The Global X Ultra Long Nasdaq 100 Complex ETF (ASX: LNAS) provides geared exposure to the Nasdaq 100, aiming to amplify movements in the index and therefore offering significantly more upside, and downside, than an unleveraged ETF such as NDQ. With a 1.00% annual management fee and around A$80m in assets, it is a smaller, higher-risk product generally better suited to tactical short-term traders/investors comfortable with leverage and greater volatility.
The LNAS is a very different beast from the other four ETFs, being the only leveraged ETF, using derivatives to amplify movements in the Nasdaq 100 and therefore magnifying both gains and losses. Hence, the LNAS is primarily a vehicle to enact a short-term view on US technology stocks; leverage also introduces greater volatility and compounding risk when markets are choppy. That higher-risk structure comes at a cost, with a 1.00% management fee, the highest of the group, while its roughly A$80m in assets makes it substantially smaller than its peers.
For MM, LNAS is best viewed as a high-octane Nasdaq exposure rather than a core portfolio holding, potentially powerful when the market is trending higher, but equally unforgiving when it moves the other way. It’s important to comprehend that in sideways markets the valuation of the LNAS, like all leveraged ETFs, will steadily erode: After 20 days of ±2% daily swings with the index ending flat, LNAS would be down approximately 4%, purely from the mathematics of compounding leveraged daily returns. The higher the daily volatility, the greater the decay.
- We are generally not fans of leveraged ETFs, but we can see the LNAS ETF advancing ~20% in the coming few weeks.
