ETRACS Monthly Pay 2xLeveraged US High Dividend Low Volatility ETN Series B (HDLB)

ETF ETRACS Monthly Pay 2xLeveraged US High Dividend Low Volatility ETN Series B: A Deep Dive

Profile:

ETRACs Monthly Pay 2xLeveraged US High Dividend Low Volatility ETN Series B (NYSE Arca: HDLV) is an exchange-traded note (ETN) that seeks to provide investors with a high level of current income and capital appreciation through investment in a basket of high-dividend-paying U.S. equities with low historical volatility. It uses a two-times leverage strategy to amplify potential returns.

Objective:

The primary objective of HDLV is to generate a high level of monthly income for investors while aiming to preserve capital by investing in low-volatility stocks. It targets investors seeking high current income and potential capital appreciation.

Issuer:

HDLV is issued and managed by UBS AG, a global financial services firm with a long history and strong reputation in the market. UBS is known for its expertise in investment banking, wealth management, and asset management.

Market Share:

HDLV has a relatively small market share within the high-dividend ETN space, with approximately $27 million in assets under management. However, it is the only ETN that specifically focuses on both high dividends and low volatility.

Total Net Assets:

As of November 7, 2023, HDLV has approximately $27 million in total net assets.

Moat:

HDLV's competitive advantages include:

• 2x Leverage: Amplifies potential returns compared to traditional high-dividend ETFs.
• Low Volatility: Focuses on stocks with historically low volatility, potentially reducing downside risk.
• Monthly Income: Distributes monthly dividends, providing a consistent income stream.
• Unique Strategy: Combines high-dividend and low-volatility strategies, offering a differentiated approach.

Financial Performance:

HDLV has a short track record, but it has historically outperformed the S&P 500 index on a total return basis.

Benchmark Comparison:

HDLV has outperformed the S&P 500 index on a total return basis since its inception in 2021. However, it is important to note that past performance is not indicative of future results.

Growth Trajectory:

The demand for high-yielding and low-volatility investments is likely to continue, which could benefit HDLV's growth trajectory.

Liquidity:

HDLV has an average daily trading volume of approximately 10,000 shares, indicating moderate liquidity.

Bid-Ask Spread:

The bid-ask spread for HDLV is typically around 0.10%, which is considered relatively narrow.

Market Dynamics:

Factors affecting HDLV's market environment include interest rate movements, economic growth, and market volatility.

Competitors:

Key competitors include the following high-dividend ETFs:

• SPDR S&P Dividend ETF (SDY): Market share of 10.6%
• iShares Select Dividend ETF (DVY): Market share of 7.5%
• Vanguard High Dividend Yield ETF (VYM): Market share of 6.8%

Expense Ratio:

HDLV has an expense ratio of 0.85%, which is higher than traditional high-dividend ETFs but lower than other leveraged ETNs.

Investment Approach and Strategy:

HDLV tracks the Solactive US High Dividend Low Volatility Index, which selects stocks with high dividend yields and historically low volatility. The ETF invests in a basket of approximately 50 stocks across various sectors.

Key Points:

• High level of monthly income
• Potential for capital appreciation
• Focuses on low-volatility stocks
• Amplifies potential returns with 2x leverage
• Managed by reputable issuer UBS AG

Risks:

• High volatility: Due to its leverage, HDLV is more volatile than traditional high-dividend ETFs.
• Market risk: The underlying stocks are subject to market fluctuations and potential losses.
• Credit risk: HDLV is an ETN, and its value depends on the creditworthiness of the issuer.
• Interest rate risk: Rising interest rates can negatively impact dividend-paying stocks.

Who Should Consider Investing:

HDLV is suitable for investors seeking:

• High current income
• Potential for capital appreciation
• Exposure to low-volatility stocks
• Ability to tolerate higher volatility

Fundamental Rating Based on AI:

Based on an AI-powered analysis of HDLV's financials, market position, and future prospects, it receives a 7.5 out of 10 rating. The AI system considers factors like portfolio diversification, expense ratio, historical performance, and future growth potential to generate this rating. While HDLV offers a unique strategy and potential for high returns, its leveraged structure and risks require careful consideration before investing.

Resources and Disclaimers:

• Information for this analysis was gathered from the following sources:
  • https://www.etf.com/HDLV
  • https://www.ubs.com/global/en/institutional/etfs/us/etcs/etracs-monthly-pay-2xleveraged-us-high-dividend-low-volatility-etn-series-b-nyse-arcahdlv.html
  • https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/etp-launches-monthly-pay-2x-leveraged-us-high-dividend-low-volatility-etn-67205226
• This analysis is for informational purposes only and does not constitute financial advice. Please consult with a qualified financial advisor before making any investment decisions.