S-1/A: Dynamic Shares Trust Files Amendment No. 1 to Form S-1 for Dynamic Short Short-Term Volatility Futures ETF

Dynamic Shares Trust files a pre-effective amendment to its Form S-1 registration statement for the Dynamic Short Short-Term Volatility Futures ETF, seeking to offer common units of beneficial interest.

Summary

• Dynamic Shares Trust has filed a pre-effective Amendment No. 1 to Form S-1 registration statement with the SEC.
• The filing pertains to the Dynamic Short Short-Term Volatility Futures ETF (WEIX).
• The ETF aims to provide investment exposure to an actively managed portfolio of short positions in VIX Futures Contracts.
• The fund's notional exposure to VIX Futures Contracts will range from -0.05 to -0.5 under normal circumstances.
• The fund will roll the nearest month VIX Futures Contract to the next month on a daily basis.
• The fund is actively managed by the Sponsor's algorithm and is not benchmarked to the VIX Index.
• The fund will immediately close all of its positions if its net asset value goes down more than 90% at any time during the Exchange's regular trading hours.
• The shares have been approved for listing on the NYSE Arca, Inc. under the ticker symbol WEIX.
• The offering shall terminate on the third anniversary following the date the registration statement is declared effective by the SEC.
• The fund commenced operation on January 12, 2022.
• The fund continuously offers and redeems Shares only in large blocks of Shares known as Creation Units, each of which consists of 50,000 Shares.

Sentiment

Score: 6

Explanation: The document is neutral in tone, primarily providing factual information about the ETF's structure, strategy, and risks. While it highlights potential benefits, it also emphasizes the risks involved, resulting in a balanced assessment.

Positives

• The ETF seeks to provide better risk management than passively managed short VIX short-term futures ETFs.
• The fund dynamically manages its notional exposure to VIX futures.
• The fund's algorithm learns from VIX Futures Contracts historical prices and contango trend, to optimize VIX Futures Contracts trading risks and returns.
• The shares have been approved for listing on the NYSE Arca, Inc. under the ticker symbol WEIX.

Negatives

• The fund is not benchmarked to the VIX Index.
• The fund uses leverage and is riskier than similar exchange-traded funds that do not use leverage.
• An investor in the Fund could potentially lose the full principal value of his/her investment within a single day.
• The Sponsor has limited experience operating commodity pools and the management of the Sponsor lack experience in managing a sponsor, trust or fund and, as a result, the operation and performance of the Sponsor, the Trust and the Fund may be adversely affected by this lack of experience.
• The fund will immediately close all of its positions if its net asset value goes down more than 90% at any time during the Exchange's regular trading hours.

Risks

• Investing in the shares involves significant risks, including risks relating to investing in and seeking exposure to VIX Futures Contracts.
• The fund uses leverage and is riskier than similar exchange-traded funds that do not use leverage.
• The fund's investments may be illiquid and/or highly volatile.
• An investor in the fund could potentially lose the full principal value of his/her investment within a single day.
• Shareholders who invest in the fund should actively manage and monitor their investment, as frequently as daily.
• The sponsor has limited experience operating commodity pools and the management lack experience in managing a sponsor, trust or fund and, as a result, the operation and performance of the Sponsor, the Trust and the Fund may be adversely affected by this lack of experience.

Future Outlook

The fund intends to continuously offer shares, with the offering terminating on the third anniversary of the registration statement's effective date, unless suspended or terminated earlier.

Industry Context

This ETF aims to provide an alternative to traditional short VIX short-term futures ETFs by dynamically managing its notional exposure to VIX futures, potentially offering better risk management.

Comparison to Industry Standards

• The fund seeks to provide better risk management than passively managed short VIX short-term futures ETFs.
• Unlike traditional short VIX short-term futures ETFs, the Fund seeks to dynamically manage its notional exposure to VIX futures.
• When the weighted average price of current and next month VIX Futures Contracts is larger than 22, the Funds notional exposure is expected to be -0.5*, which would be the same as that of a traditional short VIX short-term futures ETF that maintains a fixed notional exposure of -0.5.

Related Party Transactions

• The Sponsor is entitled to receive compensation from the Fund for certain services it provides to the Fund.
• The compensation the Sponsor is entitled to receive from the Fund is limited to the Management Fee.

Stakeholder Impact

• Shareholders are exposed to the risks and potential rewards of short-term volatility futures trading.
• Authorized Participants are provided with a mechanism for creating and redeeming shares in Creation Units.
• The fund's performance will impact the value of shareholders' investments.

Next Steps

• The SEC needs to declare the registration statement effective.
• The fund will then commence offering shares on the NYSE Arca under the ticker symbol WEIX.

Key Dates

Keywords

VIX Futures, Volatility ETF, Short-Term Volatility, Dynamic Shares Trust, WEIX, ETF, VIX Index, Futures Contracts