RCAX ETF — Holdings & Analysis

(RCAT) through the use of swap agreements and short-dated listed call options. With an expense ratio of 1.31%, RCAX offers aggressive, short-term exposure to a single drone technology company, distinguishing it from broader market or sector-based equity ETFs. Past performance does not guarantee future results.

Daily Target 2X Long RCAT ETF (RCAX) ETF — Price, Holdings & Analysis

The Daily Target 2X Long RCAT ETF (RCAX) is a leveraged equity ETF from Defiance with $0.01 billion in assets under management. RCAX seeks to generate twice the daily percentage change in the share price of Red Cat Holdings, Inc. (RCAT) through the use of swap agreements and short-dated listed call options. With an expense ratio of 1.31%, RCAX offers aggressive, short-term exposure to a single drone technology company, distinguishing it from broader market or sector-based equity ETFs. Past performance does not guarantee future results.

ETF Overview

RCAX uses swap agreements and short-dated listed call options to make bullish bets on the share price of Red Cat Holdings, Inc. (RCAT). Red Cat Holdings is a US-based drone technology company providing unmanned aerial systems and related software for military, government, and commercial applications. The fund seeks to maintain daily leveraged exposure equivalent to 200% of the daily percentage change in RCATs price through daily rebalancing. Returns may deviate from the expected 2x if held for longer than a single day due to factors such as volatility, compounding, or rebalancing effects. RCAX may also hold US government securities, money market funds, short-term bond ETFs, and investment-grade corporate debt as collateral for its derivatives positions.

RCAX provides a leveraged investment strategy, aiming for 200% of the daily performance of Red Cat Holdings, Inc. This is achieved through a combination of swap agreements and short-dated listed call options. Red Cat Holdings is a US-based drone technology company involved in unmanned aerial systems and related software. The fund rebalances daily to maintain its 2x leverage target. Beyond its derivative positions, RCAX may also hold US government securities, money market funds, short-term bond ETFs, and investment-grade corporate debt as collateral. This ETF is designed for sophisticated investors seeking short-term, tactical exposure to Red Cat Holdings, rather than a long-term investment. Due to the effects of compounding and volatility, returns over periods longer than one day may deviate significantly from the stated 2x daily target. RCAX's entire country exposure is to 'Other' at 100%.

Risk Metrics

RCAX carries significant risks associated with its leveraged investment strategy and concentrated holdings. The fund's 1.31% expense ratio is higher than many traditional equity ETFs, creating a substantial drag on performance, especially if held long-term. As a leveraged ETF, RCAX is subject to amplified gains and losses, making it unsuitable for risk-averse investors. The fund's concentration in a single company, Red Cat Holdings, exposes it to idiosyncratic risks specific to that company and the drone technology sector. Daily rebalancing, while intended to maintain the 2x leverage, can lead to increased transaction costs and potential erosion of capital, particularly in volatile markets. The fund's small AUM of $0.01 billion may also present liquidity risks. Past performance does not guarantee future results.

Expense Ratio

1.31%

How Is the Fund Allocated?

Country	Weight
Other	100.0%

Dividend Yield

0.00%

Invesco QQQ Trust, Series 1 (QQQ) — 0.18% expense ratio
State Street Technology Select Sector SPDR ETF (XLK) — 0.08% expense ratio
State Street Energy Select Sector SPDR ETF (XLE) — 0.08% expense ratio
State Street SPDR Dow Jones Industrial Average ETF Trust (DIA) — 0.16% expense ratio
iShares Russell 2000 ETF (IWM) — 0.19% expense ratio
State Street Financial Select Sector SPDR ETF (XLF) — 0.08% expense ratio
iShares MSCI Emerging Markets ETF (EEM) — 0.72% expense ratio
iShares MSCI EAFE ETF (EFA) — 0.32% expense ratio

Daily Target 2X Long RKLB ETF (RKLX) (Equity) — 1.31% expense ratio
Daily Target 2X Long SOFI ETF (SOFX) (Equity) — 1.29% expense ratio
Daily Target 2X Short PLTR ETF (PLTZ) (Equity) — 1.29% expense ratio
Daily Target 2X Long OKLO ETF (OKLL) (Equity) — 1.31% expense ratio
Daily Target 2X Short LLY ETF (LLYZ) (Equity) — 1.29% expense ratio
Defiance BMNR Option Income ETF (YBMN) (Equity) — 0.85% expense ratio

Questions & Answers

What is RCAX and what does it track?

RCAX, the Daily Target 2X Long RCAT ETF, is an exchange-traded fund designed to deliver twice the daily percentage change in the price of Red Cat Holdings, Inc. (RCAT). Red Cat Holdings is a US-based drone technology company.

The fund achieves this leveraged exposure through the use of swap agreements and short-dated listed call options.

What is the expense ratio for RCAX?

The expense ratio for RCAX is 1.31%. This means that for every $10,000 invested in the fund, $131 is deducted annually to cover operating expenses.

The expense ratio is relatively high compared to broad market equity ETFs, which often have expense ratios below 0.50%. Investors should consider the impact of this expense ratio on their overall returns, especially for long-term holdings.

What are the top holdings in RCAX?

As a leveraged ETF, RCAX primarily uses derivatives to achieve its investment objective. Its top holdings include swap agreements and call options linked to Red Cat Holdings (RCAT).

In addition to these derivative positions, RCAX may hold collateral assets such as US government securities, money market funds, short-term bond ETFs, and investment-grade corporate debt.

Is RCAX a good long-term investment?

RCAX is generally not considered a suitable long-term investment due to its leveraged structure and daily rebalancing.

The fund is designed to provide twice the *daily* return of Red Cat Holdings, and its performance over longer periods can deviate significantly from this target due to compounding, volatility, and the costs associated with daily rebalancing.

How does RCAX compare to similar ETFs?

RCAX is unique in its focus on providing leveraged exposure to a single company, Red Cat Holdings. Most ETFs offer diversified exposure to a broader index, sector, or investment strategy.

The fund's expense ratio of 1.31% is higher than many broad-based ETFs.

Does RCAX pay dividends?

According to the latest data, RCAX does not pay dividends. Its dividend yield is 0.00%. This is typical for leveraged ETFs that focus on capital appreciation rather than income generation.

Investors seeking dividend income should consider other ETFs that prioritize dividend payments.