, Author at REX Shares

REX Expands Growth & Income ETF Suite with Five New Single-Stock Covered Call Strategies

Tue, 04 Nov 2025 04:41:55 +0000

November 4, 2025 – REX Financial (“REX”), a leader in innovative exchange-traded products, today announces the expansion of its Growth & Income Covered Call ETF suite with the launch of five new funds:

REX CRWV Growth & Income ETF (CBOE: CWII)

REX HOOD Growth & Income ETF (CBOE: HOII)

REX LLY Growth & Income ETF (CBOE: LLII)

REX PLTR Growth & Income ETF (CBOE: PLTI)

REX WMT Growth & Income ETF (CBOE: WMTI)

These additions join the existing suite of funds already live in market: the REX NVDA Growth & Income ETF (CBOE: NVII), REX COIN Growth & Income ETF (CBOE: COII), REX MSTR Growth & Income ETF (CBOE: MSII), and REX TSLA Growth & Income ETF (CBOE: TSII).

The REX Growth & Income ETFs are built to balance amplified equity exposure with recurring income, offering investors a differentiated alternative to traditional covered call funds.

Each ETF is designed to provide approximately 1.25x notional exposure to a single stock using a fully synthetic, option-based structure. This approach replicates the stock’s economic performance without requiring the fund to hold the stock directly.

To generate income, the ETFs sell out-of-the-money call options on roughly half of that exposure. This “partial overwrite” structure seeks to collect weekly option premiums while leaving the remaining portion uncapped—so investors retain directional upside potential if the stock rallies.

Distributions are paid weekly and may fluctuate based on market conditions and option pricing.

“The Growth & Income Covered Call suite is designed for modern income investors who want more than a binary choice between yield and participation,” said Greg King, CEO & Founder of REX Financial. “By combining amplified exposure with partial call-writing, we’re giving investors potential for weekly income while preserving the ability to participate in stock rallies across some of the most innovative companies in the market.”

To learn more about the REX Growth & Income ETFs, or any of our other options-based income, crypto, or leveraged strategies please visit rexshares.com

About REX:
REX Financial is a leading provider of innovative exchange-traded products (ETPs), specializing in alternative strategy ETFs and ETNs. We have introduced landmark strategies including the first U.S.-listed Solana ETF with on-chain staking rewards (REX-Osprey SSK); the first 2x leveraged ETFs tied to Nvidia, Tesla, MicroStrategy, and spot Bitcoin (T-REX); and option-based covered call ETFs, ranging from traditional approaches to single-stock strategies that balance weekly distributions with uncapped upside.

For media inquiries, please contact:
Gregory FCA for REX Financial
rexfin@gregoryfca.com

Important Risks

Investors should consider the investment objectives, risk, charges, and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the REX ETFs please call 1-844-802-4004 or visit our website at rexshares.com. Read the prospectus and summary prospectus carefully before investing.

Investing in a REX ETF may be more volatile than investing in broadly diversified funds. The use of leverage by a Fund increases the risk to the Fund. The REX ETFs are not suitable for all investors and should be utilized only by sophisticated investors who understand leverage risk, consequences of seeking daily leverage, and investment results and intend to actively monitor and manage their investment. The Fund is not intended to be used by, and is not appropriate for, investors who do not intend to actively monitor and manage their portfolios. For periods longer than a single day, the Fund will lose money if the underlying security’s performance is flat, and it is possible that the Fund will lose money even if underlying security’s performance increases over a period longer than a single day. An investor could lose the full principal value of his/her investment within a single day.

An investment in the Fund entails risk. The Fund may not achieve its leveraged investment objective and there is a risk that you could lose all of your money invested in the Fund. In addition, the Fund presents risks not traditionally associated with other mutual funds and ETFs. It is important that investors closely review all of the risks listed below and understand them before making an investment in the Fund.

REX Growth & Income ETFs Risks. When the Fund invests in fixed income securities, the value of your investment in the Fund will fluctuate with changes in interest rates. Typically, a rise in interest rates causes a decline in the value of fixed income securities owned by the Fund.

Distribution Risk. As part of the Fund’s investment objectives, the Fund seeks to provide current income. There is no assurance that the Fund will make a distribution at any given time. If the Fund does make distributions, the amounts of such distributions will likely vary greatly from one distribution to the next. Additionally, the distributions, if any, may consist of returns of capital, which would decrease the Fund’s NAV and trading price over time. As a result, an investor may suffer significant losses to their investment.

Distribution Tax Risk. The Fund currently expects to make distributions on a regular basis. While the Fund will normally pay its income as distributions, the Fund’s distributions may exceed the Fund’s income and gains for the Fund’s taxable year. The Fund may be required to reduce its distributions if it has insufficient income. Additionally, there may be times the Fund needs to sell securities when it would not otherwise do so and could cause the distributions from that sale to constitute return of capital. Distributions in excess of the Fund’s current and accumulated earnings and profits will be treated as a return of capital. Return of capital distributions do not represent income or gains generated by the Fund’s investment activities and should not be interpreted by shareholders as such. Distributions in excess of the Fund’s minimum distribution requirements, but not in excess of the Fund’s earnings and profits, will be taxable to Fund shareholders and will not constitute nontaxable returns of capital. A return of capital distribution generally will not be taxable but will reduce the shareholder’s cost basis and will result in a higher capital gain or lower capital loss when those Fund shares on which the distribution was received are sold. Once a Fund shareholder’s cost basis is reduced to zero, further distributions will be treated as capital gain, if the Fund shareholder holds shares of the Fund as capital assets. Additionally, any capital returned through distributions will be distributed after payment of Fund fees and expenses. Because the Fund’s distributions may consist of return of capital, the Fund may not be an appropriate investment for investors who do not want their principal investment in the Fund to decrease over time or who do not wish to receive return of capital in a given period. In the event that a shareholder purchases shares of the Fund shortly before a distribution by the Fund, the entire distribution may be taxable to the shareholder even though a portion of the distribution effectively represents a return of the purchase price.

Effects of Compounding and Market Volatility Risk. While the Fund’s primary investment objective is to pay weekly distributions, the Fund’s secondary investment objective is to seek daily investment results, before fees and expenses, between 105% and 150% the daily percentage change of the underlying stock. Therefore, the performance of the Fund for periods longer than a single day will very likely differ in amount, and possibly even direction, from the targeted daily leveraged return of the stock for the same period.

Leverage Risk. The Fund seeks to achieve and maintain exposure to the price of various securities by utilizing leverage. Therefore, the Fund is subject to leverage risk.

Derivatives Risk. Investing in derivatives may be considered aggressive and may expose the Fund to greater risks, and may result in larger losses or smaller gains, than investing directly in the reference assets underlying those derivatives, which may prevent the Fund from achieving its investment objective.

Indirect Investment Risk. The companies referenced (CoreWeave, Robinhood, Eli Lilly, Palantir, Walmart, NVIDIA, Coinbase, MicroStrategy, and Tesla) are not affiliated with the Trust, the Adviser, or any of their affiliates, and are not involved with this offering in any way. They have no obligation to consider the Funds when taking any corporate actions that might affect the value of the Funds.

Non-Diversification Risk. The Fund is classified as “non-diversified” under the Investment Company Act of 1940, as amended. This means it has the ability to invest a relatively high percentage of its assets in the securities of a small number of issuers or in financial instruments with a single counterparty or a few counterparties.

New Fund Risk. As of the date of this prospectus, the Fund has no operating history and currently has fewer assets than larger funds. Like other new funds, large inflows and outflows may impact the Fund’s market exposure for limited periods of time.

Underlying Security Investing Risk. Issuer-specific attributes may cause an investment held by the Fund to be more volatile than the market generally. The value of an individual security or particular type of security may be more volatile than the market as a whole and may perform differently from the value of the market as a whole.

