Risky ETNs in Spotlight as ‘XXXX’ Arrives With Amped-Up Leverage

The arrival of a US investment strategy that offers amped-up stock leverage is putting a spotlight on an industry popular with retail traders, but prone to extreme volatility and frequent blow-ups.

The MAX S&P 500 4X Leveraged ETNs, which launched last week with the eye-catching XXXX ticker, promise to quadruple the daily returns of the benchmark index. That makes them the highest-leveraged trade of their kind currently available to American investors, according to CFRA Research. They charge a fee of 0.95%.

The issuer Bank of Montreal and MAX — BMO’s brand for leveraged and inverse products — say that the ...