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GraniteShares

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S&L ETPs Overview

December 01, 2020

Leveraged ETP Securities are designed to give investors leveraged long or short exposure to the daily moves of an underlying asset. The assets can be a single security or a basket of securities. Leveraged ETP Securities are priced off total return indices that capture corporate actions such dividends and rights issues.

Value vs Price

December 01, 2020

Value per ETP and price per ETP are two different notions. Value per ETP is a value used to create and redeem securities. Price per ETP is the level at which market participants trade ETP Securities during market hours.

Measuring Performance

December 01, 2020

On each given day there are two ways to measure product performance. Value per ETP The first approach is to use the Value per ETP, the value used for the creation and redemption of ETP Securities. This is the way in which the ETP delivers the index return net of fees and any adjustments. It is therefore the way in which an investor can assess how well an ETP is tracking its benchmark and meeting its investment objective. Closing price per ETP The second is the closing price per ETP published by the exchange on which the ETP Security is traded. Market-reported performance is measured against the previous day’s market close. Key takeaway Market price performance is likely to be different from the change in Value per ETP Security on any given day. Over time their performance may be broadly similar.

Corporate Actions

December 01, 2020

Corporate actions such as dividends or right issues do not affect the value of an investor’s investment. For instance, after a stock goes ex-dividend, an investor holds the stock and a dividend with a combined value equal to the share price before it went ex-dividend. Similarly, an investor who wants to short a stock needs to borrow it first. If the stock pays a dividend, the borrower needs to compensate the lender for the amount of the dividend, so that the value owed to the lender before and after the stock went ex-dividend remains the same. Leveraged ETP Securities are priced off indices that take into account corporate actions such as dividends or right issues so that there is no impact on the index level when a stock goes ex-dividend or ex-rights (potentially subject to tax).

Stop Loss Mechanism

December 01, 2020

Trading with leverage can be extremely risky. A share price move of more than 33.33% intraday would make a 3x leveraged investment in that share worthless (33.33% x 3 = 100%). To reduce the risk of such a possibility, the indices that the Leveraged ETP Securities track incorporate a stop-loss mechanism.

Compounding Impact

December 01, 2020

Leveraged ETP Securities are designed to deliver a daily percentage return, which means that the leverage factor is constant over time and also means that returns for holding periods longer than a day are subject to compounding.

Trading ETPs

December 01, 2020

ETP Securities are listed on regulated exchanges, such as the London Stock Exchange, where investors can buy and sell them. They can access such venues through a broker or a financial adviser.

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