Daily Target 2X Long RCAT ETF

Frequently Asked Questions About RCAX

What does RCAX invest in?

RCAX is an investment vehicle that utilizes financial derivatives, specifically swap agreements and short-duration call options, to capitalize on anticipated increases in the stock price of Red Cat Holdings, Inc. (RCAT). Red Cat Holdings is an American technology firm specializing in drones, providing unmanned aerial systems and associated software solutions for military, governmental, and commercial clients. The fund's primary objective is to achieve daily leveraged exposure equivalent to double the daily percentage change in RCAT's share value, which is accomplished through a strategy of daily rebalancing. However, investors holding the fund for longer than a single day should be aware that returns may diverge from the expected 2x multiplier, influenced by factors like market volatility, the effects of compounding, or the rebalancing process itself. To back its derivative contracts, RCAX has the option to hold various assets, including U.S. government securities, money market instruments, exchange-traded funds (ETFs) focused on short-term bonds, and investment-grade corporate debt.

What is the expense ratio of RCAX?

Daily Target 2X Long RCAT ETF (RCAX) charges an expense ratio of 1.31%. This is the annual fee deducted from fund assets to cover management and operations.

Is RCAX a good long-term hold?

RCAX is a leveraged fund designed to deliver a daily multiple of its underlying index. Daily reset compounding means returns over multi-day periods can diverge significantly from the headline multiple — typically negative drift in choppy markets. These funds are designed for short-term tactical use, not buy-and-hold. Review the fund's prospectus before holding more than a few days.

How does RCAX's daily reset work?

RCAX rebalances exposure each trading day to maintain its target leverage ratio against the next day's move. The daily reset means returns compound at the daily level — so a +1%, −1% sequence on the underlying doesn't return the underlying to flat after the leverage multiplier. Over time this path-dependence erodes returns in volatile markets and amplifies them in trending markets.

How big is RCAX?

Daily Target 2X Long RCAT ETF (RCAX) manages $9.0M in total assets. AUM determines bid-ask liquidity and the fund's vulnerability to closure — funds below ~$50M are at higher risk of liquidation.

Is RCAX actively managed or an index fund?

RCAX's management style is described in the fund's prospectus. See the description on the Summary tab for the published strategy.