A new opportunity exists for tech investors and leveraged strategy enthusiasts. AOT Invest launched the 2x Daily Software Platform ETF (SOFL) today on the NYSE Arca.
SOFL seeks to offer twice the returns of the AOT VettaFi Software Platform Index. The Index tracks companies that create, rely on, or contribute to software platforms as well as those connected to the service delivery and functioning of the platforms.
Software platforms include scalable technologies that allow for the creation, deployment, or use of digital ecosystems, applications, or services. These include cloud infrastructure, application development, and enterprise software platforms. They also include data analytics and AI, specific industry software, or middleware and integration platforms.
Index Composition & Leveraged Risks
The majority of the Index includes companies that derive at least 50% of their revenue from software platforms or related activities. It also includes companies whose core business relies on software platforms as well as those that license and develop them. The Index tracks the 50 top-performing companies within the industry. Companies are considered based on a score that measures both industry presence as well as quality. The Index rebalances quarterly.
SOFL uses derivatives that include swaps and listed options contracts to achieve its leveraged goals. As with all leveraged funds, SOFL should only be considered by experienced investors. The fund’s returns are based on twice the daily performance of the Index.
For any investment period longer or shorter than one day, anticipate skewed returns. Investors that hold the fund for longer periods will receive compounded daily returns for each day held. These returns will in turn deviate from the Index’s doubled returns over the same period. Elevated volatility, longer holding periods, and leverage may exacerbate compounding effects.
SOFL carries an expense ratio of 1.29%.
VettaFi LLC (“VettaFi”) is the index provider for SOFL, for which it receives an index licensing fee. However, SOFL is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of SOFL.
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