Before investing in an ETF, be sure to carefully consider the fund's objectives, risks, charges, and expenses. For a prospectus containing this and other important information, contact the fund or a BlueSkye representative at 321-473-4423. Please read the prospectus carefully before investing.
Exchange Traded Notes (ETNs)
ETNs (Exchange-Traded Notes) are not funds and are not registered as investment companies. They are unsecured debt instruments and generally do not offer principal protection, carrying inherent credit risk. The repayment of principal, any interest, and any returns at maturity or redemption depend on the issuer’s ability to pay. The market value of an ETN may decline if the issuer’s credit rating is downgraded. Additionally, ETNs may expose investors to specific sector or industry risks. Leveraged and inverse ETNs come with significant volatility and unique risks, including leverage, derivatives, and complex investment strategies that should be fully understood before investing. ETNs containing foreign currency components are also subject to foreign exchange risk. Some ETNs include call features, allowing the issuer to redeem the note, which may adversely impact its value.
Exchange Traded Funds (ETFs)
ETFs are collections of securities that may track sector-specific, country-specific, or broad or narrow market indices. Like stocks, ETFs are traded on exchanges and are subject to similar risks as their underlying securities, including market, sector, and industry risks, as well as risks related to short-selling and margin accounts. Commissions typically apply.
I. Risks of Commodity ETFs
Commodity ETFs can be impacted by broad market movements, commodity index volatility, interest rate changes, and factors specific to certain industries or commodities. These ETFs may experience higher volatility than traditional ETFs and may not be suitable for all investors. Additional risks include the fund’s use of complex investment strategies, such as derivatives, options, forward contracts, correlation or inverse correlation, market price variance, and leverage.
II. Risks of Currency ETFs
The value of currency ETFs is directly tied to the value of the underlying foreign currency, introducing concentration risks associated with currency price fluctuations. Factors affecting foreign currency values include national debt levels, trade deficits, inflation, interest rates, institutional investment activities, and geopolitical events. Currency ETFs may not be appropriate for all investors, and many are not registered investment companies under the Investment Company Act of 1940. For a complete discussion of the risks, please review the specific product's prospectus.
III. Risks of Bond ETFs
Bond ETFs are not insured or guaranteed by the FDIC or any government agency. The value of bonds and bond ETFs generally decreases as interest rates rise, which investors should consider when evaluating these funds.