New York-based ETF designerTradr ETFs has introduced what is says are the industry’s first monthly and weekly reset ETFs with plans to roll out quarterly versions in a couple of weeks.
The company rolled out eight calendar reset leveraged ETFs. Three of them reset their performance on the last trading day of the calendar month, while the remaining five reset on the last trading day of each week, according to the firm.
“It comes down to an issue of suitability,” said Matt Markiewicz, head of product and capital markets at Tradr ETFs. “The new calendar reset products from Tradr allow advisors to better match the intended holding period with the expected outcome.”
The new funds serve as an alternative to traditional leveraged ETFs, which provide returns through daily resets. The problem is advisors have been holding them for longer than a day, which can lead to negative compounding because the amplified performance is only meant to last the one day, according Markiewicz.
“They are using the daily products and they’re looking to get leverage for longer than a day, which is fine, but the products are only designed to give you the stable leverage for one single day,” he said. “We wanted to design a product that would better align the return outcome with investor expectations.”
The new ETFs will provide sustained amplification for the duration of the month or week depending upon the fund.
Six of the new ETFs provide 200% exposure to either the weekly or monthly performance of the SPY and Invesco QQQ ETFs. They also track the SOXX ETF to capture movements in the semiconductor industry. Thee ETFs tracking these indexes are the Tradr 2X Long SPY Weekly ETF (SPYB), the Tradr 2X Long SPY Monthly ETF (SPYM), the Tradr 2X Long Triple Q Weekly ETF (QQQW), the Tradr 2X Long Triple Q Monthly ETF (MQQQ), the Tradr 2X Long SOXX Weekly ETF (SOXW), and the Tradr 2X Long SOXX Monthly ETF (SOXM.
The remaining two funds, the Tradr 1.75X Long NVDA Weekly ETF (NVDW) and the Tradr 1.5X Long TSLA Weekly ETF (TSLW), magnified long weekly exposures to NVIDIA stock (NVDA) and Tesla stock (TSLA), which will complement two of the firms already-existing daily reset ETFs, the Tradr 1.5X Short NVDA Daily ETF ETF (NVDS), and the Tradr 2X Short TSLA Daily ETF (TSLQ), according to the firm.
Since leveraged ETFs came out in 2006 there has been little evolution in the product, Markiewicz said. As advisors try to beat their benchmarks while minimizing their risk, they have turned to leveraged products. However, their daily reset made them unsuitable products for long-term investors, he said, adding that the firm is hoping to provide a new alternative with its new ETFs.
“These products that we’ve just come out with we’re hoping to kind of break the mold at the broker-dealer level, especially in allowing the advisors to use the products that are more suitable over the longer-term when it comes to leverage,” Markiewicz said.
The ETFs will be available on most major platforms, including Fidelity, Schwab, E*trade, RobinHood and Interactive Brokers, and have a 1% management fee and a 1.3% expense cap, according to Markiewicz. The quarterly reset funds will launch on Oct. 1, according to the firm.
“What we’re looking to do is change the game for leverage, especially for advisors and give them a tool they can use over a longer investment horizon,” Markiewicz said. “We feel these new products are more suitable for longer-term investing than the current daily products that are out there.”