Defiance Daily Target 2x Short MSTR ETF

Frequently Asked Questions About SMST

What does SMST invest in?

SMST uses swap agreements to make bearish bets on MicroStrategy Incorporated's (NYSE: MSTR) share price. MSTR was originally known for its enterprise analytics software. It has then pivoted to include acquiring and holding Bitcoin (BTC) as another operational business. The fund maintains a daily leveraged exposure equivalent to -200% of the fund's net assets through daily rebalancing. As a geared product, the fund is intended as a short-term tactical tool, rather than as a long-term investment vehicle. As a result, returns may deviate from the expected -2x if held for longer than a single day due to compounding. This strategy is high-risk and does not include a defensive position as part of its overall process. Additionally, the fund could potentially lose money over time, even if MSTR's performance strengthens. The fund is expected to invest in cash-like instruments as collateral. Following October 29, 2024, the fund adjusted its leverage ratio from 1.5x to 2x.

What is the expense ratio of SMST?

Defiance Daily Target 2x Short MSTR ETF (SMST) charges an expense ratio of 1.31%. This is the annual fee deducted from fund assets to cover management and operations.

Is SMST a good long-term hold?

SMST 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 SMST's daily reset work?

SMST 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 SMST?

Defiance Daily Target 2x Short MSTR ETF (SMST) manages $21.6M 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 SMST actively managed or an index fund?

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