Liquidity Risk. Because these Funds are ETFs, only a limited number of institutional investors (known as “Authorized Participants”) are authorized to purchase and redeem shares directly from the Fund. In addition, there may be a limited number of market makers and/or liquidity providers in the marketplace. To the extent either of the following events occur, shares of the Fund may trade at a material discount to their net asset value (“NAV”) per share and possibly face delisting: (i) Authorized Participants exit the business or otherwise become unable to process creation and/or redemption orders and no other Authorized Participants step forward to perform these services, or (ii) market makers and/or liquidity providers exit the business or significantly reduce their business activities and no other entities step forward to perform their functions.

Guarantees or Insurance. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Comparisons Disclaimer. The ETFs shown are not meant to be a representative sample of all equity income ETFs. All funds shown are managed differently and do not react the same to economic or market events. The investment objectives, strategies, policies or restrictions of other funds may differ, and more information can be found in their respective prospectuses. Therefore, we generally do not believe it is possible to make direct fund comparisons in an effort to highlight the benefits of a fund versus another.

Out of the Money (OTM): An option with no intrinsic value. A call option is out of the money if its strike price is above the current market price of the underlying security. A put option is out of the money if its strike price is below the current market price of the underlying security.

Covered call: Owning the shares and selling call options on them for income, while capping upside above the strike.

Partial-call writing / partial-overwrite: Selling calls on only part of a stock or ETF position to get some income but leave some shares uncapped.

Option premiums: The price paid by the option buyer to the seller for the option contract.

Distributor: Foreside Fund Services, LLC, member FINRA, not affiliated with REX Shares or the Funds’ investment advisor.

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REX-Osprey™ Launches First U.S. ETF with Solana Exposure plus Staking Rewards

Wed, 02 Jul 2025 06:06:56 +0000

SSK – REX-Osprey Solana + Staking ETF offers Solana exposure and staking rewards—marking a major milestone for crypto ETFs

July 2, 2025 – REX-Osprey, a strategic collaboration between REX Shares and Osprey Funds, today announced the launch of SSK, the REX-Osprey Solana + Staking ETF, the first U.S.-listed ETF to give investors exposure to Solana (SOL) plus staking rewards in their securities brokerage accounts.

SSK provides investors with cost-effective and convenient exposure to Solana (SOL) by offering primarily spot SOL exposure—avoiding the negative effects of contango that can impact futures-based ETFs. In addition to this direct exposure, the fund also delivers the benefits of SOL staking, which currently offers a reward rate of 7.3%*. The fund seeks to hold the majority of its assets in directly staked SOL, 40% of its assets in exchange-traded products that themselves stake SOL, and a small amount of its assets in liquid staking tokens like JitoSOL. SSK seeks to make monthly distributions to investors sourced from staking rewards earned by the Fund, minus applicable fees – neither REX or Osprey will retain any portion of staking rewards received.

An investment in the Fund is not a direct investment in Solana. Investing involves significant risk, including the possible loss of principal.

“This is a major milestone for ETFs and the crypto industry, and a pioneering expansion in how securities investors can access crypto investments and blockchain-native returns,” said Greg King, CEO of REX Financial. “With SSK, we’re giving investors Solana staking rewards in a familiar ETF format—something that’s never been done before in the U.S. market. We’ve essentially built a bridge between the world of TradFi securities investments and the world of crypto investments.”

SSK is designed to serve both retail and institutional investors. Unlike other crypto products that rely on derivatives or just provide spot crypto exposure, SSK participates directly in native Solana staking, ensuring that rewards are sourced from the blockchain protocol itself, and SSK also participates indirectly in staking by holding exchange-traded products that themselves hold staked SOL. This allows investors to take part in Solana’s network economics while maintaining the convenience and transparency of an ETF.

For more information on SSK and other REX products, please visit www.rexshares.com

About REX-Osprey:

REX-Osprey is a joint initiative between REX Financial, a leader in thematic and alternative ETFs, and Osprey Funds, a digital asset specialist focused on crypto access and infrastructure. Together, REX-Osprey develops products that combine the integrity of traditional financial structures with the transformative potential of blockchain technology. For more information, visit rexshares.com.

For media inquiries, please contact:

Gregory FCA for REX Financial

rexfin@gregoryfca.com

An investor should carefully consider the Fund’s investment objective, risks, charges, and expenses before investing. The Fund’s prospectus and summary prospectus contain this and other information about REX Shares. To obtain the Fund’s prospectus and summary prospectus, call 1-844-802-4004. The Fund’s prospectus and summary prospectus should be read carefully before investing.

Important Risks

THE FUND, TRUST, ADVISER, AND SUB-ADVISER ARE NOT AFFILIATED WITH SOLANA OR ANY ENTITY PROVIDING VALIDATION OR STAKING SERVICES.

Crypto Asset Risk. The Fund holds SOL tokens, a crypto asset that is native to the Solana blockchain. Crypto assets are subject to extreme volatility, regulatory uncertainty, market manipulation, security risks, and technological changes. The value of the Fund will fluctuate with the price of SOL, which is influenced by a range of factors including adoption of the Solana network, network congestion, smart contract failures, validator misbehavior, and the emergence of competing platforms. Additionally, crypto asset exchanges and counterparties may be less regulated than traditional financial institutions, and are subject to fraud, hacking, and operational disruptions.

Solana (“SOL” or the “Reference Asset) Investing Risk. The Fund is subject to the risks of investing in SOL directly and indirectly through its investments in the ETFs that obtain exposure to SOL and other assets that provide exposure to the Reference Asset. The market price for SOL is extremely volatile and will likely continue to be volatile. As with other digital assets and crypto currencies, the price of SOL can also be impacted by malicious actors (e.g., hackers and fraudsters). The price of SOL may also fluctuate in the same direction as the broader cryptocurrency market or a subset of the cryptocurrency market, such as Meme Coins.

Risks Related to the Regulation of SOL. Any final determination by a court that SOL or any other digital asset is a “security” may adversely affect the value of SOL and the value of the Shares, and, if SOL is not, or cannot, be registered as a security, result in a potential termination of the Fund.

Staking Risk. When the Fund stakes the Reference Asset, the Reference Asset is subject to the risks attendant to staking generally. Staking requires that the Fund lock up the staked Reference Asset for the period of time required by the staking protocol, meaning that the Fund cannot sell or transfer the staked Reference Asset, thereby making it illiquid for the period it is being staked. In addition, during the lock-up period, the Fund is subject to the market price volatility of the Reference Asset, and it may miss opportunities to sell the staked Reference Asset during opportune times. During the unstaking period, the Fund may miss out on earning opportunities because, in some cases, the staked Reference Asset may not earn rewards during the unstaking period or may only earn rewards during part of the unstaking period. Staked Reference Assets are also subject to security breaches, network downtime or attacks, smart contract vulnerabilities, and validator or custodian failure or compromise, which can result in a complete loss of the staked Reference Asset or a loss of any rewards.

Concentration Risk. The Fund’s assets will be concentrated in the sector or sectors or industry or group of industries that are assigned to the Reference Asset, which will subject the Fund to the risk that economic, political or other conditions that have a negative effect on those sectors and/or industries may negatively impact the Fund to a greater extent than if the Fund’s assets were invested in a wider variety of sectors or industries.

Liquidity Risk. The Fund may not be able to sell its crypto assets at the time or price it desires. Crypto asset markets may be less liquid than traditional securities markets and may be subject to significant price fluctuations.

New Fund Risk. The Fund is a newly organized investment company with no operating history. Investors have limited performance history to assess how the Fund will perform.

Counterparty Risk. The Fund may rely on staking infrastructure providers, custodians, and crypto exchanges to hold or interact with its SOL. These third parties may become insolvent, fail to safeguard assets, or be subject to regulatory action, leading to potential losses.

Smart Contract Risk. Certain staking activities or custodial processes may rely on smart contracts. These self-executing code structures are susceptible to bugs, hacking, or unintended behavior. Exploits in smart contracts could cause loss of assets or incorrect reward distribution.

