Leverage Shares has entered the sparsely populated European white labelling space with an actively managed exchange-traded product (ETP) that rotates between short and long exposures on US equities.
The Kronos Strategy ETP (KRON) was one of the firm’s 42 listings on the London Stock Exchange on Friday and carries a management fee of 1.25%.
The launch is significant as the firm will be one of two issuers in Europe offering white labelling, a service that provides a third-party with the infrastructure needed to bring their idea to market - such as regulatory approvals, seed capital, exchange listing, fund management, trading networks and even distribution.
KRON follows the Kronos Investment Strategy from Florida-based Mourelle Investments LLC, which tries to outperform US equity indices by rotating between up to 1.5x leveraged and -1.5x short positions on the S&P 500 index or remaining neutral by allocating to cash.
The ETP’s documents state it can also remain market neutral by investing in ETFs including:
SPDR S&P 500 ETF Trust
Invesco QQQ Trust, Series 1
SPDR Dow Jones Industrial Average ETF Trust
iShares Russell 2000
ProShares Short Dow30
ProShares Short S&P 500
ProShares Short Russell2000
In addition to its management fee, KRON carries a high watermark performance fee of 20% which applies to any excess between the ETP’s value on the day and its previous all-time-high.
Other costs include three basis point transaction costs and gearing costs of up to 1.5%. Considering the ETP is not always positioned at its maximum leverage, the firm said the maximum impact of management and gearing costs should not exceed 2% - before performance fees.
BNP Paribas will act as market maker on the ETP, as with all Leverage Shares products.
KRON's debut marks the firm’s second venture into US active management exposures after its ARK ETF short, leveraged and tracker products launched last December.