Apple (AAPL) is over $130, Tesla (TSLA) is over $700 and Amazon (AMZN) is north of $3,000. At these prices, it’s very difficult for retail investors to build a portfolio of leading U.S. stocks without a significant outlay of funds. To provide our investors with the means and opportunity to profit from the performance of some of the top-performing stocks today, Leverage Shares brings to you a new suite of products: the Stock Tracker ETPs.
What Are Stock Tracker ETPs?
Stock Tracker ETPs a.k.a. “1x ETPs” give investors 1:1 exposure to the underlying stocks being tracked. While technically similar to “pure beta” ETFs, there is a key difference here: while “pure beta” ETFs offer a 1:1 exposure to a basket of stocks, our 1x ETPs offer exposure to a single company’s stock. When there’s a change in the underlying stock’s value, the investor can expect the 1x ETP’s price to move in the same direction and with a similar magnitude.
Price and Currency Choice Advantages
When it comes to the stocks we had mentioned earlier (as well many other top stocks our 1x ETPs would cover), the price is the biggest barrier to investors looking to cash in their performance. This problem is handily covered by our 1x ETPs: they start at $5 (and its equivalent value in UK £ and EUR). To be precise, for as little as $5, an investor can lock into the performance of these stocks and earn returns that are almost exactly similar to what owing stock would have entailed.
Another issue that dogs investors looking to buy high-performance stocks is that if they’re denominated in US$ and the investor trades in a European currency, they might have to factor in FX rates. Our 1x ETPs are denominated in three currencies – US dollars, Euros as well as British pounds – to give investors increased flexibility in investment choices.
Trading Hours Advantage
Another advantage that 1x ETP has is that, unlike their underlying US-listed stocks, these products are traded during European exchange hours. We had illustrated in an earlier article the limited overlap between US and European exchange hours:
Outside of the overlap hours, the 1x ETP will still remain tradable during the hours the underlying stock isn’t. This gives investors time to factor in after-hours news regarding the underlying stock into their investment decision.
Potential Tax Advantage
Many European jurisdictions offer significant tax advantages through special measures. Let’s take the UK as an example.
About 13.5% of all UK shares were held by individuals in 2019. However, only 3% of the population (about 2.2 million) were subscribed to a stock and shares Individual Savings Account (ISA), which offers significant tax advantages. Investors also held onto their shares for about 0.8 years on average before selling them.
As of 2020, Finder estimated via a survey that over 33% of British respondents owned stocks, with Financial Times estimating a more conservative 15%. In either event, either survey implies that the number of British investors has increased. This makes the case for holding investments in an ISA account all the more relevant.
To illustrate the relative advantage of stock and shares ISAs, let’s consider a stock that has been very popular with European investors in 2020: NIO. NIO had an explosive trajectory all through 2020, rising nearly 1,210% in US$ value by the end of the year. From the 1st of October till the end of 2020, NIO had a rocky ascent until it ended 124% up.
Assume a UK-based investor, Joanne, with an annual income of £60,000. For this income level, the Capital Gains Tax (CGT) is set at 20% with a Capital Gains allowance of £12,300 per year.
Joanne makes only one investment: purchasing 1,000 shares of NIO on the 1st of October via her shares dealing account and holds on to it till the end of the year. After the allowance and taxes, her investment’s performance in UK£ terms is about 103%.
On the other hand, if Joanne had held this investment in a stock and shares Individual Savings Account (ISA), her gains won’t be subjected to CGT. However, American Depositary Receipts (ADRs) like NIO can’t be held in an ISA. Well, our 1x ETP can in fact be held in an ISA. When trading our 1x ETPs, the only fee Joanne would incur would be an annual management fee of 0.15% applied daily.
If Joanne had purchased the 1x NIO Tracker ETP* for roughly the same initial amount, her investment performance would have been 109% with no tax liability or impact on capital gains allowance at all. In fact, it would have gained 109% at any level of investment. This also gives Joanne more flexibility to use the allowance for other equity investments.
*The NIO Stock Tracker’s performance is based on simulated backtested values. The Stock Trackers go live on May 23, 2021.
Some of the most popular stocks among European retail investors in recent times – in addition to the likes of Tesla, Amazon and Apple – have been US-listed Chinese stocks. We offer 1x ETPs for these fast-growing stocks as well:
Physically Backed Products
Investors are doubtless of the latest disaster with the hedge fund Archegos which recently cost leading investment banks billions of dollars when it went under. Archegos bought derivatives known as total return swaps from the banks’ prime brokerage desks to bet on stock price moves without owning the securities. When a stock price slide on ViacomCBS impacted the fund’s portfolio value, Archegos suffered a series of margin calls and tumbles which cost the issuing banks billions.
This scenario cannot happen with our products we offer since our 1x ETPs are 100% physically backed. This means that for every 1x ETP an investor holds, we physically hold the stock backing it. This ensures that the product the investor owns has “longevity” and the inherent credit risk present in every similar competing product is negated.
Trackers will be a very useful addition to an investor’s portfolio: its low cost promotes diversification; its range of currency options enables the factoring in currency play (if the investor chooses) and its European listing enables strong tax benefits as well. We encourage you to consider their viability in your investment strategy: please click here for a complete list of trackers we have on offer and subscribe to our mailing list to keep abreast of exciting new products and announcements.
Violeta a rejoint Leverage Shares en septembre 2022. Elle est chargée de mener des analyses techniques et des recherches sur les actions et macroéconomiques, fournissant des informations importantes pour aider à façonner les stratégies d’investissement des clients.
Avant de rejoindre LS, Violeta a travaillé dans plusieurs sociétés d’investissement de premier plan en Australie, telles que Tollhurst et Morgans Financial, où elle a passé les 12 dernières années de sa carrière.
Violeta est une technicienne de marché certifiée de l’Australian Technical Analysts Association et est titulaire d’un diplôme d’études supérieures en finance appliquée et investissement de Kaplan Professional (FINSIA), Australie, où elle a été conférencière pendant plusieurs années.
Julian a étudié l’économie, la psychologie, la sociologie, la politique européenne et la linguistique. Il possède de l’expérience en matière de développement commercial et de marketing grâce à des entreprises qu’il a lui-même créées.
Pour Julian, Leverage Shares est une entreprise innovante dans le domaine de la finance et de la fintech, et il se réjouit toujours de partager les prochaines grandes avancées avec les investisseurs du Royaume-Uni et d’Europe.
Oktay a rejoint Leverage Shares fin 2019. Il est responsable de la croissance de l’activité à travers des relations clés et le développement de l’activité commerciale sur les marchés anglophones.
Il a rejoint LS après UniCredit, où il était responsable des relations avec les entreprises pour les multinationales. Il a également travaillé au sein de sociétés telles qu’IBM Bulgarie et DeGiro / FundShare dans le domaine de la finance d’entreprise et de l’administration de fonds.
Oktay est titulaire d’une licence en finance et comptabilité et d’un certificat d’études supérieures en entrepreneuriat du Babson College. Il est également détenteur de la certification CFA.
Sandeep a une longue expérience des marchés financiers. Il a débuté sa carrière en tant qu’ingénieur financier au sein d’un hedge fund basé à Chicago. Pendant huit ans, il a travaillé dans différents domaines et organisations, de la division Prime Services de Barclays Capital à l’équipe de recherche sur les indices du Nasdaq (plus récemment).
Sandeep est titulaire d’un master spécialisé en finance et d’un master en administration des affaires de I’Institut de technologie de Chicago.