Is BULZ Stock a buy?

BULZ is the ticker symbol for the MicroSectors FANG & Innovation 3X Leveraged Exchange Traded Notes (ETNs), (MicroSectors FANG & Innovation 3X Leveraged ETNs Stock Quote, Charts, Financials NYSE Arca: BULZ) which trades on the electronic securities exchange NYSE Arca, which focuses on exchange-traded products like ETFs and ETNs.

An ETN is a form of unsecured debt security that is publicly traded and aims to give investors exposure to the performance of an underlying index or asset, as in an ETF, but without owning the assets themselves, including stocks, commodities and indices. Investors can hold an ETN to maturity or trade it, and it’s unsecured status means that if the bank underwriting the note went bankrupt there would be a loss of investment.

In the case of BULZ, the vehicle gives levered exposure to the Solactive FANG Innovation Index, a Germany-based index provider of index solutions for ETFs and other exchange traded products. The Solactive Index tracks the prices of 15 large cap US tech stocks.

“The ETN seeks a return on the underlying index for a single day,” reads the BMO page on BULZ. “The ETNs are not “buy and hold” investments and should not be expected to provide a leveraged return of the underlying index’s cumulative return for periods greater than a day.”

The Solactive Index constituents include: Broadcom, Salesforce, Microsoft, Amazon, Alphabet, Meta Platforms, Netflix, NVIDIA, QUALCOMM, Apple, Advanced Micro Devices, Intel Corp, Block, Tesla and Adobe, all at an equal weight of 6.67 per cent.

Bank of Montreal is the issuer and BULZ began its initial trade date on July 17, 2021, and has a daily investor fee of 0.95 per annum, accrued on a daily basis. The maturity date of BULZ is June 28, 2041.

Last month, Barclays announced it was dropping almost half of its US-listed ETNs about a year after a paperwork error was revealed to result in hundreds of millions of dollars of loss. The bank said it will be redeeming 21 of its 50 ETNs in June, including the $71 million iPath Series B Bloomberg Copper Subindex Total Return ETN. Together, the ETNs to be redeemed hold about $533 million in assets.

“Barclays is focused on a core set of products and services that match client interest and demand. We are firmly committed to building a leading position in global equity exchange-traded products, which are a strategically important part of our Equities and Global Markets businesses,” a spokesperson for Barclays said in a statement.