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BMO's MicroSectors™ FANG+™ ETNs Update

In a significant announcement, the Bank of Montreal (BMO) has informed investors about important developments regarding its MicroSectors™ FANG+™ Index 3× Leveraged ETNs, known by their ticker symbols FNGA and FNGB. This update comes as part of BMO's ongoing commitment to providing clear and timely information about its investment products.

Redemption of FNGA ETNs

BMO has expressed its intention to execute its call option to redeem all outstanding FNGA ETNs, which are due on January 8, 2038. Investors are notified that the redemption will take place on the Call Settlement Date, anticipated to be on May 15, 2025. The FNGA ETNs were initially launched in January 2018 at fee structures based on contemporary market conditions. However, BMO has decided to exercise its redemption rights due to escalating costs associated with the leverage in these ETNs, which do not align with the current market environment.

As a result, the bank will be sending out a call notice to FNGA ETN holders on May 1, 2025. This call notice will trigger a calculation period from May 2 to May 8, 2025, where the average closing values will determine the cash payment amount that investors will receive upon redemption. Consequently, the FNGA ETNs are expected to be delisted from the NYSE prior to market opening on the redemption date, with the final trading day being May 14, 2025.

New FNGB ETNs Available

In conjunction with the redemption of the FNGA ETNs, BMO has launched a new series of MicroSectors™ FANG+™ 3× Leveraged ETNs, identified as FNGB. These new ETNs are designed to provide sophisticated investors with a levered approach to participate in the daily performance of the NYSE FANG+® Index, which tracks ten notable growth stocks in the technology and media sectors. The FNGB ETNs were made available for trading on the NYSE Arca starting from February 20, 2025.

As part of this new issuance, BMO has taken into account the current market fees and charges, positioning the FNGB ETNs as a beneficial alternative for investors seeking continued access to leveraged exposure while ensuring the charges reflect today's market realities. Notably, from the Initial Trade Date up to August 19, 2025, the Daily Investor Fee for the FNGB is set at a discounted rate of 0.35% annually, increasing to 0.95% thereafter.

Investment Considerations and Risks

It is crucial for investors to understand that the FNGB ETNs are intended as trading instruments and not for long-term holding. Due to their daily resetting leverage, the performance of these securities may deviate significantly, and investors are cautioned that returns over time likely differ from a direct investment in the underlying Index. This heightened risk can lead to substantial daily price fluctuations, mandating vigilant monitoring for any investor holding the FNGB ETNs.

For those considering investing in either the FNGA or FNGB ETNs, it’s recommended to review the detailed provisions outlined in the ETN prospectus, ensuring a comprehensive understanding of the potential risks and rewards inherent in these investment vehicles.

BMO strives to support its investors amidst changing market conditions by providing clear communication about their products, with an emphasis on prudent risk management. For additional information and updates regarding these ETNs, investors can consult the official BMO websites or financial advisors for guidance tailored to individual investment strategies.

Conclusion

In conclusion, investors in the MicroSectors™ FANG+™ ETN series have critical updates to consider, including the upcoming redemption of the FNGA ETNs and the availability of the FNGB ETNs. As market dynamics evolve, staying informed about these investment opportunities will be paramount for effective portfolio management. BMO remains dedicated to assisting its client base through clear and timely disclosures, reflecting their commitment to fostering investor confidence and market engagement.