Taxable Fund Risk. Unlike most ETFs, the Fund will not be taxed as a regulated investment company for U.S. federal income tax purposes because of its limited number of holdings. Rather it will be taxed as a regular subchapter C corporation which means taxable income generally must be recognized at both the Fund level and shareholder level.

Contango is when futures contracts trade at progressively higher prices the further out in time they are set to expire.

Staking Rewards are the incentives or payments earned by participants who commit (or “stake”) their cryptocurrency tokens to help support the operations and security of a blockchain network, typically one that uses a Proof-of-Stake.

*As of 7/1/2025 – SOL staking rewards fluctuate based on many factors and should not be considered an indication of performance for the fund.

Distributor: Foreside Fund Services, LLC, member FINRA, not affiliated with REX Shares, Osprey Funds, or the Fund’s investment adviser.

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REX Financial Expands Growth & Income ETF Suite with New Single-Stock Covered Call Strategies on MSTR, COIN, and TSLA

Wed, 04 Jun 2025 04:31:23 +0000

Building on the successful launch of NVII, REX introduces MSII, COII, and TSII to provide investors with income generation and targeted exposure to Strategy, Coinbase, and Tesla

June 4, 2025 – REX Financial (“REX”), a leader in innovative exchange-traded products, today announces the expansion of its Growth & Income Covered Call ETF suite with the introduction of three new funds: the REX COIN Growth & Income ETF (CBOE: COII), the REX MSTR Growth & Income ETF (CBOE: MSII), and the REX TSLA Growth & Income ETF (CBOE: TSII). These funds join the recently launched REX NVDA Growth & Income ETF (CBOE: NVII), which debuted last week.

Each fund in the suite targets 1.25x* exposure to its underlying stock—Coinbase (COIN), Strategy (MSTR), or Tesla (TSLA)—while seeking to generate consistent weekly income through the strategic sale of call options on approximately half of the notional value of the portfolio. This dual approach provides uncapped upside potential on the remaining portion of the portfolio, allowing investors to maintain directional exposure to some of the most disruptive and high-growth companies in the market, while monetizing volatility to produce regular income.

“The expansion of our Growth & Income Covered Call ETF suite builds on the momentum of NVII and offers investors a differentiated way to capture the upside of transformative companies while generating weekly income,” said Scott Acheychek, COO of REX Financial. “With stocks like Coinbase, Strategy, and Tesla at the forefront of innovation in crypto infrastructure, Bitcoin adoption, and electric mobility, these funds provide a compelling way to stay invested in future-focused themes—without having to choose between participation and income”

These new funds build on the success of REX’s existing Covered Call ETF lineup and represent a continued expansion of the firm’s platform to meet rising investor demand for high-conviction, income-generating strategies tied to transformative growth themes.

*The Funds target 1.25x daily exposure to the underlying stock; however, in accordance with its investment objective, actual leverage may range between 1.05x and 1.50x.

Investing in the Funds is not equivalent to investing directly in MSTR, COIN, or TSLA.

For more information on the REX Growth & Income ETFs and other REX products, please visit rexsharestg.wpengine.com

About REX:

REX is an innovative provider of exchange-traded products specializing in alternative-strategy ETFs and ETNs, with over $6 billion in assets under management. REX is renowned for its MicroSectors and T-REX product lines and recently introduced a series of option-based income strategies. For more information, visit rexshares.com.

For media inquiries, please contact:

Gregory FCA for REX Financial

rexfin@gregoryfca.com

Important Risks

Investing in a REX ETF may be more volatile than investing in broadly diversified funds. The use of leverage by a Fund increases the risk to the Fund. The REX ETFs are not suitable for all investors and should be utilized only by sophisticated investors who understand leverage risk, consequences of seeking daily leverage, and investment results and intend to actively monitor and manage their investment. the Fund is not intended to be used by, and is not appropriate for, investors who do not intend to actively monitor and manage their portfolios. For periods longer than a single day, the Fund will lose money if the underlying security’s performance is flat, and it is possible that the Fund will lose money even if underlying security’s performance increases over a period longer than a single day. An investor could lose the full principal value of his/her investment within a single day.

REX Growth & Income ETFs Risks. When the Fund invests in fixed income securities, the value of your investment in the Fund will fluctuate with changes in interest rates. Typically, a rise in interest rates causes a decline in the value of fixed income securities owned by the Fund.

Effects of Compounding and Market Volatility Risk. While the Fund’s primary investment objective is to pay weekly distributions, the Fund’s secondary investment objective is to seek daily investment results, before fees and expenses, between 105% and 150% the daily percentage change of the underlying stocks. Therefore, the performance of the Fund for periods longer than a single day will very likely differ in amount, and possibly even direction, from the targeted daily leveraged return of underlying stocks for the same period.

Leverage Risk. The Fund seeks to achieve and maintain the exposure to the price of various securities by utilizing leverage. Therefore, the Fund is subject to leverage risk.

Derivatives Risk. Investing in derivatives may be considered aggressive and may expose the Fund to greater risks, and may result in larger losses or smaller gains, than investing directly in the reference assets underlying those derivatives, which may prevent the Fund from achieving its investment objective.

Indirect Investment Risk. Coinbase, Strategy, and Tesla are not affiliated with the Trust, the Adviser, or any of their affiliates, and are not involved with this offering in any way. They have no obligation to consider the Funds when taking any corporate actions that might affect the value of the Funds.

Non-Diversification Risk. The Fund is classified as “non-diversified” under the Investment Company Act of 1940, as amended. This means it has the ability to invest a relatively high percentage of its assets in the securities of a small number of issuers or in financial instruments with a single counterparty or a few counterparties.

New Fund Risk. As of the date of this prospectus, the Fund has no operating history and currently has fewer assets than larger funds. Like other new funds, large inflows and outflows may impact the Fund’s market exposure for limited periods of time.

Underlying Security Investing Risk. Issuer-specific attributes may cause an investment held by the Fund to be more volatile than the market generally. The value of an individual security or particular type of security may be more volatile than the market as a whole and may perform differently from the value of the market as a whole.

The Funds’ investment adviser will not attempt to position the portfolio to ensure that a Fund does not gain or lose more than a maximum percentage of its net asset value on a given trading day. As a consequence, if a Fund’s underlying security moves more than 75%, as applicable, on a given trading day in a direction adverse to the Fund, the Fund’s investors would lose all of their money.

Distributor: Foreside Fund Services, LLC, member FINRA, not affiliated with REX Shares or the Funds’ investment advisor.

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REX Financial Unveils the REX NVDA Growth & Income ETF, the First Fund in New Single Stock Covered Call ETF Suite

Wed, 28 May 2025 04:33:29 +0000

NVII targets 1.25x* leveraged exposure to NVIDIA, combining covered calls on half the portfolio for weekly income with uncapped upside potential on the rest

May 28, 2025 – REX Financial (“REX”), a leader in innovative exchange-traded products, today announces the launch of a new single stock covered call suite with the REX NVDA Growth & Income ETF (CBOE: NVII). NVII seeks to provide balance between growth and income by offering between 1.05x and 1.50x targeted exposure to NVIDIA Corporation (NVDA) and aiming to provide weekly income by selling options on half of the targeted portfolio.

“The launch of NVII marks the beginning of an exciting new series of single stock based income strategies at REX,” said Scott Acheychek, COO of REX Financial. “With NVDA leading the AI and semiconductor revolution, NVII offers investors a unique way to generate weekly income while maintaining uncapped exposure on half of the portfolio to one of the most transformative growth stories in the market.”

The launch of NVII also marks the debut of REX’s Growth & Income Covered Call ETF Suite, building on the success of REX’s index based covered call strategies, including the REX FANG & Innovation Equity Premium Income ETF (NASDAQ: FEPI), the REX AI Equity Premium Income ETF (NASDAQ: AIPI), and the REX Crypto Equity Premium Income ETF (NASDAQ: CEPI).

