LRETETRACS Monthly Pay 2xLeveraged MSCI US REIT INDEX ETN
LRET Fund Description
ETRACS Monthly Pay 2xLeveraged MSCI US REIT Index ETN provides monthly 2x leveraged exposure to a market-cap-weighted index of US real estate investment trusts
LRET Factset Analytics Insight
LRET is an exchange-traded note linked to the monthly compounded 2x leveraged performance of the MSCI U.S. REIT Index—a market-cap-weighted index of equity REIT securities in the US. The note is a senior, unsecured debt obligation of UBS, and as such, is subject to UBS’ credit risk.LRET’s expense ratio, while not cheap, is in line with other leveraged products in the Real Estate segment. LRET pays a variable coupon linked to the amount of cash distributions from the index constituents. The resulting rich yield will no doubt appeal to investors looking for current income from their portfolios. However, the investor’s principal is at risk, so the note’s total return may lag its yield, or may even be negative despite a high yield.Another feature in line with LRET’s positioning as a portfolio holding—rather than a trading—vehicle is the fact that leverage is reset monthly. This makes the note’s return performance less path-dependent than similar instruments with daily reset. Nevertheless, the long-term result is likely to be different from twice the return of the underlying index.It’s too early to judge LRET’s tradability, but the first few days of trading show promise. As with all new products, sparking investor interest and gathering assets will be a critical challenge to achieving stable liquidity, and ultimately will determine this product’s viability.
LRET CHARTS AND PERFORMANCE
LRET Factset Analytics Block Liquidity
This measurement shows how easy it is to trade a $1 million USD block of LRET. LRET is rated a N/A out of 5.