Credit Suisse, the Switzerland-based bank with a growing lineup of U.S.-listed exchange-traded notes, today added to that family of ETNs with the launch of a “me-too” double-exposure equity security focused on European blue chips that looks to be designed to take advantage of Europe’s resurgence.
Indeed, the FI Enhanced Europe 50 ETN (FIEU) is much the same as the Barclays ETN+ FI Enhanced Europe 50 ETN (FEEU), a security that came to market in late May and had more than $250 million in assets by the first week of June. FEEU now has more than $800 million in assets, suggesting Credit Suisse must be seeing opportunity based on the success of the Barclays’ ETN.
ETNs are frequently created for specific coterie of clients, so it’s a bit presumptuous to read too much into ETNs that quickly build assets, considering that some strategies packaged in an ETN wrapper are little more than a custom-made investment for high-net-worth clients with very specific needs.
Still, it seems safe to view FIEU and FEEU as plays on Europe’s recovery from its debt crisis and to surmise that Credit Suisse’s willingness to design a copycat ETN is a measure of the potential it sees in Europe’s bounce back after that debt crisis’ ravaging of the eurozone in 2010 through at least half of 2012.
The index around which Credit Suisse’s FIEU and Barclays’ FEEU are organized is composed of 50 European blue chip companies selected from within the Stoxx Europe 600 Index.
The parent index contains the 600 largest stocks traded on the major exchanges of 18 European countries: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
In a pricing supplement, Credit Suisse said the “investor fee” for its new ETN would be “equal to the product of the ETN’s closing indicative value the previous business day; times 0.05 percent; times the ‘day count fraction.’”
FEEU, meanwhile, has what Barclays calls an annual “exposure fee rate” that is the sum of 0.76 percent plus the three-month Libor rate, according to the latest paperwork on the ETN that Barclays filed on the new ETN.
The two ETNs appear to be double-exposure versions of the index that underlies the nearly $100 million SPDR Stoxx Europe 50 ETF (FEU|C86).
The State Street ETF, whose assets are up 40 percent since late spring, comes with an annual expense ratio of 0.29 percent, or $29 for each $10,000 invested.
Be careful when making fruit-basket comparisons; you’re likely to come up with lemons.
Movers and shakers in the ETF world are often just the opposite.
With the S&P 500 topping 2,000, it’s worth understanding how you ended up in the wrong large-cap ETF.
Pimco is going back to what it does best—generating alpha through fixed-income exposure.