*The Fund targets 1.25x daily exposure to NVDA; however, in accordance with its investment objective, actual leverage may range between 1.05x and 1.50x.

For more information on the REX NVDA Growth & Income ETF and the Growth & Income ETF Suite, please visit rexsharestg.wpengine.com

About REX:

For media inquiries, please contact:

Gregory FCA for REX Financial

rexfin@gregoryfca.com

Important Risks

Investing in a REX ETF may be more volatile than investing in broadly diversified funds. The use of leverage by a Fund increases the risk to the Fund. The REX ETFs are not suitable for all investors and should be utilized only by sophisticated investors who understand leverage risk, consequences of seeking daily leverage, and investment results and intend to actively monitor and manage their investment. The Fund is not intended to be used by, and is not appropriate for, investors who do not intend to actively monitor and manage their portfolios. For periods longer than a single day, the Fund will lose money if NVDA’s performance is flat, and it is possible that the Fund will lose money even if NVDA’s performance increases over a period longer than a single day. An investor could lose the full principal value of his/her investment within a single day.

Effects of Compounding and Market Volatility Risk. While the Fund’s primary investment objective is to pay weekly distributions, the Fund’s secondary investment objective is to seek daily investment results, before fees and expenses, between 105% and 150% the daily percentage change of the common stock of NVDA. Therefore, the performance of the Fund for periods longer than a single day will very likely differ in amount, and possibly even direction, from the targeted daily leveraged return of NVDA for the same period.

Leverage Risk. The Fund seeks to achieve and maintain the exposure to the price of various securities by utilizing leverage. Therefore, the Fund is subject to leverage risk.

Indirect Investment Risk. Nvidia Corporation. is not affiliated with the Trust, the Adviser, or any of their affiliates, and are not involved with this offering in any way. They have no obligation to consider the Funds when taking any corporate actions that might affect the value of the Funds.

Distributor: Foreside Fund Services, LLC, member FINRA, not affiliated with REX Shares or the Funds’ investment advisor.

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REX Shares Unveils Latest Covered Call ETF Designed to Enhance Exposure to Crypto Leaders

Wed, 04 Dec 2024 07:51:54 +0000

CEPI’s unique covered call strategy aims to unlock added income from the BITA Crypto Assets & Digital Payments Index

Miami – December 4, 2024 – REX Financial (“REX”), a leader in innovative exchange-traded products, today announces the launch of the REX Crypto Equity Premium Income ETF (Nasdaq: CEPI). CEPI aims to provide investors exposure to leading cryptocurrency (crypto) companies while generating an enhanced monthly income using an advanced covered call strategy.

CEPI provides investors unique access to the top 25 U.S. crypto-related companies through the BITA Crypto Assets & Digital Payments Index, including those that operate in crypto mining, trading, custody, blockchain technology development, and the creation of digital payment solutions. CEPI executes an out-of-the-money call writing strategy across the individual stocks within the index, balancing the potential for income generation and price appreciation. This innovative approach is designed to help investors better capitalize on the cryptocurrency sector’s volatility and upside potential.

CEPI joins REX’s lineup as the firm’s third covered call ETF, following the flagship FANG & Innovation Equity Premium Innovation ETF (Nasdaq: FEPI) and the REX AI Equity Premium Income ETF (Nasdaq: AIPI). Since its launch a year ago, FEPI and AIPI have accumulated over $500 million in assets under management and offers an annualized distribution rate* of 25.2% and 34.8% respectively (as of 11/25/24) and a 30-day SEC yield** of -0.09% and -0.18% (as of 10/31/24).

“Crypto is transforming financial ecosystems and creating unique investment opportunities. With CEPI, we’re applying our targeted covered call strategy to the sector’s most disruptive companies, creating new opportunities for income generation,’ said Greg King, CEO of REX Financial. “We remain committed to building first-of-their-kind tools to help traders and investors harness opportunities in the market.”

For more information on REX Financial or CEPI, please visit rexsharestg.wpengine.com

Prospectus for FEPI: Click here

Standardized Performance for FEPI: Click here

Prospectus for AIPI: Click here

Standardized Performance for AIPI: Click here

The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than their original cost; current performance may be lower or higher than the performance quoted. For standardized fund performhttps://www.rexshares.com/wp-content/uploads/2024/05/rex-ai-equity-premium-income-etf-prospectus_v1.pdfance rexsharestg.wpengine.com

*The Distribution Rate is the annual yield an investor would receive if the most recently declared distribution, which includes option income, remained the same going forward. The Distribution Rate is calculated by multiplying an ETF’s Distribution per Share by twelve (12), and dividing the resulting amount by the ETF’s most recent NAV. The Distribution Rate represents a single distribution from the ETF and does not represent its total return. Current distributions represent 100% Return of Capital. For full details on the composition of distributions, please refer to the latest 19a-1 notice.

**The 30-Day SEC Yield represents net investment income, which excludes option income, earned by such ETF over the 30-Day period, expressed as an annual percentage rate based on such ETF’s share price at the end of the 30-Day period. The REX AI Equity Premium Income ETF and the REX FANG & Innovation Equity Premium Income ETF have a gross expense ratio of 0.65%. Distributions are not guaranteed.

About REX Financial:

REX Financial is an innovative ETP provider specializing in alternative-strategy ETFs and ETNs, with $9 billion in assets under management. REX is renowned for creating MicroSectorsTM and co-creating the T-REX product lines of leveraged and inverse tools for traders and recently launched a series of option-based income strategies.

For media inquiries, please contact:

Gregory FCA for REX Shares

rexshares@gregoryfca.com

An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. The Fund’s prospectus and summary prospectus contain this and other information about REX Shares. To obtain a Fund’s prospectus and summary prospectus call 1-844-802-4004. A Fund’s prospectus and summary prospectus should be read carefully before investing.

Important Risks

Industry Concentration Risk. In following its methodology, the Index from time to time may be concentrated to a significant degree in securities of issuers located in a single industry or industry group. To the extent that the Index concentrates in the securities of issuers in a particular industry or industry group, the Fund will also concentrate its investments to approximately the same extent.

Liquidity Risk. Some securities held by the Fund, including options contracts, may be difficult to sell or be illiquid, particularly during times of market turmoil.

Derivatives Risk. Derivatives are financial instruments that derive value from the underlying reference asset or assets, such as stocks, bonds, or funds (including ETFs), interest rates or indexes. The Fund’s investments in derivatives may pose risks in addition to, and greater than, those associated with directly investing in securities or other ordinary investments, including risk related to the market, imperfect correlation with underlying investments or the Fund’s other portfolio holdings, higher price volatility, lack of availability, counterparty risk, liquidity, valuation and legal restrictions.

Distribution Risk. As part of the Fund’s investment objective, the Fund seeks to provide current monthly income. There is no assurance that the Fund will make a distribution in any given month. If the Fund does make distributions, the amounts of such distributions will likely vary greatly from one distribution to the next. Additionally, the monthly distributions, if any, may consist of returns of capital, which would decrease the Fund’s NAV and trading price over time. As a result, an investor may suffer significant losses to their investment.

Call Writing Strategy Risk. The path dependency (i.e., the continued use) of the Fund’s call writing strategy will impact the extent to which the Fund participates in the positive price returns of the individual stocks comprising the Index and, in turn, the Fund’s returns, both during the term of the sold call options and over longer time periods.

Crypto Asset Risk. The Fund has exposure to the crypto asset platforms as a result of the Index attempting to reflect generally the performance of the price of Bitcoin before payment of its expenses and liabilities. A crypto asset operates without central authority or banks and is not backed by any government. Crypto assets are often referred to as a “virtual asset” or “digital asset,” and operate as a decentralized, peer-to-peer financial trading platform and value storage that is used like money. A crypto asset is also not a legal tender. Federal, state or foreign governments may restrict the use and exchange of a crypto asset, and regulation in the U.S. is still developing. Further, the spot markets for crypto assets are fragmented and lack regulatory compliance and/or oversight. Crypto asset platforms may stop operating or permanently shut down due to fraud, technical glitches, hackers or malware. The Fund’s indirect exposure to crypto assets such as Bitcoin may be affected by the high volatility associated with such crypto asset exposure. Future regulatory actions or policies may limit the ability to sell, exchange or use crypto assets, thereby impairing their prices. Crypto asset trading platforms on which Bitcoin trades, and which may serve as a pricing source for valuation of spot Bitcoin held by the Index may be subject to enforcement actions by regulatory authorities.

