New Listings: There Is a Leveraged ETF on the Broker That Sells You Leveraged ETFs

The ETF industry has quietly closed the loop on itself, and almost nobody noticed.

Leverage Shares 2x Long HOOD Daily ETF (HOOG, Nasdaq)

Robinhood built a business on making leveraged and speculative exposure available to people who would previously have had to phone someone in a suit to get it. There is now a fund that gives you two times the daily move in Robinhood itself. You can buy it, as it happens, on Robinhood.

Take a moment with that. The product is a daily-reset leveraged bet on the share price of the platform whose revenue depends on people placing daily-reset leveraged bets. If retail trading volumes boom, the underlying rises and the fund rises faster. If retail goes quiet, the whole edifice deflates twice over. It is not a hedge. It is the opposite of a hedge. It is the trade and its own beta, welded together and sold as one line item.

I keep trying to decide whether this is a serious risk-management concern or simply very funny. So far the answer is both. It is worth noting that the fund has lost roughly half its value over the past year while remaining comfortably ahead since launch, which is the single most honest summary of daily-reset leverage anyone has ever produced by accident.

Direxion Daily PLTR Bull 2X and Bear 1X ETFs (PLTU and PLTD, BMV and BIVA)

Somebody has been busy with the paperwork. Mexico's international quotation segment now carries well over a thousand foreign-listed ETFs, and this batch brings it a fresh consignment from the American leverage aisle: two times long Palantir, one times short Palantir, and, for balance, two times long Microsoft and two times long Oracle.

The long and the short of the same stock arriving in the same batch is the part I enjoy. No view is being expressed. That is not the product team's job. Their job is to make sure that whatever a Mexican trader thinks about Palantir on any given morning, there is a peso-settled instrument waiting to express it.

And Palantir is a genuinely reasonable choice of underlying for this treatment, in the sense that it is deeply unreasonable. The company grows revenue at a rate most enterprise software businesses would consider science fiction. It also trades on a multiple that requires it to keep doing exactly that for a very long time, and it has now spent a good while a long way below its highs. Two times that, daily, is a product for people who have made peace with something.

The Microsoft version is the one that made me put my coffee down. Two times daily leveraged exposure to one of the largest and most heavily analysed companies on earth. There is no informational edge left in Microsoft. There is only the gearing.

iShares Euro Government Bond 1-3yr UCITS ETF, Mexican Peso Hedged (IBGMX, Cboe Europe)

This is my favourite thing in the batch, and I appreciate that it will be nobody else's.

Consider what has to be true for this fund to exist. Somebody, somewhere, wants short-dated European government bonds. That somebody keeps their books in Mexican pesos. That somebody is numerous enough, and institutional enough, to justify a dedicated currency-hedged share class with its own line on a European venue. Euro sovereign duration of one to three years, currency risk stripped out and replaced with peso exposure, twenty-two basis points, and it is not even alone: there are peso-hedged siblings across the shorter end of the euro and dollar government curves.

There is no story here. There is no theme. Nothing about it will trend. It is a piece of financial plumbing built for a very specific person with a very specific mandate, and it is the single most professional object in the entire batch. Two peso-facing products in one wave, one of them the most aggressive thing on the list and the other the most sober. The same currency, serving opposite temperaments.

Global X Euro Stoxx 50 Covered Call UCITS ETF (SYLD, London Stock Exchange)

Here is a fund that exists to give away the upside, and it landed in the same wave as a shelf full of products built to multiply it.

The mechanics are a buy-write on the Euro Stoxx 50, delivered synthetically, paying out monthly, for forty-five basis points. You take the exposure to fifty of the largest companies in the eurozone, and you sell call options against it. The premium comes back to you as income. The gains above the strike do not come back to you at all. That is not a flaw in the design, it is the design.

Which makes it the philosophical opposite of everything else on this list. The leverage products exist because their buyers want the tails. This one exists because its buyers want the tails removed and would prefer to be paid for the inconvenience. Both propositions are entirely rational. They cannot both be rational for the same investor, and yet here they are, cleared and settled through the same infrastructure, on the same morning.

A hundred million euros or so has already found its way in, which suggests somebody out there has done the sums and decided that capped equity beats uncapped anxiety.

CT QR Series Emerging Markets Equity Active UCITS ETF (QREM, London Stock Exchange)

And then, listed in the same wave, this.

A systematic active emerging markets equity fund. It runs a quantitative stock selection process, it charges thirty basis points, and its stated ambition is to beat the MSCI Emerging Markets index. That is the whole proposition. No leverage multiplier. No inverse sibling. No currency overlay for a jurisdiction you have to look up. No acronym doing the work that a strategy should be doing.