Rex-Osprey’s Risky DOJE Fund: Outpacing the Dogecoin ETF Boom?

The first U.S. spot Dogecoin ETF, Rex-Osprey’s DOJE, saw robust trading activity when it debuted on Thursday. Its performance ranked among the top ETF launches of the year. The firm has already submitted paperwork for a more aggressive, leveraged version.

According to a registration filed with the SEC on Thursday, Rex-Osprey intends to launch the REX DOJE Growth & Income ETF. This new fund will aim to provide daily exposure to the price movements of DOJE, amplified by a factor of 1.05 to 1.5x.

The filing cautions, “Because the fund aims to achieve leveraged daily investment results, it differs significantly from typical ETFs. Therefore, this fund may carry a higher degree of risk compared to non-leveraged options.”

The REX DOJE Growth & Income ETF’s portfolio will consist of three key components: a leveraged long position in the underlying Dogecoin ETF (DOJE), a covered call strategy designed to generate additional income, and investments in secure, short-term treasuries or money market funds.

The fund’s primary objective is to distribute income to shareholders on a weekly basis. A secondary goal is to achieve daily investment returns that are 105% to 150% of the daily percentage change in DOJE.

Leveraged investment products are familiar territory for Rex-Osprey, which already offers a selection of leveraged ETFs. These products give investors the potential for higher returns, but they also come with increased risk.

The latest prospectus emphasizes that this elevated risk profile makes the fund unsuitable for all investors.

“This fund is designed for knowledgeable investors only,” the document states. “It is intended for individuals who understand the potential consequences of seeking daily leveraged investment results, are aware of the risks associated with leverage, and are prepared to actively monitor their investment portfolios.”

Because of the daily leveraged structure, the company also points out that the fund is likely to underperform if DOJE experiences sideways trading. Additionally, the Growth & Income ETF could potentially lose money even if the underlying DOJE ETF shows positive gains over a multi-day period.

Moreover, the prospectus makes it clear that there is no guarantee that the fund’s investment strategy will be successfully executed or that it will be able to consistently provide weekly distributions.

Dogecoin (DOGE) has decreased by 6% in
the past 24 hours, currently trading at $0.265. While this leading meme coin has risen by over 22% in the last month, it is still approximately 64% below its all-time high of $0.73 reached in 2021.

Rex-Osprey’s DOJE ETF commenced trading on Thursday, generating approximately $17 million in trading
volume. According to Eric Balchunas, a Senior ETF Analyst at Bloomberg, this performance places it among the top five ETF launches in terms of first-day trading volume this year.

The Rex-Osprey XRP ETF, also launched on Thursday, experienced even greater demand, achieving nearly $38 million in trading volume and topping the list of new fund rollouts this year.