Riding the market’s biggest technology winners has been one of the easiest ways to outperform over the past decade. The MicroSectors FANG+ 3X Leveraged ETNs (NYSEARCA:FNGU) takes that idea and adds three times daily leverage. Its underlying index currently includes Nvidia, Microsoft, Apple, Amazon, Meta Platforms, Alphabet, Netflix, Broadcom, Palantir, and Micron Technology. These are some of the companies driving the artificial intelligence boom and much of the broader market’s gains. The problem is what happens when they stop winning. The previous FNGU notes carrying the same strategy lost roughly 87% during 2022. A similar decline today would turn a $100,000 position into about $13,000.
Ten Stocks, Three Times the Exposure
Unlike leveraged exchange-traded funds, ETNs are unsecured debt securities issued by a bank rather than funds that own a portfolio of assets. While they perform similar to ETFs, they come with their own set of added risks. Such products come with a maturity date and provisions allowing the issuer to call or redeem the notes early. For investors, that creates an additional risk because the redemption value could differ significantly from the price originally paid.
FNGU tracks three times the daily performance of the NYSE FANG+ Index before fees and financing costs. The benchmark FANG+ Index holds just 10 companies and equally weights them, meaning each constituent starts around a 10% allocation.
That is a highly concentrated portfolio before leverage even enters the equation. Applying 3X daily exposure turns a roughly 10% index allocation into something closer to 30% of FNGU’s daily economic sensitivity at each rebalance. Several of the companies are also exposed to the same underlying themes: artificial intelligence spending, cloud computing, digital advertising, consumer technology, and growth-stock valuations. This lack of diversification should be cause for concern, especially if the AI/ Big Tech growth theme were to enter a period of underperformance.
2022 Shows What Can Go Wrong
Investors should understand the historical comparison. Today’s FNGU is technically a new security. The Bank of Montreal (BMO) called the original FNGU notes in May 2025, launched replacement notes under the FNGB ticker, and then renamed those notes FNGU in June 2025. The current security therefore did not exist during the 2022 bear market.
However, the predecessor ETN is still useful because it followed essentially the same basic proposition: three times the daily performance of the FANG+ Index. When high-growth technology stocks collapsed in 2022, that leverage turned a bad year into a devastating one. The previous FNGU lost roughly 87% over the calendar year. The recovery math is even worse than the headline number sounds. A 50% loss requires a 100% gain to get back to even. An 87% loss requires approximately a 669% gain to get back to your starting point. That is almost a complete loss of capital.
That is the risk investors accept in exchange for FNGU’s potential explosive upside.
Daily Leverage Is the Part That Matters
FNGU does not promise three times whatever the FANG+ Index earns over a month or year. Instead, it targets three times the return each day, and the leverage resets after every trading session.
BMO specifically warns that returns over periods longer than one day can differ significantly from three times the index’s cumulative performance. Volatility and the sequence of daily gains and losses both matter for investors.
Consider an index that falls 10% one day and rises 11.1% the next. The index is essentially back where it started. By comparison, a simplified 3X product falls 30% on day one and then gains roughly 33.3% from that reduced balance on day two. The result is still a loss of about 6.7%.
Repeat that volatility enough times and performance can erode even if the underlying stocks eventually recover. BMO describes the notes as daily trading tools for sophisticated investors rather than buy-and-hold investments.
A Powerful Tool With Very Little Margin for Error
There is nothing inherently wrong with wanting leveraged exposure to some of the market’s biggest tech leaders. If these companies continue leading the market and do so relatively smoothly, FNGU can produce extraordinary gains.
FNGU simply leaves very little room for being wrong. You are combining a concentrated group of expensive, growth-oriented technology leaders with three times daily leverage and path-dependent compounding. The last major technology bear market showed what that combination can look like when the winners stop winning. FNGU can magnify the next rally but also amplify the next downturn.
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