UBS AG (NYSE: UBS), the investment bank that provides the suite of ETRACS exchange traded notes, has launched two new ETNs designed to let individuals speculate on higher or lower prices across a variety of asset classes, including commodities, stocks, bonds and currencies.
ETRACS Fisher-Gartman Risk On ETN (NYSEArca: ONN) tries to reflect the daily performance of the Fisher-Gartman Risk Index, which holds a mix of long and short positions on various asset classes that are expected to rise on an optimistic outlook and decrease when the outlook is negative. The fund is expected to do well during periods of economic growth. ONN has an expense ratio of 0.85%.
The tracking index is designed by Mark Fisher of MBF Asset Management and newsletter publisher Dennis Gartman. The Horizons Gartman ETF, which is listed in Canada, gives investors exposure to the investment strategies of The Gartman Letter. The ETF was launched in March 2009 (see chart below).
Current sector weightings include: Energy 48%, Equities 46%, Currencies 28%, Agriculture 18%, Metals 10%, Currencies -16% and Sovereign Bonds -34%. Total long exposure is 150% and total short exposure is -50%, which provides a total exposure of 100%.
ETRACS Fisher-Gartman Risk Off ETN (NYSEArca: OFF) tries to reflect the daily short, or inverse, exposure to the Fisher-Gartman Risk Index by holding long “risk off” instruments while shorting “risk on” instruments. The fund is expected to perform during periods with a negative outlook. OFF has an expense ratio of 1.15%.
Current sector weightings include: Energy -48%, Equities -46%, Currencies -28%, Agriculture -18%, Metals -10%, Currencies 16% and Sovereign Bonds 34%. Total long exposure is 50% and total short exposure is -150%, which provides a total exposure of -100%.
“Correlation between asset classes and across geographic regions has risen dramatically over the past two decades as investors move in concert in reaction to changes in the global economic outlook,” Christopher Yeagley, Managing Director and US Head of Equity Structured Products, said in a press release. “These two ETNs are designed to give investors the ability to take advantage of this in a straightforward manner: if they expect economic growth, they can purchase ONN to express a ‘risk on’ view, and if they don’t expect growth, they can purchase OFF to express a ‘risk off’ view.”
Exchange traded notes are senior, unsecured debt instruments issued by UBS AG. Potential ETN investors are subject to a number or risks, including the loss of some or all of an investor’s principal and the creditworthiness of the issuing bank.
Horizons Gartman ETF
For more information on new ETFs, visit our new ETFs category.
Max Chen contributed to this article.