S-1/A: Dynamic Shares Trust Files Amendment No. 2 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, aiming for public sale commencement.

Summary

• Dynamic Shares Trust has filed a pre-effective Amendment No.
• 2 to its Form S-1 registration statement with the SEC.
• The filing pertains to the Dynamic Short Short-Term Volatility Futures ETF (WEIX).
• The ETF seeks inverse exposure to the implied volatility of the U.S. equity market by managing short positions in VIX Futures Contracts.
• The fund's notional exposure will range from -0.05 to -0.5 under normal circumstances.
• 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 Exchanges 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 of which this prospectus forms a part is declared effective by the Securities and Exchange Commission, unless suspended or terminated at any earlier time for certain reasons specified in this prospectus or unless extended as permitted under the rules of the Securities Act of 1933.

Sentiment

Score: 6

Explanation: The document is neutral, presenting both the potential benefits and significant risks associated with investing in the ETF. The active management strategy and dynamic exposure adjustments are presented as potential advantages, while the risks associated with inverse ETFs, leverage, and volatility are clearly outlined.

Positives

• The ETF is actively managed, seeking better risk management than passively managed short VIX ETFs.
• The fund uses an algorithm to dynamically manage its notional exposure to VIX futures contracts.
• The Shares have been approved for listing on the NYSE Arca, Inc. under the ticker symbol WEIX.

Negatives

• The fund has limited operating history.
• 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 fund will immediately close all of its positions if its net asset value goes down more than 90% at any time during the Exchanges regular trading hours.

Risks

• The fund is not appropriate for all investors and presents different risks than other funds.
• The Fund includes 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.
• 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 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.

Future Outlook

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. The offering shall terminate on the third anniversary following the date the registration statement of which this prospectus forms a part is declared effective by the Securities and Exchange Commission, unless suspended or terminated at any earlier time for certain reasons specified in this prospectus or unless extended as permitted under the rules of the Securities Act of 1933.

Management Comments

• The Sponsor expects the algorithm to exploit this trend by maintaining a lower notional exposure than a traditional short VIX short-term futures ETF when the VIX Index is below its historical average, based on the VIX Index Daily close data from January 4, 2010, to December 30, 2021, and, conversely, a similar or higher notional exposure when the VIX Index is above its historical average, based on the VIX Index Daily close data from January 4, 2010, to December 30, 2021.

Industry Context

This ETF provides an alternative for investors seeking to profit from declines in market volatility, differentiating itself through active management compared to traditional passive short VIX ETFs.

Comparison to Industry Standards

• Traditional short VIX short-term futures ETFs, such as ProShares Short VIX Short-Term Futures ETF (SVXY), typically maintain a fixed notional exposure.
• The Dynamic Short Short-Term Volatility Futures ETF seeks to dynamically manage its notional exposure to VIX futures, potentially offering better risk management.
• During periods of high volatility, the Fund may not perform as expected and the Fund may have losses when an investor may have expected gains if the Fund is held for a period that is different than one trading day.

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 an actively managed inverse volatility ETF.
• Authorized Participants are involved in the creation and redemption of Creation Units.
• The Sponsor is responsible for managing the Fund and ensuring compliance with regulations.

Next Steps

• The registration statement needs to be declared effective by the SEC.
• The Shares will be listed on the NYSE Arca, Inc. under the ticker symbol WEIX.

Key Dates

Keywords

VIX Futures, Volatility ETF, Inverse ETF, Dynamic Shares Trust, WEIX, ETF, Futures Contracts