By Trevor Hunnicutt
(Reuters) – Investors are getting a high-octane way to bet on or against the stock market’s technology leaders.
A new product aims to let investors triple the return of 10 stocks, including the so-called FANG stocks – Facebook Inc
The BMO REX MicroSectors FANG+ Index 3X Leveraged Exchange Traded Note (ETN) starts trading on Tuesday under the ticker FNGU, the product’s backers said in a note on Monday.
If the target stocks gain 10 percent, the notes should trade up 30 percent.
A companion product, BMO REX MicroSectors FANG+ Index -3X Inverse Leveraged Exchange Traded Notes, which will trade under the ticker FNGD, aims to let investors triple the inverse of the same index.
If FANG and the other stocks fall by 10 percent, the notes would gain 30 percent.
FANG stocks have profited tremendously during the U.S. bull market since the 2007-2009 global financial crisis, and for some investors they have come to symbolize the market’s excesses.
Netflix, the best performer of the four, has gained more than 5,000 percent since the end of 2008.
A unit of Intercontinental Exchange Inc
ETNs, like debt, constitute a pledge by an issuer. Payouts are based on the performance of the underlying index, but the notes do not actually own those stocks, unlike most of the ETFs to which they are often compared. The stocks are equally weighted regardless of market capitalization.
(Reporting by Trevor Hunnicutt; Editing by Lisa Shumaker)