Technology Industry Risk. The stock prices of technology and technology-related companies and, therefore, the value of the Fund, may experience significant price movements as a result of intense market volatility, worldwide competition, consumer preferences, product compatibility, product obsolescence, government regulation, excessive investor optimism or pessimism, or other factors.

Index: The BITA Crypto Assets and Digital Payments Index (the “Index”) is a rules-based composite index that tracks the market performance of 25 companies, listed on recognized exchanges based in the US, that are actively engaged in crypto-related activities such as cryptocurrency mining, trading, custody, blockchain technology development, and the creation of digital payment solutions. The Index is weighted by modified free float market capitalization and is reconstituted quarterly and rebalanced monthly, providing a dynamic reflection of market trends..

Out of the Money Option: An out of the money call option has a strike price that is higher than the price of the underlying asset.

Call Option: Call options are financial contracts that give the buyer the right—but not the obligation—to buy a stock, bond, commodity, or other asset or instrument at a specified price within a specific period.

Funds distributed by: Foreside Fund Services, LLC, not affiliated with Rex Shares, LLC.

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AIPI Reaches $50M Milestone

Thu, 26 Sep 2024 19:34:32 +0000

REX Shares is excited to announce that AIPI, the REX AI Equity Premium Income ETF, has recently surpassed $50 million in assets under management (AUM)!

Initial Performance:

In just under four months, AIPI has demonstrated its ability to effectively balance income and growth by producing consistent income without sacrificing NAV appreciation.

*The Distribution Rate is the annual yield an investor would receive if the most recently declared distribution, which includes option income, remained the same going forward. The Distribution Rate is calculated by multiplying an ETF’s Distribution per Share by twelve (12), and dividing the resulting amount by the ETF’s most recent NAV. The Distribution Rate represents a single distribution from the ETF and does not represent its total return. Current distributions may include return of capital (ROC). For full details on the composition of distributions, please refer to the latest 19a-1 notice.

**The 30-Day SEC Yield represents net investment income, which excludes option income, earned by such ETF over the 30-Day period, expressed as an annual percentage rate based on such ETF’s share price at the end of the 30-Day period. The REX AI Equity Premium Income ETF has a gross expense ratio of 0.65%. Distributions are not guaranteed.

The Distribution Rate and 30-Day SEC Yield is not indicative of future distributions, if any, on the ETFs. In particular, future distributions on any ETF may differ significantly from its Distribution Rate or 30-Day SEC Yield. You are not guaranteed a distribution under the ETFs. Distributions for the ETFs (if any) are variable and may vary significantly from month to month and may be zero. Accordingly, the Distribution Rate and 30-Day SEC Yield will change over time, and such change may be significant. The distribution may include a combination of ordinary dividends, capital gain, and return of investor capital, which may decrease a fund’s NAV and trading price over time. As a result, an investor may suffer significant losses to their investment. These distribution rates caused by unusually favorable market conditions may not be sustainable. Such conditions may not continue to exist and there should be no expectation that this performance may be repeated in the future. Additional fund risks can be found below.

Interested in Learning More? If you’re curious about AIPI’s approach, book a meeting with our team for a deeper understanding of the AIPI strategy.

Standardized performance can be found here.

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The performance data quoted represents past performance and is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For the most recent month-end performance, please call 1-844-802-4004 or visit the Fund’s website at AIPI – REX Shares.

The Fund’s investment exposure is concentrated in the same industries as that assigned to the underlying securities. Some or all of these risks may adversely affect the Fund’s net asset value (“NAV”) per share, trading price, yield, total return, and/or ability to meet its investment objective. The value of the Fund, which focuses on underlying securities in the technology sector, may be more volatile than a more diversified pooled investment or the market as a whole and may perform differently from the value of a more diversified pooled investment or the market as a whole.

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Investing in the Funds involves a high degree of risk. As with any investment, there is a risk that you could lose all or a portion of your investment in the Funds.

THE FUND, TRUST, ADVISER, AND SUB-ADVISER ARE NOT AFFILIATED WITH THE FUND’S UNDERLYING SECURITIES.

Sector Concentration Risk. The trading prices of the Fund’s underlying securities may be highly volatile and could continue to be subject to wide fluctuations in response to various factors. The stock market in general, and the market for technology companies in particular, where applicable, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies.

Liquidity Risk. Some securities held by the Fund, including options contracts, may be difficult to sell or be illiquid, particularly during times of market turmoil.

NAV Erosion Risk. Due to Distributions. When the Fund makes a distribution, the Fund’s NAV will typically drop by the amount of the distribution on the related ex-dividend date. The repeated payment of distributions by the Fund, if any, may significantly erode the Fund’s NAV and trading price over time. As a result, an investor may suffer significant losses to their investment.

Call Writing Strategy Risk. The path dependency (i.e., the continued use) of the Fund’s call writing strategy will impact the extent that the Fund participates in the positive price returns of the underlying reference securities and, in turn, the Fund’s returns, both during the term of the sold call options and over longer time period.

High Portfolio Turnover Risk. The Fund may actively and frequently trade all or a significant portion of the Fund’s holdings. A high portfolio turnover rate increases transaction costs, which may increase the Fund’s expenses.

New Fund Risk. The Fund is a recently organized management investment company with no operating history. As a result, prospective investors do not have a track record or history on which to base their investment decisions.

FLEX Options Risk. The Fund may invest in FLEX Options issued and guaranteed for settlement by The Options Clearing Corporation (“OCC”). The Fund bears the risk that the OCC will be unable or unwilling to perform its obligations under the FLEX Options contracts.

Non-Diversification Risk. Because the Fund is non-diversified, it may invest a greater percentage of its assets in the securities of a single issuer or a smaller number of issuers than if it was a diversified fund.

Options Contracts. The use of options contracts involves investment strategies and risks different from those associated with ordinary portfolio securities transactions. The prices of options are volatile and are influenced by, among other things, actual and anticipated changes in the value of the underlying instrument, including the anticipated volatility, which are affected by fiscal and monetary policies and by national and international political, changes in the actual or implied volatility of the underlying reference security, the time remaining until the expiration of the option contract and economic events. For the Fund in particular, the value of the options contracts in which it invests are substantially influenced by the value of the underlying securities.

Money Market Securities Risk. The Fund may invest in money market securities, which are short-term, highly rated fixed income securities. Although money market securities typically carry lower risk than equity securities, return of principal and interest may not be guaranteed.

Associated Risks Related to Investing in Artificial Intelligence. Artificial Intelligence typically faces intense competition and potentially rapid product obsolescence. These companies are also heavily dependent on intellectual property rights and may be adversely affected by loss or impairment of those rights. There can be no assurance these companies will be able to successfully protect their intellectual property to prevent the misappropriation of their technology, or that competitors will not develop technology that is substantially similar or superior to such companies’ technology. Artificial Intelligence typically engages in significant amounts of spending on research and development and mergers and acquisitions, and there is no guarantee that the products or services produced by these companies will be successful. Artificial Intelligence is a potential target for cyberattacks, which can have a materially adverse impact on the performance of these companies. In addition, artificial intelligence technology could face increasing regulatory scrutiny in the future, which may limit the development of this technology and impede the growth of companies that develop and/or utilize this technology. Similarly, the collection of data from consumers and other sources could face increased scrutiny as regulators consider how the data is collected, stored, safeguarded and used. Artificial Intelligence may face regulatory fines and penalties, including potential forced break-ups, that could hinder the ability of the companies to operate on an ongoing basis. The customers and/ or suppliers of Artificial Intelligence may be concentrated in a particular country, region or industry. Any adverse event affecting one of these countries, regions or industries could have a negative impact on Artificial Intelligence. Country, government, and/or region-specific regulations or restrictions could have an impact on Artificial Intelligence.

