I’m imagining a scenario like this:
FWFunds, LLC maintains ten different exchange-traded funds with ticker symbols FWFA, FWFB, … FWFJ.
These funds track the value of some commodity and help investors mitigate the risk of their other investments in that commodity. Their typical return is very high variance: based on the price of that commodity, after a year, a $100 investment may end up being worth about $1 or about $950!
As it happens, the way the ETNs are written, each of the ten funds covers different possible scenarios, and it’s certain that exactly one $100 investment will end up at the $950 price point while all the rest will end up at $1 after a year.
A savvy investor puts $5000 into each of these funds. At the end of the year, they characterize one of their investments as a Roth IRA; the rest they characterize as normal taxable investments. This investor has spent $50000 and has ended up with $47950 in Roth IRA funds. They took a real risk (that this ETN would remain solvent and that their money would be better off in this place vs. the S&P 500, bonds, or CDs for a year).
Other investors who love variance for different reasons end up buying only one of the funds, but this still doesn’t bankrupt FWFunds LLC because the money really is invested in high-risk outcomes and they aren’t “losing” anything by publishing any one of the funds.
Does this already exist? Could it?