Important Disclosures
QQQY Disclosure: Defiance ETFs LLC is the ETF sponsor. The Fund’s investment adviser is Toroso Investments, LLC (“Toroso” or the “Adviser”). The investment sub-adviser is ZEGA Financial, LLC (“ZEGA” or the “Sub-Adviser”).
Fund holdings and sector allocations are subject to change at any time and should not be considered recommendations to buy or sell any security.
The Funds' investment objectives, risks, charges, and expenses must be considered carefully before investing. The prospectus contain this and other important information about the investment company. Please read carefully before investing. A hard copy of the prospectuses can be requested by calling 833.333.9383.
Past performance is no guarantee of future results. High ratings does not assure favorable performance.
Investing involves risk. Principal loss is possible. As an ETF, the funds may trade at a premium or discount to NAV. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. A portfolio concentrated in a single industry or country, may be subject to a higher degree of risk.
There is no guarantee that the Fund’s investment strategy will be properly implemented, and an investor may lose some or all of its investment. None of the Fund, the Trust, the Adviser, the Sub-Adviser, or their respective affiliates makes any representation to you as to the performance of the Index. THE FUND, TRUST, ADVISER, AND SUB-ADVISER ARE NOT AFFILIATED WITH, NOR ENDORSED BY, THE INDEX.
Index Overview: The Nasdaq 100 Index is a benchmark index that includes 100 of the largest non-financial companies listed on the Nasdaq Stock Market, based on market capitalization. This makes it a large-cap index, meaning its constituents have a high market value, often in the billions of dollars. The Index includes companies from various industries but is heavily weighted towards the technology sector. This reflects the Nasdaq’s historic strength as a listing venue for tech companies. Other sectors represented include consumer discretionary, health care, communication services, and industrials, among others.
Indirect Investment Risk. The Index is not affiliated with the Trust, the Fund, the Adviser, the Sub-Adviser, or their respective affiliates and is not involved with this offering in any way. Investors in the Fund will not have the right to receive dividends or other distributions or any other rights with respect to the companies that comprise the Index but will be subject to declines in the performance of the Index.
Index Trading Risk. The trading price of the Index may be highly volatile and could continue to be subject to wide fluctuations in response to various factors. The stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies.
The Nasdaq 100 Index Risks: The Index’s major risks stem from its high concentration in the technology sector and significant exposure to high-growth, high valuation companies. A downturn in the tech industry, whether from regulatory changes, shifts in technology, or competitive pressures, can greatly impact the index. It’s also vulnerable to geopolitical risks due to many constituent companies having substantial international operations. Since many of these tech companies often trade at high valuations, a shift in investor sentiment could lead to significant price declines.
Derivatives Risk. Derivatives are financial instruments that derive value from the underlying reference asset or assets, such as stocks, bonds, or funds (including ETFs), interest rates or indexes. The Fund’s investments in derivatives may pose risks in addition to, and greater than, those associated with directly investing in securities or other ordinary investments, including risk related to the market, imperfect correlation with underlying investments, higher price volatility, lack of availability, counterparty risk, liquidity, valuation and legal restrictions.
Price Participation Risk. The Fund employs an investment strategy that includes the sale of in-the-money put option contracts, which limits the degree to which the Fund will participate in increases in value experienced by the Index over the Call Period (typically, one day, but may range up to one week). This means that if the Index experiences an increase in value above the strike price of the sold put options during a Call Period, the Fund will likely not experience that increase to the same extent and may significantly underperform the Index over the Call Period. Additionally, because the Fund is limited in the degree to which it will participate in increases in value experienced by the Index over each Call Period, but has full exposure to any decreases in value experienced by the Index over the Call Period, the NAV of the Fund may decrease over any given time period.
Distribution Risk. As part of the Fund’s investment objective, the Fund seeks to provide current monthly income. There is no assurance that the Fund will make a distribution in any given month. If the Fund does make distributions, the amounts of such distributions will likely vary greatly from one distribution to the next.
High Portfolio Turnover Risk. The Fund may actively and frequently trade all or a significant portion of the Fund’s holdings. A high portfolio turnover rate increases transaction costs, which may increase the Fund’s expenses.
Liquidity Risk. Some securities held by the Fund, including options contracts, may be difficult to sell or be illiquid, particularly during times of market turmoil. This risk is greater for the Fund as it will hold options contracts on a single security, and not a broader range of options contracts.
New Fund Risk. The Fund is a recently organized management investment company with no operating history. As a result, prospective investors do not have a track record or history on which to base their investment decisions.
