Leveraged ETFs charge a management fee you can see on the fact sheet, but a second party quietly collects a separate financing fee. A familiar name from the crypto world just bought its way into that hidden revenue stream.
Leveraged ETFs charge a management fee you can see on the fact sheet, but a second party quietly collects a separate financing fee.
A familiar name from the crypto world just bought its way into that hidden revenue stream.
Leveraged ETFs charge a management fee you can see on the fact sheet, but a second party quietly collects a separate financing fee. A familiar name from the crypto world just bought its way into that hidden revenue stream.
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Who’s really making money on leveraged ETFs? The issuer collects a management fee, the number printed on every fact sheet. Behind many of these funds sits a second earner. It’s the firm that supplies the leverage, which charges the fund a financing fee that rarely gets mentioned.
Ripple, the crypto payments company, now collects that second fee. Its prime brokerage arm, Ripple Prime, is financing leveraged stock ETFs, according to reporting by The Wall Street Journal that CoinDesk shared. In one example, CoinDesk estimated that a single Tradr fund pays Ripple roughly 8% a year in financing at current rates.
How a Fund Doubles a Stock Without Buying Double the Shares
Say a fund promises twice the daily return of NVIDIA (NASDAQ:NVDA | NVDA Price Prediction). The reporting shows the fund can get that leverage by signing a total return swap. That’s a contract where a broker pays the fund whatever the stock returns, and the fund pays the broker a fee in exchange.
The broker provides the exposure and hedges its own risk, and the fund pays a financing fee for this, separate from the management fee shareholders see on the fact sheet.
What One Sandisk Fund Pays Ripple Each Year
Averytin News Financial update.