BMO Plans Redemption and Launch of New Leveraged ETNs
BMO Announces Important Changes to Leveraged ETNs
Bank of Montreal (BMO) has made significant announcements concerning its MicroSectors™ FANG+™ Index 3× Leveraged ETNs, known by their ticker symbol FNGU. The financial institution has decided to redeem all outstanding securities related to these ETNs. Additionally, a new ETN will be launched, known as the MicroSectors™ FANG+™ 3× Leveraged ETNs, which will be identified by the ticker symbol FNGB.
Redemption of FNGU ETNs and Ticker Symbol Change
BMO has set a plan to redeem all currently outstanding FNGU ETNs on the Call Settlement Date slated for mid-May. As part of this process, BMO intends to change the ticker symbol from FNGU to FNGA. This symbol change is projected to take place on March 3.
The FNGU ETNs were first introduced to the market in January of 2018. Since their launch, the fees and charges associated with supporting the leverage in the FNGU ETNs have increased notably. As a result, BMO has acknowledged that the existing fees are no longer reflective of the market environment, necessitating this decision. BMO plans to reintroduce the ticker FNGU approximately 90 days after the ticker change, which aligns with NYSE Arca guidelines.
Introduction of New FNGB ETNs
The newly launched FNGB ETNs will start trading on the NYSE following their official debut. These are designed to provide sophisticated investors with three times leveraged exposure to the performance of the FANG+ Index daily. The FNGB ETNs offer an alternative for investors, ensuring continued access to an ETN that indicates the daily performance of the index with updated fees reflective of current market conditions.
The FANG+ index tracks the performance of ten high-performing, tech-oriented growth stocks. By incorporating dividends, it creates a comprehensive picture of stock performances within the tech, media, communications, and consumer discretionary sectors.
Structure and Benefits of FNGB ETNs
The FNGB ETNs are tailored for active traders rather than traditional buy-and-hold investors. Within the first six months following the launch, the Daily Investor Fee for the FNGB ETNs will be offered with a discount, promoting a strategic trading environment. This fee will rise after six months, promoting longer-term investment strategies.
Investors should exercise caution as the FNGB ETNs are sensitive to market fluctuations and the daily performance of the underlying index. As a leveraged product, the potential for greater gains also carries the risk of significant losses, thus catering primarily to sophisticated investors who can navigate these dynamics effectively.
Details on Redemption Process for FNGU ETNs
The redemption notice for FNGU ETNs will be dispatched to holders on May 1. The Call Calculation Date, marking the beginning of the redemption period, will be set for May 2. Following this, a five-day evaluation will determine the Call Settlement Amount.
BMO emphasizes the importance of understanding the potential impacts of the redemption. Investors may choose to hold their FNGU ETNs until the settlement date or redeem early. Notably, BMO has waived previous minimum requirements for early redemption, allowing greater flexibility for current holders.
Disclosures and Additional Information
Investors considering purchasing the FNGU ETNs prior to the redemption should be aware of the implications this decision could have on their investment value. The value may fluctuate, and selling at the incorrect time could lead to losses. The FNGB ETNs are not intended for long-term holds but serve as a tool for tactical trading.
In preparation for the changes, it remains crucial for investors to thoroughly review the pertinent pricing supplements and prospectuses. These documents provide crucial insight into the nature of their investment and any associated risks.
About Bank of Montreal and Its Services
BMO Financial Group stands as the eighth largest bank in North America, showcasing a rich 200-year history in serving clients with an array of banking and financial solutions. With a total asset valuation of $1.41 trillion, BMO is dedicated to positively impacting economies and societies alike.
For more details on BMO's offerings or to stay updated on the latest news, investors can explore BMO's official website.
Frequently Asked Questions
What is the purpose of the FNGU ETNs redemption?
The redemption aims to address the rising costs and ensure that the fees and charges reflect the current market environment.
When will the ticker symbol change for the FNGU ETNs take place?
The ticker symbol will change from FNGU to FNGA on March 3, and the original ticker may be reused approximately 90 days after.
What advantages do FNGB ETNs provide for investors?
The FNGB ETNs offer three times leveraged exposure to the FANG+ Index, supporting active trading strategies with discounted initial fees.
How will the settlement for the FNGU ETNs occur?
The settlement is scheduled for May 15, with an amount determined based on the closing Indicative Note Values during the measurement period.
What should investors consider before investing in FNGB ETNs?
Investors should recognize the risks associated with leveraged products and actively manage their investments due to the potential for significant losses.
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