RBS Launches a China Trend-Following ETN | ETF Trends

RBS Securities, the issuing bank of the “Trendpilot” exchange traded note suite, expanded its offering with the launch of a China Trendpilot ETN on Thursday.

The RBS China Trendpilot ETN (NYSEArca: TCHI) uses a systematic trend-following strategy to provide expsure to the BNY Mellon China Select ADR Total Return Index, or the yield on a hypothetical notional investment in 3-month U.S. Treasury Bills as of the most recent weekly auction, the Cash Rate.

According to the Trendpilot methodology, the fund will follow the Benchmark Index if the closing level of the Index is at or above its historical 100-day simple moving average for three consecutive business days. However, if the Index drops below its historical 100-day simple moving average for three consecutive days, the fund will follow the Cash Rate. [An ETF Trend-Following Plan for All Seasons]

“The RBS China Trendpilot Exchange Traded Note, like the other ETNs in our Trendpilot suite, are designed for investors who seek an objective and transparent trend-following strategy that aims to mitigate, to some extent, the volatility of investing in the BNY Mellon China Select ADR Total Return Index,” Michael Nelskyla, Head of Investor Products Distributions, Americas, said in the press release.

Since the fund switches between Index and Cash Rate holdings, the ETN will have an expense ratio of 1.1% when tracking the Benchmark Index or a 0.50% expense ratio when tracking the T-Bill rate.

The fund holds American Depositary Shares, or ADS – U.S. dollar-denominated equity shares of a foreign-based company available to investors on an American stock exchange. Depositary banks in the U.S. issue ADS under an agreement with the issuing foreign entity. The entire transaction is called an American Depositary Receipt, or ADR, and the individual shares are called ADS.