What's New In Investments, Funds? - ETF Securities

Editorial Staff

14 July 2020

ETF Securities
has launched a set of customised exchange traded funds for the Australian market, with one ETF seeking to tap into stock market gains and the other offering protection against a fall.

The two “Ultra” trading products are Sydney-listed ETFS Ultra Short Nasdaq 100 Hedge Fund and ETFS Ultra Long Nasdaq 100 Hedge Fund. The first ETF aims to provide investors with geared returns that are positively related to the returns of the Nasdaq-100 index between 200 per cent and 275 per cent of its net asset value. The second tries to provide investors with geared returns that are negatively related to the returns of the Nasdaq-100 Index. This fund provides exposure to the Nasdaq-100 Index of between -200 per cent and -275 per cent of its net asset value.

The ETFs allow investors to trade leveraged exposure to an index that features iconic companies such as Apple, Google, Intel and Tesla.

Both the ETFs are currency hedged and get exposure to the Nasdaq-100 Index by using derivatives. They invest primarily in a portfolio of short E-mini Nasdaq 100 Futures contracts listed on the Chicago Mercantile Exchange.

“These products are positioned as short-term investments - investors might trade these for a day, specifically as a temporary conviction play. These trading products give power to investors to trade based on their expectations of whether the Nasdaq-100 will gain or fall in the short term, as well as offer the ability to create a temporary hedge for existing positions and avoid the need to sell, either crystallising losses or creating a capital gain,” Kris Walesby, CEO ETF Securities, said.

Evan Metcalf, co-head of Portfolio Management for ETF Securities, warned: “A word of caution. Leveraged ETFs are high risk investments. As with any geared investment, leveraged ETFs not only magnify gains, they also magnify losses and investors need to be aware of their risk tolerance and continually monitor their investment when using these products. These are not your traditional long-term buy-and-hold investments.”