NRGD Profile
The MicroSectors U.S. Big Oil Index -3X Inverse Leveraged ETNs are senior unsecured medium-term notes issued by Bank of Montreal, designed for sophisticated investors seeking leveraged inverse exposure to the performance of the energy sector. These notes provide a three times leveraged inverse participation in the daily performance of an index, which represents the largest market capitalization stocks in the U.S. oil and energy sector. The leveraged exposure is compounded daily, reflecting the inverse of the index’s daily returns, adjusted for a Daily Investor Fee, any negative Daily Interest, and, if applicable, a Redemption Fee Amount.
The underlying index is an equal-dollar weighted benchmark that captures the performance of the 10 largest U.S.-listed stocks in the energy and oil sector. This index is specifically designed to track companies with substantial market capitalizations, representing major players in the sector. By equal-weighting these stocks, the index aims to provide a balanced view of the sector’s largest entities, minimizing the influence of any single company on the overall index performance.
Investors in the ETNs are exposed to amplified inverse returns based on the daily performance of the index, meaning that the notes are designed to benefit from declines in the index value. This inverse leverage is intended for short-term trading and tactical positioning rather than long-term investment, due to the daily compounding effect which can lead to performance deviations over extended periods.
The MicroSectors U.S. Big Oil Index -3X Inverse Leveraged ETNs cater to investors looking to hedge against or profit from declines in the energy sector, particularly those who anticipate falling oil prices. The notes provide an advanced investment tool for those who understand the risks associated with leveraged and inverse products, including potential high volatility and the effects of daily compounding on long-term returns.
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