Total return represents changes to the NAV and accounts for distributions from the fund.
* The Distribution rate is the annual yield an investor would receive if the most recently declared distribution, which includes option income, remained the same going forward. The Distribution Rate is calculated by multiplying an ETF’s Distribution per Share by twelve (12), and dividing the resulting amount by the ETF’s most recent NAV. The Distribution Rate represents a single distribution from the ETF and does not represent its total return. Distributions are not guaranteed.
** The Distribution rate and 30-Day SEC Yield is not indicative of future distributions, if any, on the ETFs. In particular, future distributions on any ETF may differ significantly from its Distribution Rate or 30-Day SEC Yield. You are not guaranteed a distribution under the ETFs. Distributions for the ETFs (if any) are variable and may vary significantly from month to month and may be zero. Accordingly, the Distribution Rate and 30-Day SEC Yield will change over time, and such change may be significant. The distribution may include a combination of ordinary dividends, capital gain, and return of investor capital, which may decrease a fund's NAV and trading price over time. As a result, an investor may suffer significant losses to their investment. These distribution rates caused by unusually favorable market conditions may not be sustainable. Such conditions may not continue to exist and there should be no expectation that this performance may be repeated in the future. Additional fund risks can be found below.
Median 30 Day Spread is a calculation of Fund’s median bid-ask spread, expressed as a percentage rounded to the nearest hundredth, computed by: identifying the Fund’s national best bid and national best offer as of the end of each 10 second interval during each trading day of the last 30 calendar days; dividing the difference between each such bid and offer by the midpoint of the national best bid and national best offer; and identifying the median of those values.
Diversification does not ensure a profit nor protect against loss in a declining market.
Commissions may be charged on trades.
QQQY is distributed by Foreside Fund Services, LLC.
As an enthusiast deeply entrenched in the world of ETFs and investment strategies, I bring forth a wealth of knowledge and practical experience to dissect the information provided in the article about QQQY (Defiance ETFs LLC). Having closely followed the trends and developments in the financial markets, I am well-versed in the intricacies of fund management, risk factors, and the nuances of different investment vehicles.
The article starts by disclosing the key players in the QQQY ETF—Defiance ETFs LLC as the sponsor, Toroso Investments, LLC as the investment adviser, and ZEGA Financial, LLC as the sub-adviser. Such disclosure is critical for investors to understand the entities involved in managing the fund. The article emphasizes that fund holdings and sector allocations are subject to change, underlining the dynamic nature of the investment landscape.
Moving on to the index overview, the article sheds light on the Nasdaq 100 Index, describing it as a benchmark comprising the 100 largest non-financial companies listed on the Nasdaq Stock Market. The index is characterized as a large-cap index, dominated by the technology sector, showcasing the Nasdaq's historical strength in tech listings. It is crucial to note the inclusion of other sectors like consumer discretionary, health care, communication services, and industrials, providing diversification within the index.
The article introduces various risks associated with investing in the QQQY ETF. Notably, there's a focus on the index's concentration in the technology sector, highlighting the vulnerability to downturns in the tech industry due to regulatory changes, technological shifts, or competitive pressures. Additionally, geopolitical risks are mentioned, given the international operations of many constituent companies.
Derivatives risk is discussed, emphasizing the complexities and additional risks associated with investing in financial instruments that derive value from underlying assets. The article points out risks related to market fluctuations, imperfect correlation, higher price volatility, counterparty risk, liquidity, valuation, and legal restrictions.
The article delves into the fund's investment strategy, particularly the sale of in-the-money put option contracts, introducing the concept of price participation risk. This strategy limits the fund's participation in increases in the index's value over a specific period, potentially leading to underperformance.
Distribution risk is highlighted as the fund aims to provide current monthly income, but there's no assurance of consistent monthly distributions. High portfolio turnover risk is also mentioned, warning investors of increased transaction costs due to frequent trading. Liquidity risk is addressed, specifically for options contracts that may be difficult to sell during market turmoil.
The disclosure of the fund being a recently organized entity with no operating history emphasizes the new fund risk, providing crucial information for prospective investors. The article concludes by discussing total return, distribution rates, 30-Day SEC Yield, and the median 30-Day Spread as additional metrics for investors to consider.
In summary, this comprehensive analysis provides potential investors with a thorough understanding of the QQQY ETF, covering key players, index overview, associated risks, investment strategy, and important metrics. It serves as a valuable resource for making informed investment decisions in the dynamic landscape of ETFs.
