The MicroSectors FANG+ Index 3X Leveraged ETN (NYSEARCA: FNGU), issued by Bank of Montreal, carries an investor fee of roughly 0.95% annualized on notional exposure.
That works out to approximately $95 per year for every $10,000 invested, a figure that sounds manageable until the structural costs underneath it are examined.
An investor who put $10,000 into FNGU on June 1, 2026 watched it shrink by roughly 28.88% in a single month, while the Nasdaq-100 barely moved.
Over that same period, Invesco QQQ (NASDAQ: QQQ), which tracks the Nasdaq-100 and captures most of the same mega-cap tech names, slipped only 0.85%.
The one-year picture is even more striking, with FNGU up just 3.29% against QQQ’s 33.49%, and year-to-date figures of 1.78% versus 19.87% respectively.
The structural culprit behind that gap is volatility decay, the result of FNGU resetting its 3x leverage daily, which bleeds value in choppy markets even when the underlying index ends flat.
The VIX ranged from 15.40 to 22.22 across June 2026, with sustained readings between 17 and 22, representing ordinary market noise rather than exceptional turbulence.
Beyond decay, FNGU holders are unsecured creditors of Bank of Montreal, meaning if BMO defaults, the note can go to zero regardless of how the FANG+ index performs.
The NYSE FANG+ Index holds only around 10 equal-weighted mega-cap tech names, making concentration risk extreme before any leverage is applied.
ETN gains on equity-index notes are also generally taxed as ordinary income on sale, stripping out the qualified-dividend and long-term capital-gains treatment available to plain ETF holders.
For investors seeking similar tech exposure without daily-reset leverage, MicroSectors offers the MicroSectors FANG+ Index ETN (NYSEARCA: FNGS), the 1x version of the identical index with no leverage decay.
Technology Select Sector SPDR (NYSEARCA: XLK) offers an even cheaper alternative, with a net expense ratio of just 0.08%, or roughly $8 per year per $10,000, compared to FNGU’s $95.
XLK’s top three holdings, NVIDIA, Apple, and Microsoft, already account for 39.99% of the fund, preserving a meaningful mega-cap tech tilt without the ETN credit risk layer.
Over 20 years, the annual fee gap between FNGU and XLK alone, before any performance drag or decay, compounds into a several-thousand-dollar difference on the same broad tech thesis.
FNGU is ultimately a trading tool that happens to trade on an exchange, and the core question for any holder is whether they are buying tech exposure or renting a short-dated derivative at a steep structural cost.
