On Thursday, Defiance ETFs rolled out its next leveraged fund, the Defiance Daily Target 2X Long LLY ETF (LLYX).
The actively managed LLYX has a net expense ratio of 1.29%. The fund seeks to provide investment results that are double the daily percentage change for Eli Lilly and Company (LLY)’s share price.
“Our new ETF, LLYX, allows investors to gain enhanced exposure to the share price movement of Eli Lilly stock, a company at the forefront of the weight loss revolution with GLP-1 receptor agonists,” noted Defiance ETFs CEO Sylvia Jablonski. “We believe the advancements in GLP-1 therapies represent a multitrillion-dollar opportunity, and we are excited to provide investors with a groundbreaking trading tool to participate in this transformative sector.”
Swap Strategy
To provide leveraged exposure to Eli Lilly’s share price, the ETF enters into swap agreements on LLY. Periods in which the fund remains in swap agreements may range from one day to over a year. Notably, the fund will not directly invest in Eli Lilly stock.
At the conclusion of each day, LLYX will value its swaps with market valuations and rebalance the holdings. By doing so, the fund aims to maintain exposure to 200% of LLY’s share price.
While a leveraged approach may expose investors to more risk, the rewards may be worth it. Eli Lilly has enjoyed a strong overall performance over the past 12 months, driven by innovative pharmaceutical products.
A variety of assets will be held by LLYX to provide collateral for the swap agreements. These holdings may include U.S. government securities, money market funds, corporate debt securities, and short-term bond ETFs.
“There’s been immense interest in leveraged products that track single stocks this year. So it’s an exciting time to for Defiance to be entering the fray,” added Kirsten Chang, senior industry analyst at VettaFi. “In keeping with its first-mover thematic approach, the company is now offering a way to double down on the popular weight-loss drug field, in which Eli Lilly is a proven giant.”
For more information, please visit VettaFi.com | ETF Trends.
