benefits to investors as well as when compared to other similar-seeming products.
Leverage Shares’ Single-Stock ETPs offer investors the opportunity to either amplify the gains or reverse the trend of the underlying stock. The ETPs track the underlying stock such that a daily leveraged return is calculated. The portfolio manager will trade the underlying stock for the fund that the ETP belongs to reflect this ending value as closely as possible.
Our Short (Or “Inverse”) ETPs
Our Inverse ETPs come with a leverage factor of -1x. In other words, investing into a -1x ETP over a day is equivalent to a -1x daily short position in the underlying stock for that same day.
Consider our -1x (short) Facebook ETP (FBS) as an example, which is built with the underlying stock (NASDAQ: FB). This ETP tracks the iSTOXX Inverse Leveraged -1X FB Index. Here is what the performance of FBS versus FB over a single week – from the 7th to the 11th of December 2020 – looks like:
For more information on the costs payable for this class of products, please refer to the “Cost of Products” section in our introductory article of this series
For more examples on the effective usage of our inverse products, please read a previous article highlighting the value of these products.
Our Leveraged ETPs
Our Leveraged ETPs come with a leverage factor of 2x (double leveraged) and 3x (triple leveraged). In other words, investing into a 2x/3x ETP would give a magnified exposure to the daily performance of the underlying stock.
Consider our 2x (long) Amazon ETP (AMZ2) as an example, which is built with the underlying stock (NASDAQ: AMZN). This ETP tracks the NYSE Leveraged 2x AMZN Index.
Also, consider our 3x (long) Amazon ETP (AMZ3) which is built with the same underlying stock. This ETP tracks the iSTOXX Leveraged 3X AMZN Index.
Here is what the performance of AMZ2 and AMZ3 versus AMZN over a single week – from the 23rd to the 27th of November of this year – looks like:
For more information on the costs payable for this class of products, please refer to the “Cost of Products” section in our introductory article of this series.
The date range was selected to highlight two effects:
For more examples on utilizing insight or market sentiment to your advantage, please refer to a previous article highlighting the utilization of either leveraged or inverse products, depending on the situation.
Benefits of Short and Leveraged ETPs
We had covered the benefits of our products in detail in our previous entry in the series: our products have mitigated risk, lower costs relative to competing products, can be purchased without a margin account, limited in loss to only the amount invested and – depending on the investor’s country – very likely to accrue enhanced tax benefits as well.
With respect to our inverse products: one aspect of keen interest among investors has been the prospect of effectively “going short” without actually “shorting”. That is, buying our -1x ETP is similar to selling a stock as far as the payoff estimates are concerned. Foregoing the hassle of covering one’s short position and maintaining margins to support said position is an undeniable advantage for the investor.
Another key benefit to purchasing S&L ETPs is the limited capital outlay. The minimum amount that can be purchased is just one share – while some brokers may even allow for the purchase of fractional shares. In this model, investors are free to invest a percentage of the total cost of one share instead of the entire amount. This facility has begun to attract a large number of investors to the marketplace who earlier felt “priced out” on account of the high values of the stocks they were interested in.
Sandeep joined Leverage Shares in September 2020. He leads research on existing and new product lines, asset classes, and strategies, with special emphasis on analysis of recent events and developments.
Sandeep has longstanding experience with financial markets. Starting with a Chicago-based hedge fund as a financial engineer, his career has spanned a variety of domains and organizations over a course of 8 years – from Barclays Capital’s Prime Services Division to (most recently) Nasdaq’s Index Research Team.
Sandeep holds an M.S. in Finance as well as an MBA from Illinois Institute of Technology Chicago.
Violeta joined Leverage Shares in September 2022. She is responsible for conducting technical analysis, macro and equity research, providing valuable insights to help shape investment strategies for clients.
Prior to joining LS, Violeta worked at several high-profile investment firms in Australia, such as Tollhurst and Morgans Financial where she spent the past 12 years of her career.
Violeta is a certified market technician from the Australian Technical Analysts Association and holds a Post Graduate Diploma of Applied Finance and Investment from Kaplan Professional (FINSIA), Australia, where she was a lecturer for a number of years.
Julian joined Leverage Shares in 2018 as part of the company’s premier expansion in Eastern Europe. He is responsible for web content and raising brand awareness.
Julian has been academically involved with economics, psychology, sociology, European politics & linguistics. He has experience in business development and marketing through business ventures of his own.
For Julian, Leverage Shares is an innovator in the field of finance & fintech, and he always looks forward with excitement to share the next big news with investors in the UK & Europe.
Oktay joined Leverage Shares in late 2019. He is responsible for driving business growth by maintaining key relationships and developing sales activity across English-speaking markets.
He joined LS from UniCredit, where he was a corporate relationship manager for multinationals. His previous experience is in corporate finance and fund administration at firms like IBM Bulgaria and DeGiro / FundShare.
Oktay holds a BA in Finance & Accounting and a post-graduate certificate in Entrepreneurship from Babson College. He is also a CFA charterholder.
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The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.
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Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.
Leverage Shares exchange-traded products (ETPs) provide leveraged exposure and are only suitable for experienced investors with knowledge of the risks and potential benefits of leveraged investment strategies.
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