At the very end of November of last year, UBS E-TRACS rolled out two ETNs that are geared towards the “risk on” and “risk off” concepts in the marketplace, and from our viewpoint, these products were well timed given the volatility and “macro” type movements that we experienced through much of 2011.
ONN (E-TRACS Fisher-Gartman Risk On ETN) tracks the Fisher-Gartman Index, which is a mixture of long and short positions across asset classes that are typically expected to increase in environments where the market and economic outlooks are favorable. Conversely, these particular asset classes are expected to falter when these outlooks go negative.
The asset classes that are included are energy, agriculture, metals, equities, currencies, and domestic and foreign bonds.
On the flipside of ONN, OFF (E-TRACS Fisher-Gartman Risk Off ETN), tracks the same Fisher-Gartman Risk Index but from an inverse (-100%) standpoint. In essence, OFF would be more of a “bear” product for those who believe the market and economic outlooks look grim, and are seeking to profit from any fallout that may occur.
With VIX ETFs and ETNs amassing a considerable amount of assets last year amidst unprecedented volatility and surely uncertain economic times, products such as ONN and OFF should meet a favorable reception among investment managers whom are looking for new sources of hedging as well as those looking to make opportunistic shorter term “theme based” trades.
Now, these products are not direct plays on volatility as many of the VIX ETFs and ETNs are, but we foresee portfolio managers using these products as opportunistic macro type hedges and or for strategic trading reasons.
E-TRACS Fisher-Gartman Risk On ETN
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