A Leveraged ETN Play on Europe STOXX 50

Fisher Investments has partnered with Credit Suisse to launch an exchange traded note to provide leveraged exposure to the a widely observed European benchmark.

Credit Suisse rolled out the Credit Suisse FI Enhanced Europe 50 ETN (NYSEArca: FEUL), which has a 1.00% expense ratio.

The new Credit Suisse FI Enhanced Europe 50 ETN tries to provide leveraged exposure to the STOXX Europe 50 USD (Gross Return) Index, an index comprised of equity securities of 50 “blue-chip” European companies selected from within the broader STOXX Europe 600 Index, which covers 17 European countries, including Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

FEUL to Rebalance on Quarterly Basis

The leveraged ETN aims to provide a quarterly compounded 2x or 200% leveraged exposure of its benchmark index. Unlike more popular leveraged exchange traded funds that reset exposure on a daily basis, the ETN rebalances on a quarterly basis, so the leveraged ETN is less affected by compounding risks associated with long-term exposure.

FEUL covers notes that mature on May 11, 2028.

Similar to index-based ETFs, ETNs also track some sort of index as part of their investment strategy. However, an exchange traded note, like the name implies, is a type of debt note that trades on an exchange.

ETNs are debt securities issued by financial institutions that promise to pay the return of an index, minus fees and taxes. Therefore, investors are exposed to the credit risk or the possibility the underwriting bank goes bankrupt. The note can be vulnerable if the issuer gets into financial trouble, otherwise known as a default. With an ETN, an investor can lose some or all of their investment if the ETN issuer goes under.

For more information on new fund products, visit our new ETFs category.