BMO Introduces Major Changes to MicroSectors FANG+ ETNs with New Launch and Redemption Plans

BMO's Strategic Announcement for MicroSectors FANG+ ETNs

In a significant update for investors in the technology sector, BMO Financial Group has officially announced plans to execute a complete redemption of its MicroSectors™ FANG+™ Index 3× Leveraged ETNs, known by the ticker symbol FNGU. This decision is driven by increased costs associated with maintaining the leverage embedded in these exchange-traded notes (ETNs) and reflects a broader shift in the current market conditions that no longer align with the existing fee structure introduced back in 2018.

Details of the Redemption and Ticker Change

Effective May 15, 2025, BMO will liquidate all outstanding FNGU ETNs, previously issued with the expectation of sustaining a longer lifespan. In conjunction with this redemption, effective March 3, 2025, the ticker symbol for these ETNs will change from FNGU to FNGA.

Moreover, BMO plans to launch a new linked security, MicroSectors™ FANG+™ 3× Leveraged ETNs, with an anticipated expiration date of January 23, 2045. These new ETNs will initially trade under the ticker FNGB and are set to reinstate the FNGU symbol approximately 90 days after the symbol change. This strategic move is designed to preserve investor familiarity with the FNGU ticker while transitioning to the newer FNGB instruments.

Introducing FNGB ETNs for Continued Investor Access

The newly formed FNGB ETNs are engineered to provide investors with a three-fold leveraged exposure to the NYSE FANG+® Index and are fully aimed at sophisticated traders. Unlike traditional buy-and-hold strategies, these instruments are designed for daily trading amid high volatility and market fluctuations, allowing traders to navigate their trading strategies effectively.

The introduction of the FNGB ETNs aims to address the rising demand for leveraged products in today's fast-paced market environment. On the initial trading date, the Daily Investor Fee for the FNGB ETNs is reduced to 0.35% per annum for the first six months, after which it will revert to a rate of 0.95% per annum—reflecting the competitive landscape of exchange-traded products.

The FANG+ Index: A Snapshot of Technology’s Elite

The NYSE FANG+® Index, which underlies both the FNGU and FNGB ETNs, tracks the performance of a select group of high-performing technology and tech-enabled companies in the consumer discretionary and media sectors. This equally-weighted index offers a holistic view of the market performance of ten distinguished firms, providing investors exposure to a basket of stocks encompassing the powerhouses of the marketplace.

In anticipation of the May 15 redemption, BMO will send notices to current FNGU ETN holders on May 1, 2025, outlining the specifics of the settlement and potential actions investors can take regarding their holdings. The decision to waive minimum redemption sizes, a prerequisite previously set at 25,000 ETNs, further facilitates investor flexibility during this transition.

Conclusion: Navigating Change with Caution

As BMO executes these measures, it highlights the dynamic nature of the financial landscape, especially within the technology sector where consumer sentiment alongside investor trends continually shifts. For current investors or those contemplating entering into the MicroSectors ETN arena, it is crucial to remain informed about the intricacies of these changes and the potential implications on investment strategies.

In light of these updates, BMO advises investors to actively monitor their holdings, equipped with the understanding of daily performance consequences and the inherent risks associated with leveraged trading.

Investors looking for a sustained path in transformational investing must remain diligent in their strategies, particularly as the new FNGB ETNs arrive to take the place of their predecessors. Always consult with a financial advisor to navigate this landscape prudently.