How does the ETPA ETF work?

The ETPA ETF primarily invests at least 80% of its net assets in a portfolio of Flexible Exchange® Options (FLEX Options) that reference the Underlying ETF. FLEX Options are customizable exchange-traded options contracts with uniquely tailored terms. The Fund aims to produce specific outcomes based on the performance of the Underlying ETF's share price over an approximately one-year period (the "Outcome Period").

What are the outcomes sought by the ETPA ETF?

The ETPA ETF seeks to provide specific outcomes over the Outcome Period. If the Underlying ETF's share price increases during the period, the Fund aims to generate an increase in value that is twice the share price increase (Accelerated Return), up to a predetermined Cap. If the Underlying ETF's share price decreases, the Fund seeks to provide a Buffer against the first 9% of Underlying ETF losses, limiting downside risks.

How is the Cap determined for the ETPA ETF?

The Cap, which represents the maximum percentage return an investor can achieve from an investment in Shares over the Outcome Period, is determined at the beginning of each Outcome Period based on prevailing market conditions. For the current Outcome Period, the Cap is set at 20.00%, or 19.21% after accounting for the Fund's annual management fee of 0.79%.

How does the Buffer work in the ETPA ETF?

The Buffer provides protection against the first 9% of losses experienced by the Underlying ETF during the Outcome Period. If the Underlying ETF's share price decreases by up to 9%, the Fund seeks not to participate in any of those losses. However, losses exceeding 9% will be borne by the Fund's shareholders on a one-to-one basis.

5 min read

By Ron Koren, ETF Insider

What is the ETPA ETF ?

In the dynamic world of finance, exchange-traded funds (ETFs) have gained immense popularity among investors. One such ETF that has caught the attention of investors is the ETPA ETF. In this article, we will take an in-depth look at the ETPA ETF, its underlying principles, investment strategy, and potential benefits. We will also discuss the considerations that investors should keep in mind before investing in this ETF.

ETPA ETF: Overview

The ETPA ETF, short for "Exchange-Traded Product for Digital Payments Assets," is an investment fund designed to track the performance of the Underlying Index. As an exchange-traded fund, it follows a passive management approach, which means it aims to replicate the performance of the Underlying Index rather than actively selecting individual securities. This ETF primarily focuses on digital payments infrastructure companies worldwide, particularly those engaged in digital payments, financial technology (Fintech), merchant processing, and settlement networks.

ETPA ETF Underlying and Exposure: What does it track and how?

The Underlying Index of the ETPA ETF is a proprietary rules-based, modified market capitalization weighted, float-adjusted index. It is meticulously crafted to monitor the overall performance of equity securities of global digital payments infrastructure companies listed on developed country exchanges. These Digital Payments Companies are those that play a significant role in facilitating digital payments, including real-time record-keeping, settlement networks, and Fintech products or services.
The ETF allocates at least 80% of its net assets, along with any investment-related borrowings, in these Digital Payments Companies. To qualify for inclusion in the Underlying Index, a company must be a Digital Payments Company listed on a developed country stock exchange, meeting specific market capitalization and liquidity turnover criteria.

ETPA overlap What is the ETPA ETF ?

ETPA ETF: Benefits to Invest in This ETF

Investing in the ETPA ETF offers several potential benefits for investors. As it focuses on the digital payments industry, it provides exposure to a rapidly growing and innovative sector. With the global shift towards cashless transactions and the rise of digital payment platforms, companies in this space have shown substantial growth potential. The ETF offers diversification across multiple companies in the industry, reducing the risk associated with investing in individual stocks. Moreover, being an ETF, it provides the flexibility of trading throughout the day like a stock, making it a convenient option for investors.

ETPA ETF: Considerations Before Investing

Before investing in the ETPA ETF, investors should carefully consider several factors. Firstly, like all investments, the value of the ETF can fluctuate, and there are no guarantees of returns. The performance of the ETF will largely depend on the performance of the Digital Payments Companies it tracks. Investors should also assess their risk tolerance and investment objectives to determine if this ETF aligns with their portfolio strategy. Furthermore, it's essential to conduct due diligence on the companies included in the Underlying Index to understand their business models, financial health, and growth prospects. Investors should also be aware of any changes in the methodology or constituents of the Underlying Index, as this can impact the ETF's performance.

Conclusion:

The ETPA ETF provides investors with an opportunity to participate in the growth potential of the global digital payments industry. By tracking the performance of Digital Payments Companies listed on developed country stock exchanges, the ETF offers diversification and convenience to investors. However, like all investments, it comes with inherent risks, and investors should carefully analyze their suitability and conduct thorough research before making investment decisions.

Disclaimer: This article is for informational purposes only and does not provide any investment advisory services.

Sources:

ETPA ETF issuer
ETPA ETF official page

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FAQ

What is the ETPA ETF?
The ETPA ETF is an exchange-traded fund that aims to provide investors with exposure to the performance of the SPDR® S&P 500® ETF Trust (the "Underlying ETF"), an ETF registered under the Investment Company Act of 1940. The Underlying ETF seeks to track the performance of the S&P 500 Index, representing 500 leading U.S. companies across various industries.
How does the ETPA ETF work?
The ETPA ETF primarily invests at least 80% of its net assets in a portfolio of Flexible Exchange® Options (FLEX Options) that reference the Underlying ETF. FLEX Options are customizable exchange-traded options contracts with uniquely tailored terms. The Fund aims to produce specific outcomes based on the performance of the Underlying ETF's share price over an approximately one-year period (the "Outcome Period").
What are the outcomes sought by the ETPA ETF?
The ETPA ETF seeks to provide specific outcomes over the Outcome Period. If the Underlying ETF's share price increases during the period, the Fund aims to generate an increase in value that is twice the share price increase (Accelerated Return), up to a predetermined Cap. If the Underlying ETF's share price decreases, the Fund seeks to provide a Buffer against the first 9% of Underlying ETF losses, limiting downside risks.
How is the Cap determined for the ETPA ETF?
The Cap, which represents the maximum percentage return an investor can achieve from an investment in Shares over the Outcome Period, is determined at the beginning of each Outcome Period based on prevailing market conditions. For the current Outcome Period, the Cap is set at 20.00%, or 19.21% after accounting for the Fund's annual management fee of 0.79%.
How does the Buffer work in the ETPA ETF?
The Buffer provides protection against the first 9% of losses experienced by the Underlying ETF during the Outcome Period. If the Underlying ETF's share price decreases by up to 9%, the Fund seeks not to participate in any of those losses. However, losses exceeding 9% will be borne by the Fund's shareholders on a one-to-one basis.

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