This ETN delivers 3x leveraged daily returns on the Solactive FANG Innovation Index, which is made up of 15 large US technology and innovation stocks. The index includes eight core big tech names, such as Alphabet, Amazon, Apple, Meta, Microsoft, Netflix, NVIDIA, and Tesla, along with additional innovative companies, and it is equally weighted.

It suits experienced investors who are comfortable with short-term directional trading and have strong conviction that the big tech sector will rise. Holding it for the long term does not match its design purpose.

It is a passively managed (index-tracking) ETF launched by Bank of Montreal in 2021.

The product uses derivative contracts to target 3x the daily return of the Solactive FANG Innovation Index. The index consists of 15 equally weighted big tech and innovation companies and is rebalanced monthly. Because of the ETN structure, it does not hold stocks directly and carries the credit risk of the issuing bank.

• Equal-weighted exposure to 15 big tech and innovation companies (reduces concentration in any single stock)
• ETN structure links to the leveraged index return without tracking error

Assets under management (AUM) are $2.2B, and the total expense ratio is 0.95% per year.

Unlike leveraged ETFs such as TQQQ or SOXL, BULZ uses an ETN structure, so it links directly to the index return through an internal derivative contract and has no tracking error. However, it is important to understand in advance the structural feature that, as an ETN, it is tied to the issuer's creditworthiness.

Because it applies 3x leverage to a big-tech-focused index, gains can expand quickly when tech stocks are strong, while losses are amplified by daily compounding decay during corrections. This two-sided nature stands out. When tech stock volatility is high, both gains and losses can become extreme.

Money tends to concentrate in leveraged ETNs when big tech growth expectations are high or short-term momentum is strong. By contrast, when interest rate uncertainty or concerns about tech stock valuations come to the fore, funds also tend to flow out of leveraged products quickly across the board.

The 3x leverage offers the potential for high returns when big tech rises, but the daily compounding structure and ETN credit risk make long-term holding very risky.

TQQQ, shown in the table, is a 3x leveraged ETF on the Nasdaq 100 Index. It offers a leverage multiple similar to BULZ, but the tracked index and holdings differ. SOXL is a 3x leveraged semiconductor sector ETF that provides more concentrated sector exposure. QLD and SSO are 2x leveraged products on the Nasdaq 100 and the S&P 500, respectively. Their multiples are lower, but so is their decay risk. SPXL is a 3x leveraged S&P 500 product. The direct inverse counterpart to BULZ is BERZ (3x inverse FANG Innovation).

BULZ is a high-risk product designed only for short-term directional trading. Before investing, you should fully understand its structural characteristics and risks, and decide carefully how much of your portfolio to allocate to it.

With its 3x leverage structure, losses expand quickly when tech stocks fall. Because of daily compounding decay, long-term holding can fall far short of 3x the index return, and as an ETN it also carries the credit risk of the issuing bank.

It can be a useful tool for experienced investors who want highly leveraged exposure to a short-term big tech rally. It should be approached as a short-term directional trading vehicle rather than a long-term holding, and managing its weight within the portfolio is essential.