Ultra Short Nasdaq 100 Hedge Fund

The Nasdaq-100 Index is one of the world’s preeminent large-cap growth indices, featuring some of the planet’s most iconic companies. It includes 100 of the largest U.S. domestic and international non-financial companies listed on the Nasdaq Stock Markets based on market capitalisation.

With a market cap of US$15t at the end of 2020, the Nasdaq-100 has a proven history of growth, impact and performance.

The Nasdaq-100 Index is home to some of the world’s most innovative companies—including Apple, Google, Intel and Tesla.

Technology companies account for more than 50% of the index’s weight, but all listed companies are disrupting markets with innovative new technologies and/or have a history of accelerating change with out-of-the-box ideas and robust solutions.

SNAS achieves its exposure to the Nasdaq-100 Index using primarily derivatives. It invests primarily in a portfolio of short E-mini Nasdaq-100 Futures contracts listed on the Chicago Mercantile Exchange. Derivatives such as futures provide gearing or leverage because they offer market exposure in excess of the amount that is required to be invested upfront when entering into the contracts. When opening a short futures position, the upfront cost is zero, although there are transaction costs to be paid and an initial margin amount to be posted by SNAS. This margin amount is adjusted up or down daily depending on whether the contracts have generated a gain or loss.

As the Nasdaq-100 moves up and down the amount of gearing in the fund changes and the fund manager needs to rebalance the exposure to ensure it remains within the target range. Currency hedging is achieved by entering into foreign exchange forward contracts whereby the fund contracts to sell U.S. dollars and buy Australian dollars at an agreed rate on a fixed future date.

All investments carry the risk of loss. SNAS is designed to magnify inverse performance when the Nasdaq-100 experiences falls, but it will also magnify losses when the Nasdaq-100 gains.

Over longer periods of time, due to the effects of rebalancing and compounding, the performance of SNAS is not likely to exactly replicate the Nasdaq-100 inverse return multiplied by the target exposure.

The investment performance will depend primarily upon the general direction of the index (up or down), and the amount of exposure to the index (leverage) within the target range at any point in time, and will also depend on the path the SNAS portfolio takes to achieve its returns. Performance can suffer in volatile markets.

Investors in SNAS will not experience losses beyond the amount they have invested.

Geared or leveraged funds such as SNAS are commonly used by highly experienced investors and traders to gain short-term market exposure. Due to their ability to amplify returns, they require less capital to be committed upfront than traditional investments, which makes them attractive to different types of users.

A trading product like SNAS may often be used to express a high conviction view around future performance or outcomes of upcoming events, such as economic data releases or earnings announcements. SNAS could be used to achieve outright short exposure or to hedge a pre-existing long exposure. It may be used as a speculative stand-alone position or to implement temporary shifts in asset allocation. Positions may be taken over less than a day.