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Volatility Shares, a financial company known for its groundbreaking ETFs, is introducing a new series of ETFs. This financial instrument, which uses a one-plus-one model, will give investors 100% leveraged exposure to two different assets at the same time.
This new product structure combines major asset classes such as cryptocurrencies, equity indices and volatility indices. It offers portfolios such as BTC+ETH, Nasdaq+ETH, S&P+BTC, S&P+ETH, S&P+Nasdaq, and S&P+VIX.
Volatility Shares Introducing Diversified Access to ETFs
According to Eric Balchunas, ETF expert at Bloomberg Intelligence, the one-plus-one ETF is reminiscent of the “Ministry Planting ETF.” They use leverage to optimize exposure without requiring additional capital from the investor. Balchunas emphasize the appeal of the product This is for investors who want to optimize portfolio allocation without giving up exposure to any asset.
“VolatilityShares is introducing the new One+One ETF family, which uses leverage to provide 100% exposure to two assets at once, e.g. 100% QQQ + 100% Ether. Seems similar to Horticulture ETFs,” Balchunas comment.
Jeffrey Ptak, CFA and Director of Ratings at Morningstar, provides further insight. Grandfather explain that these ETFs aim to provide 100% notional exposure to each underlying asset through the use of futures contracts.
For example, the Nasdaq+BTC ETF would simultaneously provide full exposure to the tech-heavy Nasdaq index and Bitcoin’s volatile cryptocurrency market. Ptak also confirmed that the filing for this ETF line has been submitted to regulators.
Consequences for Investors as Crypto-ETF Competition Heats Up
For investors, the one-plus-one ETF represents significant growth in the exchange-traded fund sector. Combining traditional financial instruments like the S&P 500 or Nasdaq with high-growth assets like Bitcoin and Ethereum can open up unique diversification strategies.
However, the leverage contained in these products carries additional risks, especially for volatile assets such as cryptocurrencies. This can amplify both profits and losses.
“Such products can be game-changers for portfolio diversification, but their complexity and leverage make them suitable for savvy and risk-aware investors,” one expert said. Industry experts commented after the announcement.
Still, Volatility Shares’ groundbreaking approach comes amid increased activity in the crypto ETF space. Bitwise recently filed an application with the U.S. Securities and Exchange Commission (SEC) for a “Bitwise 10 Crypto Index ETF.”
This index seeks to track the performance of a diversified basket of top cryptocurrencies. The move reflects growing demand for accessible cryptocurrency investments that go beyond single asset offerings like Bitcoin or Ethereum.
Franklin Templeton has also filed a proposal with the SEC for a Bitcoin and Ethereum Index ETF. The fund will compete directly with Volatility Shares dual asset products by targeting the same market of investors looking to combine traditional equity exposure with cryptocurrency.
Despite the increase in crypto ETF profiles, regulatory challenges remain a key obstacle. The SEC has been reticent to approve cryptocurrency-related ETFs due to concerns about market manipulation and volatility. However, with growing interest from the likes of BlackRock, Franklin Templeton, and now Volatility Shares, the momentum towards approval may be changing.
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