Leveraged ETFs Now Come in an Hourly Version for Time-Pressed Traders

PROVIDENCE, Rhode Island, September 9 (Reuters) — For anyone who finds a full trading day too lengthy, an exchange-traded fund issuer says it has a fitting solution.

Defiance ETFs is proposing 16 funds designed to double a stock’s return within one hour, marking the newest development in the industry’s push to boost returns on single stocks for traders who follow every move in the Magnificent Seven and other popular names.

The planned funds would operate like current 2x single-stock ETFs, except their reset would occur hourly instead of once at the close of the U.S. trading session from 9:30 a.m. to 4 p.m. ET.

“They treat the trading day as one hour rather than a full day,” said Sylvia Jablonski, Defiance’s CEO and chief investment officer. The funds, linked to the performance of some of the most heavily owned and actively traded stocks and ETFs — from Nvidia and Microsoft to the Roundhill Memory ETF — offer a way for investors to wager on intraday price swings.

The U.S. Securities and Exchange Commission filing from Defiance arrives as regulators examine a fund category that includes these leveraged products. Meanwhile, the roster of leveraged ETFs seeking to provide twice the daily return of an individual stock keeps expanding.

According to Jablonski, if investors roll profits into subsequent hours and the market stays favorable, compounding might let them achieve bigger one-day gains than they could get from merely holding existing leveraged ETFs.

However, Jablonski noted that if the stock turns lower or meanders unevenly only to close higher, holding these hourly products through the session could still produce a loss.

Provided regulators raise no objections, the funds could begin trading in November, marking yet another leveraged-ETF innovation. Up to now, the SEC has declined to allow proposed leveraged products that seek 3x or 5x daily returns on an underlying stock.

While retail investors have dominated leveraged ETF activity, Defiance stated in its SEC filing that the proposed funds are appropriate solely for sophisticated investors who grasp the risks and are able to track portfolios all day.

The SEC did not promptly reply to a request for comment on the most recent submission.