NightShares launches ETF for leveraged nocturnal trading

Oct 10th, 2022 | By | Category: Equities

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NightShares has unveiled its third ETF, a US large-cap equity fund providing leveraged exposure to the “Night Effect”.

NightShares launches ETF for leveraged nocturnal trading

The Night Effect refers to how overnight markets have historically outperformed daytime trading sessions on a risk-adjusted basis.

The NightShares 500 1x/1.5x ETF (NSPL US) has been listed on NYSE Arca with an expense ratio of 0.67%.

The Night Effect refers to how overnight markets have historically outperformed daytime trading sessions on a risk-adjusted basis, exhibiting higher returns alongside similar or even lower levels of volatility.

The phenomenon, which has been confirmed through academic research dating back to 2008, is believed to be caused in part by the greater frequency of corporate announcements, such as earnings results, that are reported outside of traditional trading hours.

Additionally, overnight markets benefit by avoiding a greater proportion of severe downturns which tend to happen more often during normal trading hours, potentially because scores of day traders may amplify these events.

NightShares made its debut in July with the launch of two ETFs – the NightShares 500 ETF (NSPY US) and NightShares 2000 ETF (NIWM US) – which aim to capture the Night Effect in US large and small-cap equities, respectively, by systematically buying overnight futures positions in the S&P 500 and Russell 2000 indices at the close of each trading day and exiting those futures positions at the beginning of the next trading day.

The newest addition, NSPL, is also based on the S&P 500 but delivers 150% leveraged exposure to the US bellwether index during overnight sessions while also providing traditional (+100%) exposure to the index’s daytime returns.

Bruce Lavine, CEO of NightShares, said: “We are very proud to be bringing NSPL to market as this ETF is an exciting extension of our product line. Because the day and night market sessions perform very differently, we wanted to provide investors with yet another cutting-edge approach to capturing the Night Effect.”

Max Gokhman, Chief Investment Officer of AlphaTrAI, a sister company of NightShares, added: “With the launch of NSPL, we are giving investors two interesting alternatives to holding a long position in the S&P 500. Both products are designed to offer attractive risk-adjusted returns but with one focused on lower volatility relative to the S&P 500 and the other looking for potential outperformance by emphasizing the historically well-rewarded night session.”

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