ETF Securities has launched a series of exchange-traded funds (ETFs) allowing investors to trade leveraged exposure to the Nasdaq 100 index.
The new ETF Securities Ultra series consists of two currency-hedged ETFs; ETFS Ultra Long Nasdaq 100 Hedge Fund (ASX code: LNAS) and ETFS Ultra Short Nasdaq 100 Hedge Fund (ASX code: SNAS).
According to the manager, LNAS will provide geared returns positively related to the returns of the Nasdaq 100 index between 200 per cent and 275 per cent of its net asset value, while SNAS will provide geared returns negatively related to the returns of the Nasdaq 100 Index between -200 per cent and -275 per cent of its net asset value.
ETF Securities chief executive Kris Walesby said: “We are very excited to launch these two trading products. These products show the growing innovation in the ETF space.”
“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 crystalising losses or creating a capital gain.”
The management costs of the new offerings is to be one per cent per annum.
ETF Securities portfolio management co-head Evan Metcalf highlighted the relative “simplicity of use” of leveraged ETFs as a key advantage but urged potential investors to be cautious when using them.
“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,” Metcalf explained.
In May, a report on the sector revealed ETFs were performing at “all-time highs” despite the market turmoil caused by the COVID-19 pandemic.
In March, a panel of industry stakeholders said advisers could minimise their compliance risk through the use of ETFs instead of picking individual stocks for clients wanting to invest directly on the Australian Securities Exchange.