US-based REX Shares and German-based index provider Solactive have collaborated for the launch of a multi-leveraged ETN comprised of the largest banks in the US. The Big Bank ETNs are listed on the Bank of Montreal (BMO) in Canada, all with an annual fee of 0.95%.
+3x Long Big Bank ETN (BNKU)
+2x Long Big Bank ETN (BNKO)
-1X Inverse Big Bank ETN (KNAB)
-2x Inverse Big Bank ETN (BNKZ)
-3x Inverse Big Bank ETN (BNKD)
ETNs differ to ETFs as they are senior debt notes whereas ETFs represent buying a share in the underlying companies.
Leveraged ETN’s offer a significantly higher level of risk. If an investor was to invest in BNKU, a 3x leveraged ETN, and the net asset value of the benchmark was to fall 1%, BNKU would fall 3% due to the leverage. Equally, if the benchmark’s NAV was to rise by 1%, BNKU would also rise by 3%.
Solactive is managing the ETN's underlying benchmark, the Solactive MicroSectors US Big Banks Index. It consists of the 10 industry leaders in the US banking sector and are all equally weighted (10%) including:
JP Morgan
Wells Fargo
Bank of America
Citi
Goldman Sachs
US Bancorp
Morgan Stanley
Schwab
PNC
BB&T
Solactive has completed several partnerships recently to launch more “exotic indices” and move away from the plain vanilla core range. These launches included entering the crypto market, issuing benchmarks for crypto ETP provider Amun following a partnership with exchange CoinMarketCap.
Scott Acheychek, President of REX Shares, said in a statement: “Our goal is to provide a suite of concentrated sector -specific trading products, which allow for a more targeted view in segments like Big U.S. Banks. While popular financial sector indices contain insurance companies, REITS, credit card enterprises, Solactive has allowed us to provide a specified exposure to the biggest U.S. banks.
