If you thought the AI investment product arms race was slowing down, think again. Rex Shares and Bank of Montreal have teamed up to launch two new leveraged exchange-traded notes that let traders make turbocharged bets on artificial intelligence stocks, both long and short.

The products, trading under the tickers AIQU and AIQD, began trading on June 2. AIQU provides 3x long daily exposure to the BITA AI Leaders Select NTR US Index, while AIQD offers the inverse: -3x short daily exposure to the same basket. In English: AIQU triples any daily gain in the index (and triples any loss), while AIQD does the opposite, profiting when AI stocks fall.

What’s actually in the box

The underlying index, tracked by the ticker BAILSN, holds 25 US-listed companies categorized into two buckets. “Purity Leaders” are firms with high revenue exposure directly tied to AI. “Key Enablers” are companies that provide critical infrastructure or support for AI deployment but aren’t pure-play AI businesses.

Both products are structured as exchange-traded notes, not exchange-traded funds. That distinction matters more than most people realize. ETNs are unsecured debt obligations issued by a bank, in this case BMO. They don’t actually hold the underlying stocks. Instead, BMO promises to pay returns linked to the index’s performance.

The advantage is precise index tracking with no tracking error from portfolio management. The disadvantage is credit risk. If the issuing bank ran into serious financial trouble, the ETN could lose value regardless of what the index does.

Here’s the thing about 3x leverage: it resets daily. That means the triple exposure applies to each individual trading day, not over longer periods. Hold these for weeks or months, and the compounding math gets weird. In volatile, choppy markets, a phenomenon called volatility decay can erode returns even when the underlying index ends up roughly flat over time. Rex Shares has been explicit that these are designed as daily trading instruments, not buy-and-hold positions.

Rex’s growing AI product lineup

This launch fits neatly into Rex Shares’ broader strategy of building out thematic leveraged products. The firm isn’t new to the AI investment space. Back in June 2024, Rex launched the REX AI Equity Premium Income ETF under the ticker AIPI, which takes a covered-call approach to investing in AI leaders. That product was designed for income-focused investors willing to cap upside in exchange for premium income.

AIQU and AIQD sit at the opposite end of the risk spectrum. Where AIPI is a yield play built for relative stability, the new ETNs are pure volatility instruments. Rex is essentially bracketing the AI investment market: conservative income seekers on one side, aggressive daily traders on the other.

Rex and BMO aren’t hiding the risks here. The product documentation emphasizes that these ETNs carry the potential for total loss, and the firms have been clear about volatility decay as a structural feature, not a bug, of daily leveraged products.

What this means for investors

For active traders who already understand leverage mechanics, AIQU and AIQD add a new tool for expressing short-term views on the AI sector. Rather than taking leveraged positions in individual names like Nvidia or Microsoft through options, traders can now get broad sector exposure with a single ticker.

The short product, AIQD, is particularly notable. Getting concentrated short exposure to AI stocks has traditionally required either borrowing individual shares or constructing options spreads. A -3x ETN makes that trade trivially easy to execute.

The risk calculus is straightforward but unforgiving. If you’re holding AIQU and the underlying index drops 10% in a single day, you’re looking at a 30% loss. On AIQD, a 10% rally in AI stocks means the same 30% hit. The 25-stock index provides more diversification than a single-stock leveraged product, but it’s still concentrated in one of the market’s most momentum-driven sectors.

For anyone outside the active trading community, these products are effectively spectator sports. The daily reset structure, credit risk from the ETN wrapper, and triple leverage make them unsuitable for retirement accounts or passive portfolios.