Index: The BITA AI Leaders Select Index is a rules-based composite index that tracks the market performance of companies, listed on recognized exchanges based in the US, that are at the forefront of AI technologies. The final BITA AI Leaders Select Index is calculated by aggregating the “Purity Leaders” and “Key Enablers” categories and weighting them in a fixed proportion of 40% and 60%respectively. The index is rebalanced monthly and reconstituted quarterly.

Funds distributed by: Foreside Fund Services, LLC, not affiliated with Rex Shares, LLC, or its affiliates.

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REX Financial Welcomes Kevin Gopaul as Chief Investment Officer and President of REX Financial Canada

Wed, 11 Sep 2024 12:04:03 +0000

ETF Industry Veteran to Oversee Global Expansion and Product Innovation

MIAMI – September 11, 2024 — REX Financial (“REX”) is pleased to announce the appointment of Kevin Gopaul as Chief Investment Officer and President of REX Financial Canada. In his new role, Kevin will be instrumental in bringing an institutional lens to REX’s growing business, helping to design innovative products and build strategic partnerships, while spearheading the company’s global expansion initiatives.

Kevin brings a wealth of experience from his 25-year career in the financial services industry, most recently serving as Global Head of ETFs at BMO Global Asset Management. As a key architect behind BMO’s $100 billion ETF franchise, Kevin held several prominent leadership roles, including Canadian CEO, Chief Investment Officer, and Global Head of Quantitative Investments. His career has also included positions at leading organizations such as Barclays Global Investors, Sun Life Financial, and Scotia Capital, where he was involved in research, trading, portfolio management, and executive leadership.

“We are thrilled to welcome Kevin to the REX Financial team. His deep expertise in ETFs, combined with his proven leadership in managing large-scale financial businesses, will be a tremendous asset as we continue to expand our global footprint,” said Greg King, CEO of REX Financial. “Kevin’s insights and experience will enhance our ability to offer innovative products to our clients and help us build strategic partnerships in key markets worldwide.”

Commenting on his new role, Kevin Gopaul stated, “I’m excited to join REX Financial at such a pivotal time. The opportunity to work alongside respected leaders and gain deeper exposure to the U.S. ETF market is truly compelling. I look forward to using my global experience to help grow REX’s presence and drive its continued innovation in the ETF space.”

For more information on REX Financial’s leadership team and strategic initiatives, please visit rexsharestg.wpengine.com.

About REX Financial

REX Financial is a leading provider of innovative exchange-traded products (ETPs), specializing in alternative strategy ETFs and ETNs. With over $5 billion in assets under management, REX is known for pioneering the MicroSectors and T-REX product lines, offering leveraged and inverse exposure to a variety of market sectors. REX also provides a number of services for its crypto-focused sister company, Osprey Funds, LLC. REX continues to drive industry innovation through its growing suite of ETPs, serving investors seeking sophisticated trading tools, income strategies, and other alternative exposures.

For media inquiries, please contact:

Gregory FCA for REX Shares

rexfin@gregoryfca.com

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ETF Market Risks

Tue, 02 Jul 2024 13:28:43 +0000

What is Risk, and Why Does It Matter?

Broadly speaking, risk in the investing context is the possibility that an individual or institution may not reach their goals. And there are many risks to be aware of, such as interest rate risk, geopolitical risk, and counterparty risk. Let’s put those portfolio threats aside and focus on the Investment/Market Risks associated with ETFs. There are a number of risk metrics investors can use to see whether or not a given ETF is meeting its objective. It’s important to know what these metrics are—and it’s equally crucial to understand what constitutes a good number, and what suggests cause for concern. To use a baseball analogy, knowing what slugging percentage represents is only half the battle—the savvy fan can put a player’s figure in context, making an informed conclusion as to how good a hitter someone truly is.

Is Your ETF Doing Its Job? The Importance of Tracking Difference

Although active ETFs have become more prevalent, the most popular funds are still passively managed. Whether or not a passive ETF increases or decreases in value, it’s crucial to know whether the fund is “doing its job.” In other words, is a given passive ETF reflecting its benchmark index, or meaningfully straying from it? This is where a metric known as Tracking Difference can be used. Tracking Difference is the discrepancy between ETF performance and index performance over a specified period of time. For passive ETFs, Tracking Difference is arguably the most important risk metric to follow.

Every ETF will have some element of Tracking Difference. For one thing, an ETF’s total expense ratio (TER) can always be expected to contribute to Tracking Difference, as it creates an exact drag on the fund’s performance compared to its index. In this vein, investors obviously benefit from a lower TER, as this minimizes the gap between an ETF’s performance and its benchmark index.

A Fund’s Tracking Difference Can Also Be Impacted by Other Factors, Such As:

• Cash Drag: In a bull market, a portfolio that holds cash will tend to underperform an index with no cash component.

• Sampling: Some ETFs engage in what’s known as “Full Replication”—owning all components of an index. Other ETFs, though, ‘sample’ a majority of the index components—owning most, but not all, of its securities. By not fully replicating an index, an ETF is exposed to Tracking Difference (positive or negative).

• Securities Lending: Many ETFs earn extra income by lending out shares to short sellers. On the one hand, this practice can improve a fund’s performance. However, there are a couple of risks. First, if a security that has been lent out soars in value and bankrupts a short seller, the borrowed shares may not be returned. This turn of events would mean the ETF would not benefit from the security’s jump in price, leading to underperformance relative to the index. To be clear, this is a rare event. To protect the lender from risk of loss, lent securities are always collateralized using cash or securities, commonly government debt. Cash collateral is more common in the United States, while Europe tends to favor noncash. This is common practice for ETFs.

• Trading Costs: When an ETF buys or sells securities (to re-balance, for example), it incurs trading commissions. These costs also cause the ETF’s performance to deviate from that of the index.

From Tracking Difference to Tracking Error

Tracking Difference is a measure of whether an ETF is keeping up with its index, but Tracking Difference fluctuates over time. That’s where a measure known as Tracking Error can be employed. Tracking Error is essentially the volatility of an ETF’s Tracking Difference. The lower the number, the better. Tracking Error shows you if the tracking difference is relatively consistent, or if it varies wildly over the course of the year.

Some investors conflate Tracking Difference with Tracking Error. They see a high Tracking Error and conclude that a given ETF isn’t properly following its index. In reality, the Tracking Difference may simply be low but volatile.

It’s important to note that, for the purpose of Tracking Difference and Tracking Error calculations, an ETF’s performance can be measured by price or Net Asset Value (NAV). Price is based on the perceived value of the fund by buyers and sellers in the market, while NAV is based on the prices of the underlying securities and their weights making up the fund. NAV may have fewer uncontrollable variables impacting its measure of performance, arguably making it the better choice.

Other Passive Measures of Risk

In addition to Tracking Difference and Tracking Error, there are two other key metrics used to measure ETF risk for passive ETFs: Beta and Standard Deviation.

Beta is a measure of an ETF’s volatility relative to the market. By definition, the overall market’s Beta is 1.00. An ETF with a Beta greater than 1.00 has exhibited more volatility than the market over a specified period of time. In contrast, an ETF with a Beta less than 1.00 has been less volatile than the overall market.

Beta is also a function of correlation: An ETF with a positive Beta (greater than 0) is positively correlated with the overall market, whereas an ETF with a negative Beta (less than 0) is inversely correlated to the overall market. Most passive ETFs will have a positive Beta. Sectors that tend to exhibit high levels of volatility will have a positive Beta greater than 1, and more defensive sector ETFs will have a Beta that is positive but less than 1. Examples of passive ETFs that may, depending on the market environment, have a negative Beta, include inverse ETFs (exchange traded funds that use derivatives to achieve the opposite returns of a specified benchmark), and government bond ETFs.

