Daily ETF Watch: 2x S&P 500 ETN Live

March 26, 2014

UBS’ latest 2x leveraged S&P ETN ETF launches today.

UBS today is launching a 2x leveraged S&P ETN as a way for investors to milk a bit more out of an S&P rally that seems to be decelerating after 2013’s 32 percent rise.

The Etracs Monthly Reset 2xLeveraged S&P 500 Total Return ETN’s (SPLX) monthly resetting leverage means there are only 12 reset events per year versus approximately 252 reset events per year for leveraged securities having daily resetting leverage, according to the ETN’s fact sheet.

A leveraged ETF like SPLX might give some investors the right tool to leverage a stock market rally that is still going, but may slow after last year’s powerful gains. The S&P is currently up about 1 percent amid weak economic data in the U.S. and abroad as well as the Federal Reserve’s efforts to continue to taper its bond-buying program.

SPLX is the second double-exposure S&P 500-focused ETN the bank has launched. It brought the Etracs Monthly Pay 2xLeveraged S&P Dividend ETN (SDYL) to market in May 2912.

SPLX, the new ETN, has an annual expense ratio of 0.85 percent, or $85 for every $10,000 invested. SDYL, by contrast, has an annual fee of 30 basis points, or $30 for each $10,000 invested.

Thursday Launch

On Thursday, March 27, ProShares is launching a new global infrastructure fund, according to an NYSE communique, reflecting the investment market’s need for steady income at a time when bond yields remain rather low and the threat of rising inflationary pressures could lead to capital losses in fixed-income markets.

The ProShares DJ Brookfield Global Infrastructure ETF (TOLZ) will track the performance of the Dow Jones Brookfield Global Infrastructure Composite Index, which consists of companies that own and operate infrastructure assets, activities that generally generate long-term stable cash flows, according to a regulatory filing.

Yields continue to be a major theme for investors in 2014 as it was in 2013 when the S&P 500 Index surged by more than 30 percent. This year, industry observers are expecting a correction in the equity markets, making yield and defensive plays a key strategy in investors’ playbooks going forward.

Companies in the fund manage infrastructure assets such as airports, toll roads and ports, among other assets. The fund has an annual expense ratio of 0.45 percent, or $45 for every $10,000 invested.

 

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