Defiance launches leveraged ETF targeting QuantumScape stock

Defiance ETFs announced the launch of the Defiance Daily Target 2X Long QS ETF (QSU), a leveraged exchange-traded fund that seeks to deliver twice the daily percentage change of QuantumScape Corporation stock (NYSE: QS).

The ETF aims to provide 200% of the daily performance of QuantumScape shares before fees and expenses. The fund does not seek to accomplish this objective over periods longer than a single trading day, according to the company's statement.

QuantumScape develops solid-state lithium-metal battery technology for electric vehicles and energy storage applications. The company is backed by investors including Volkswagen and focuses on scaling its technology toward commercialization.

Defiance ETFs warns that QSU is designed for knowledgeable investors who understand leveraged investment risks and plan to actively monitor their portfolios. The fund is not suitable for investors seeking long-term exposure, as daily compounding effects mean performance over multiple days will likely differ significantly from 200% of QuantumScape's return over the same period.

The ETF uses swap contracts and options contracts based on QuantumScape's share price rather than directly holding the underlying stock. This strategy subjects the fund to risks including potential significant losses if QuantumScape's stock price declines, counterparty risk, and derivatives risk.

Founded in 2018, Defiance ETFs focuses on thematic, income, and leveraged ETFs. The company states it pioneered single-stock leveraged ETFs to enable amplified positions in high-growth companies without margin accounts. The fund's investment adviser is Tidal Investments LLC, with shares distributed by Foreside Fund Services LLC.

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