AMZU provides 200% daily exposure to Amazon using derivatives and daily rebalancing rather than holding equivalent direct equity. The fund held only 13.57% in Amazon stock, with the remainder in derivatives to achieve leverage, and it resets leverage daily. Daily resets create compounding drag and volatility decay that erode NAV and long-term returns even when Amazon appreciates. Over the past year Amazon fell 1.64% while AMZU fell 23.15%; year-to-date through December 2025 Amazon gained 3.63% while AMZU lost 13.99%, showing severe underperformance versus 2x expectations. Large daily swings in December 2025 amplified rebalancing losses. A $1.20 special dividend was paid in December 2025 but must be weighed against NAV erosion.
"AMZU doesn't generate income through traditional dividends. It uses derivatives, swaps, and daily rebalancing to achieve 200% exposure to Amazon's daily price movements. When Amazon pays a dividend, AMZU receives the distribution amplified through leverage, but at significant cost. The ETF paid a $1.20 special dividend in December 2025, but this must be evaluated against substantial NAV erosion from volatility decay."
"While Amazon declined 1.64% over the past year, AMZU lost 23.15% - nearly 20 percentage points beyond what 2x leverage predicts. The S&P 500 gained 12.63% and the Nasdaq-100 surged 20.70% over the same period. Year-to-date through December 2025, Amazon gained 3.63%, which should theoretically produce a 7.26% return for AMZU. Instead, the fund lost 13.99% - a 21-percentage-point shortfall from volatility decay. This occurs because daily resets lock in losses during choppy markets."
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