Latest news from REX Shares, providers of long and short ETNs on a range of key indices, has announced that Bank of Montreal (BMO) has increased the aggregate principal amount of the MicroSectors US Big Oil Index 3x Leveraged Exchange Traded Notes by USD50 million, to a new total of USD75 million.
The ETNs offer investors 3x daily resetting leveraged exposure linked to the Solactive MicroSectors US Big Oil Index. The ETNs, listed on NYSE Arca, were issued by BMO and launched on April 9, 2019.
The Solactive MicroSectors US Big Oil Index includes the 10 biggest US listed energy companies. The index’s underlying composition is equally weighted across the 10 stocks.
Scott Acheychek, President of REX Shares comments on his range of ETNs, saying: “Volatility is helpful in gaining additional interest in leveraged and inverse products. With the market down substantially, we see investors either trading for further downside or calling the bottom.”
His audience is mostly sophisticated investors and institutions who are looking to hedge or to exploit short term views.
Activity in REX Shares’ ETNs, especially NRGU and NRGD, their 3x long and -3x short energy equity products, may grow even further after recent news that Direxion is cutting their 3x leverage to 2x for a number of energy related equity products like ERY, ERX, GUSH, DRIP. Acheychek says that following Direxion’s cut in leverage, NRGU and NRGD will be the only ETPs in the US that have 300 per cent and -300 per cent energy equity exposure.
“We have had no problem with liquidity as our market makers have done a great job keeping spreads flowing,” Acheychek says. “Sophisticated investors continue to regularly trade a number of our products.”
The upsize on the energy products has come because of the upsurge in volatility in the sector. “People are looking to express their short-term energy views overall,” Acheychek says.
The first products from the REX Shares’ MicroSectors brand in 2018 were FNGU & FNGD, 3x/-3x FANG+ ETNs. The firm has 18 products now, 10 long and nine short.
“We did pretty well off the bat with the 3x FANG products and have built out the rest to include energy, banks and cannabis,” Acheychek says. He admits that he is constantly looking for new products while juggling the current state of volatility and liquidity.
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