Standard Deviation compares the long-term average return of an investment to the shorter-term returns it achieved along the way. It’s common to look at the historical average returns of an investment when deciding if it’s a good opportunity. But average returns don’t tell the whole story. Suppose two ETFs both average a 7% return over the past 10 years. But when looking at individual years, one returned 7% every year while the other had some years with double-digit performance, and others with low single digit returns. Clearly, the ETF that rose 7% each year displayed lower volatility than its counterpart—and likely took less risk to achieve the same long-term return.

It’s crucial to note that Standard Deviation includes both upside and downside volatility. So, a high number could indicate increasing returns, decreasing returns, or a combination of both.

Active Measures of Risk

Passive ETFs may still dominate, but active products are becoming increasingly popular with investors. Fortunately, we also have measures of risk to assess these ETFs as well. As with passive ETFs, investors can use both Beta and Standard Deviation when judging whether an active product is meeting its objective.

In addition, there are two key risk metrics specifically applicable to active ETFs:

• Alpha: A measure of how an ETF performs relative to a particular index or benchmark over a specified period of time, after adjusting for volatility. Alpha offers a window into the ‘active’ performance of an ETF, allowing investors to see whether a fund is outperforming or underperforming a passive benchmark. This measure is expressed as a percentage. For instance, an ETF with an Alpha of 3% will have exceeded its benchmark by this amount, after taking into account the volatility of the fund’s portfolio.

• Sharpe Ratio: A measure of an ETF’s excess returns relative to its volatility. The Sharpe Ratio indicates how much excess return is generated per unit of risk taken, and a higher number implies that an investor is being compensated for taking on extra risk with relatively outsized returns. The Sharpe Ratio gives investors a sense of whether an active ETF fund is taking a substantial amount of risk in order to generate outperformance. Ideally, an ETF is delivering above average returns with low volatility. The Sharpe Ratio is also expressed numerically (the higher the better), with anything above 1 considered to be good.

Sidebar: Liquidity Risk

ETF investors are also faced with potential liquidity risk. This is especially true if a significant portion of a fund’s assets are concentrated in thinly traded securities. An ETF’s liquidity is tightly linked to the liquidity of its underlying holdings. As a result, a fund that has a large weighting in small companies with large bid-ask spreads and low volume will usually have poorer liquidity than a fund, which predominately owns large-capitalization stocks with tighter spreads and high daily volume.

Conclusion

ETFs have specific roles to play in an investor’s portfolio. There’s no guarantee that a given ETF will rise in value, as any number of market factors could lead to a decline. But whatever the market environment, it is crucial that the ETF is performing its role correctly. Investors should look at the key risk metrics for a given fund to see whether the ETF is truly “doing its job.” That can help determine whether it’s a hold, or if it’s time to sell and move on to a product more likely to meet their objective.

This resource is brought to you by NASDAQ

Distributed by NASDAQ CAPITAL MARKETS ADVISORY, LLC, a Registered Broker Dealer and affiliate of Nasdaq, Inc.

Investment Risks

Exchange Traded Products (ETPs) are types of securities that derive their value from a basket of underlying securities such as stocks, bonds, commodities, etc., and trade intra-day on a national securities exchange. Generally, ETPs take the form of Exchange Traded Funds (ETFs) or Exchange Traded Notes (ETNs). Each ETP has a unique risk profile, detailed in its prospectus, offering circular, or similar material, which should be considered carefully when making investment decisions.

Exchange Traded Funds (ETFs) are subject to market risk, including the possible loss of principal. The value of the portfolio will fluctuate with the value of the underlying securities. ETFs may trade at a premium or discount to their net asset value. ETFs may have underlying investment strategy risks similar to investing in commodities, bonds, real estate, international markets or currencies, emerging growth companies, or specific sectors.

Diversification is not a guarantee against loss.

Nasdaq® is a registered trademark of Nasdaq, Inc. The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Neither Nasdaq, Inc. nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding Nasdaq-listed companies or Nasdaq proprietary indexes are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.

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Key Benefits Of ETFs

Tue, 02 Jul 2024 13:28:25 +0000

There are many great investment tools available for investors to reach their objectives. Choice, as every consumer knows, is wonderful, but understanding the various options is important.
For millions of people the right option continues to be exchange traded funds (ETFs). From humble beginnings in the 1990s, ETFs have become a veritable juggernaut in the world of investments. The exchange traded fund is a transformational vehicle, and its crucial benefits have won over both individuals and institutions alike.

Diversify Your Portfolio

We’ve all heard the adage, “Don’t put all your eggs in one basket.” In an investment context, this advice speaks to the importance of being properly diversified. Diversification can enhance risk-adjusted returns over time, protecting a portfolio against a sharp drop in one holding or asset class. Exchange traded funds can offer compelling benefits in terms of diversification. From an asset allocation standpoint, owning ETFs can complement and augment the other building blocks of an investor’s portfolio—whether that’s cash or cash equivalents, individual securities (equities or fixed income), or alternative investments (e.g. private equity, hedge funds, real estate, etc.).

Meanwhile, exchange traded funds allow for diversification because they offer investors access to such a wide range of stocks and bonds. There are ETFs that seek to track broad market indices (such as the Nasdaq-100®), strategies that complete parts of a portfolio such as value, growth, or income, as well as funds that focus on specific countries or sectors. Each investor
can buy the mix of ETFs that helps to meet their unique needs and objectives.

Individual and institutional investors can also choose from passive and active exchange traded funds. Passive ETFs buy and hold a basket of securities, which are typically representative of an index, sector, or country. Unlike, say, a traditional active mutual fund, a passive ETF does not have portfolio managers who aim to buy certain securities (and avoid others) in a quest for outperformance. These types of ETFs often sport ultra-low fees, as the fund provider doesn’t need to maintain expensive teams of analysts and portfolio managers.

While passive funds still dominate the ETF space, investors now have increasing access to actively managed exchange traded funds. These function in the same way as traditional (i.e. passive) ETFs but have professional managers at the helm buying and selling in a bid to outperform an index or other benchmark. Active ETFs do tend to come with somewhat higher fees, but they also have the potential of outperforming their benchmark.

Low Cost and Easy Access

Two features that have made ETFs so popular are their low fees and their ease of access. Take cost, for starters. Compared to mutual funds, exchanged traded funds have rock-bottom management expense ratios (MERs).

ETF fees usually range from around 0.1%-0.45%, depending on the strategy and whether they are passively or actively managed.

ETFs are also super-easy to access. Anyone with a brokerage account (whether it’s self-directed or through an advisor) can buy and sell ETFs. Indeed, with online trading, this can literally be done with the click of a few buttons. What’s more, the management fees associated with owning an ETF tend to be very inexpensive. To use a simplified example, an investor who buys $10,000 of an ETF with a 0.1% management expense ratio would pay $10 to the fund provider each year. Trading costs (which are paid to an investor’s broker) are a separate cost.

Exchange traded funds are accessible in another way as well: there’s no minimum purchase. This makes them ideal for individuals who are just starting to build a portfolio. Mutual funds, on the other hand, typically require a minimum investment.

Intra-Day Trading

Another advantage of ETFs is that you can buy and sell them throughout the trading day. So, while we don’t recommend attempting to time the market, you do have the ability to respond to market changes as they happen. Intra-day trading is also crucial because it allows investors to buy and sell a holding instantaneously. This allows you, for instance, to quickly raise funds if you spot another investment opportunity.

You don’t have to wait for the close of trading to know the price you’ll receive, either.

Intra-day trading is available for all ETFs, including those that trade less frequently. For those ETFs, which can have more price fluctuations, it is best practice to use a limit order or wait until after the market has been open for an hour or so.

