This leveraged ETF is built on MSOS, the flagship U.S. cannabis sector ETF, and is designed to deliver twice its daily total return. It is linked to the one-day performance of the underlying ETF rather than to a standalone index.

It suits active short-term investors who have conviction about the near-term direction of the U.S. cannabis sector and can tolerate leveraged volatility.

It is an actively managed ETF run by AdvisorShares.

The fund uses a leveraged strategy that relies on one or more swap agreements to track twice the daily return of the underlying MSOS. Because the objective is set on a daily basis, the longer the holding period, the more the compounding effect can cause cumulative returns to differ from twice the underlying's return.

• Leveraged exposure focused on the U.S. cannabis sector
• Swap-based, non-diversified active management

Assets under management (AUM) stand at $50.5M, and the total expense ratio is 0.97% per year.

Rather than holding the underlying ETF directly, the fund creates double exposure through swaps, making it a product geared toward short-term directional trading.

The fund has responded at twice the magnitude to moves in cannabis-related stocks overall, and its volatility tends to expand sharply when sector policy issues or regulatory changes emerge. If a directional call turns out wrong, losses also accumulate at twice the rate.

Speculative money tends to pour in when expectations of U.S. federal cannabis deregulation come to the fore. Conversely, when policy momentum weakens, the fund is exposed to an environment of capital outflows and larger price swings.

Investors can seek amplified returns from short-term rallies in the U.S. cannabis sector, but because of its leveraged nature, the product carries significant risks of losses in downturns and of compounding losses when held for the long term.

If you want exposure to the U.S. cannabis sector without leverage, the underlying MSOS is the direct substitute, and YOLO, a broad cannabis ETF from the same issuer, is also worth considering. In addition, non-leveraged sector ETFs such as MJ, which follows the alternative harvest theme, and CNBS, which follows a Seymour cannabis strategy, offer lower-volatility choices. Meanwhile, TQQQ, SOXL and QLD, which are compared in the table, are leveraged ETFs that track other sectors at 2x to 3x. Only the underlying theme differs, and the structure of amplified volatility is similar.

These are the points to review before investing in MSOX. Because leveraged ETFs are short-term tools, it is advisable to first confirm your holding period, your tolerance for volatility, and the cannabis sector's sensitivity to regulation before approaching the fund.

Because of leverage and a non-diversified structure, short-term losses can grow sharply, and given the daily reset, value can erode even in a sideways market. The risk of sudden swings around regulatory events is also ever present.

This is a leveraged tool for investors with conviction about the short-term direction of the U.S. cannabis sector, and it is better approached from a short-term trading perspective with active risk management than as a long-term holding.