Defiance Files Six Convexity ETFs Tied to QQQ, DRAM and SMH

Defiance has filed for six actively managed convexity ETFs built around QQQ, the Roundhill Memory ETF (DRAM) and the VanEck Semiconductor ETF (SMH). Each underlying will have a standard Convexity ETF and an Ultra Convexity version. The standard funds would invest substantially all assets in the underlying ETF while using about 3% of assets to buy cash-settled call options expiring in one to five business days. The Ultra versions would instead allocate roughly 10% to 20% to short-term calls and keep about 80% to 90% in cash, Treasuries and other short-term investments. The options are designed to create nonlinear upside when the underlying rises, but can expire worthless if gains are insufficient. The Ultra funds do not directly hold the underlying ETFs and would not receive their dividends. Milliman Financial Risk Management will sub-advise the strategies.