Tax Efficiency

Returns matter for investors, but what really matters are after-tax returns. Fortunately, the way exchange traded funds are designed can help minimize the taxes paid by investors holding the ETF. Without going into too many details, ETFs can engage in ‘in kind’ transactions for their underlying securities, which avoid the realization of capital gains. This leads to lower capital gains taxes pay able for those who hold an ETF in their portfolio. So, while investors will still realize capital gains for the increase in their purchase price vs. their sale price, trading activity
within the ETF likely won’t have any tax implications.

Price Efficiency

Price matters. Whether you’re buying a sweater, a car, or an ETF, you want to feel confident that you won’t pay more than something is currently worth or sell for less than you could get. The good news is that exchange traded funds have two mechanisms that contribute to the price efficiency. First, each ETF has one or more designated Authorized Participants. These are typically brokerage firms or other trading companies. Authorized Participants may deal both in a given ETF, as well as that ETF’s underlying assets—creating and redeeming units of a fund in the process.

If the market price of an ETF is trading at a discount to its Net Asset Value (NAV)*, an Authorized Participant (AP) can deliver units of the ETF to the fund’s provider, taking the ETF’s basket of securities in return. On the flip side, if an ETF is trading at a premium to its NAV, an AP can profit by doing the reverse: Buying securities and delivering them to the fund provider in exchange for ETF units. This kind of arbitrage is profitable for the Authorized Participant and brings the market price of a fund in line with its value.

A second layer of price efficiency in ETFs arises due to the actions of what are known as Market Makers. Market Makers are trading firms designated to provide liquidity when required. These firms post bid and ask quotes throughout the trading day, giving prospective buyers and sellers the ability to trade in an ETF. As with Authorized Participants, Market Makers can help arbitrage away any significant premium or discount in an ETF relative to its underlying NAV—buying if an ETF is trading at a discount and selling if it’s trading at a premium.

Transparency—Know What You Own

A final but still crucial benefit of ETFs is their transparency. In other words, investors know what they’re buying, and they know what they’re selling. ETFs differ in the amount of transparency they provide, but in both cases, there is sufficient disclosure for someone to make an informed decision.

Fully transparent ETFs publish their complete list of holdings daily. That means the market knows at the end of each trading day which securities an ETF owns—and exactly how many. Semi-transparent ETFs, on the other hand, shield some level of detail to protect their investment process. To facilitate transparency, these funds publish what is known as an indicative NAV. Usually updated every 15 seconds throughout the trading day, an indicative NAV tells the market what a fund’s underlying holdings are worth. Semi-transparent ETFs also publish a proxy basket for Market Makers: While not a fund’s actual portfolio holdings, this basket is designed to be sufficiently representative so as to encourage trading firms to keep providing liquidity to the market.

A Note on Notes

This primer has delved into the world of exchange traded funds, but there are other exchange traded products including exchange traded notes (ETNs). ETNs, one of the many exchange-traded products out there, are very different than ETFs. Most importantly, an ETN represents an unsecured liability on the part of its issuer (often a bank). If, for whatever reason, the issuer cannot make good on its obligations, investors in an ETN could suffer losses, even if they were correct in choosing a particular sector or market. Contrast this with ETFs, which are their own standalone structure, that hold securities on behalf of the fund’s investors.

ETFs are Here to Stay

From virtual obscurity a few decades ago, ETFs have become a household term. They have revolutionized the investing world, allowing individuals and institutions to access a wide variety of strategies in a low cost, tax-efficient manner. For its benefits, it seems a safe bet that the exchange traded fund is here to stay.

This resource is brought to you by NASDAQ

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Examining the ETF Landscape

Tue, 02 Jul 2024 13:27:56 +0000

Historically, most exchange traded funds (ETFs) have been passive. But that’s starting to change, with more and more active ETFs coming to market. The growth in active ETFs is largely the result of traditional fund managers realizing that the ETF is a great wrapper and investment vehicle for a broad range of strategies. The result is that investors have more choice than ever before.

Active vs. Passive ETFs Defined

Passive ETFs are designed to track a particular index or sector — and, hence, do not aim to “beat the market.” Rather, they tend to own a basket of securities (based, for example, on market capitalization). The buying, selling and rebalancing process for these strategies is based on a specific set of rules outlined in the product’s methodology.

While they can be rebalanced occasionally if, say, an index is altered, they don’t engage in buying or selling for the purpose of generating excess returns.

Active ETFs, by contrast, are designed with the goal of outperforming a benchmark index or sector. Helmed by professional fund managers, these ETFs may employ a proprietary mix of quantitative and qualitative investment strategies to inform buy and sell decisions. Ideally, an active ETF will deliver ‘alpha’ to investors, that is, a risk-adjusted return that beats a given benchmark.

Why Investors Might Choose Either an Active or Passive ETF

Both styles of ETFs have merits. Passive ETFs might be the right choice for investors who seek index-like returns and prioritizes very low fees. Meanwhile, investors may gravitate toward active ETFs due to a desire to outperform the market — and a belief that their ETF is led by professional managers with the ability to do so.

Source: Nasdaq, as of Oct 23

Differences in Benchmarking: Active vs. Passive ETFs

Active ETFs have more flexibility to choose their reference benchmark or even to choose multiple benchmarks. Active ETF managers can then use the securities and financial instruments within their stated strategy to attempt to outperform their benchmark(s). Conversely, passive ETF managers can choose a specific method to track their one benchmark. Their selection methodology can be full replication, optimization or synthetic replication.

• Full Replication: The ETF holds every security at the same weight as in the benchmark index.

• Optimization: When an index includes more constituents or difficult-to-trade constituents than the ETF can handle in terms of trading costs, the ETF will
hold an optimized sample of the index in terms of costs, correlations and exposure.

• Synthetic Replication: The ETF does not buy the underlying securities of its index and instead uses derivatives to swap the performance of the index for a defined fee. Full disclosure happens on a monthly basis.

Almost all fixed income ETFs use an optimization approach because most fixed income indexes hold thousands of bonds that may or may not have traded recently. The fixed income portfolio manager will utilize a more liquid sample of the bonds to replicate the desired performance.

Smart Beta ETFs: A Hybrid Approach to Investment Management

ETFs that combine elements of active and passive approaches employ so called Smart Beta strategies and do not track a straightforward index like the Nasdaq-100® or S&P 500. Rather, these strategies create a more complex set of screening, filtering, weighting and/or rebalancing rules. This could be interpreted as a hybrid approach because it takes the guidelines an active manager may follow and codifies them into a new Smart Beta index that an ETF can track.

Issuers have expanded into launching ETFs focusing on one or more factors that are meant to be used to outperform different parts of the economic cycle as well.

Smart Beta, defined:

Using a rules-based approach instead of discretionary stock-picking.

Source: Nasdaq, as of Oct 23

Mutual Fund and Separately Managed Account Conversions to ETFs

The popularity of ETFs among investors shows no signs of abating. As a result, some mutual funds, as well as separately managed accounts (SMAs), are converting to ETFs. Conversions allow for active management offered in a form that can be more tax-efficient, more liquid, more transparent, more accessible (intraday trading/can be purchased on a simple brokerage app) and potentially with lower fees than mutual funds or SMAs. Converting is not without its hurdles, however. The switch from a mutual fund or SMA to an ETF involves operational challenges, significant communication with investors, and in some cases, shareholder approval.

Number of Mutual Fund to ETF Conversions

Source: Nasdaq, as of Oct 23

Conclusion

The scope of ETFs has broadened considerably in recent years. Investors can still access a wide range of passive vehicles, but now have the choice of adding active ETFs to their portfolios. To help ensure you own the ETF that best fits your objectives, understanding the nuances behind the different products is a must.

This resource is brought to you by NASDAQ

Distributed by NASDAQ CAPTIAL MARKETS ADVISORY, LLC, a Registered Broker Dealer and affiliate of Nasdaq, Inc.

Investment Risks

Diversification is not a guarantee against loss.

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