FOR HIGHLY EXPERIENCED INVESTORS AND FOR SHORT TERM TRADING ONLY
Trade your conviction on the Nasdaq-100
ETFS Ultra Long Nasdaq 100 Hedge Fund (ASX code: LNAS) is a trading product offering positively geared exposure to the Nasdaq-100 index.
LNAS is an exchange traded managed fund that aims to provide investors with geared returns that are positively related to the returns of the Nasdaq-100 index. LNAS provides exposure to the Nasdaq-100 index within a target range of 200% to 275% of the LNAS net asset value. Over a short interval of time, this means that for every 1% movement in the Nasdaq-100 index, an investment in LNAS is anticipated to return between 2.00% and 2.75%, depending on the degree of leverage deployed by the fund manager over that time interval (subject to fees and costs).
Furthermore, LNAS is currency hedged, meaning that the fund manager will aim to reduce, but may not eliminate, exposure to movements in the Australian dollar/U.S. dollar exchange rate.
LNAS is not recommended for investors as a long-term portfolio position.
Why consider LNAS?
A high conviction trading tool for short term market exposure to the Nasdaq-100 index
The potential to magnify returns (but investors should also be aware losses could be magnified, though not beyond the amount invested).
Simple to use, avoiding the complexities associated with direct derivative investments, such as CFDs
Liquid and transparent
What is the Nasdaq-100?
The Nasdaq-100 Index is one of the world’s preeminent large-cap growth indices, featuring some of the planet’s the most iconic companies. It includes 100 of the largest U.S. domestic and international non-financial companies listed on the Nasdaq Stock Markets based on market capitalisation.
With a market cap of US$9.8T at the end of 2019, the Nasdaq-100 has a proven history of growth, impact and performance.
The Nasdaq-100 Index is home to some of the world’s most innovative companies—including Apple, Google, Intel and Tesla.
Technology companies account for more than 50% of the index’s weight, but all listed companies are disrupting markets with innovative new technologies and/or have a history of accelerating change with out-of-the-box ideas and robust solutions.
How does LNAS work?
LNAS achieves its exposure to the Nasdaq-100 Index primarily using derivatives. It invests primarily in a portfolio of long E-mini Nasdaq-100 Futures contracts listed on the Chicago Mercantile Exchange. Derivatives such as futures provide gearing or leverage because they offer market exposure in excess of the amount that is required to be invested upfront when entering into the contracts. When opening a long futures position, the upfront cost is zero, although there are transaction costs to be paid and an initial margin amount to be posted by LNAS. This margin amount is adjusted up or down daily depending on whether the contracts have generated a loss or a gain.
As the Nasdaq-100 moves up and down, the amount of gearing in the fund changes and the fund manager needs to rebalance the exposure to ensure it remains within the target range. Currency hedging is achieved by entering into foreign exchange forward contracts whereby the fund contracts to sell U.S. dollars and buy Australian dollars at an agreed rate on a fixed future date.
What key risks are associated with LNAS?
All investments carry the risk of loss. LNAS is designed to magnify positive performance when the Nasdaq-100 experiences gains, but it will also magnify losses when the Nasdaq-100 falls.
Over longer periods of time, due to the effects of rebalancing and compounding, the performance of LNAS is not likely to exactly replicate the Nasdaq-100 return multiplied by the target exposure.
The investment performance will depend primarily upon the general direction of the Index (up or down), and the amount of exposure to the Index (leverage) within the target range at any point in time, and will also depend on the path the LNAS portfolio takes to achieve its returns. Performance can suffer in volatile markets.
Investors in LNAS will not experience losses beyond the sum they have invested.
How could LNAS be used?
Geared or leveraged ETFs such as LNAS are commonly used by highly experienced investors and traders to gain short-term market exposure. Because of their ability to amplify returns, they require less capital to be committed upfront than traditional investments, which makes them attractive to different types of users.
A trading product like LNAS may often be used to express a high conviction view around future performance or outcomes of upcoming events, such as economic data releases or earnings announcements.
It may be used as a speculative stand-alone position or to implement temporary shifts in asset allocation. Positions may be taken over less than a day.
|Date (NAV)||05 Aug 2020|
|Fund inception date||10 Jul 2020|
|Management Costs (% p.a.)||1.00|
|Maximum cost recoveries (% p.a.)||0.00|
|Legal Form||Managed Investment Scheme|
|Bloomberg Code||LNAS AU Equity|
|Trading hours||10:00AM – 4:00PM|
|Issuer||ETFS Management (AUS) Limited|
|Custodian||JPMorgan Chase Bank N.A. (Sydney Branch)|
|Registrar||Computershare Investor Services Pty Limited|
|Exposure Range||200% to 275%|
|Current Portfolio Exposure||216.1%|