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

Overview

The ETRACS Monthly Pay 2xLeveraged US High Dividend Low Volatility ETN Series B (HDLB) is an exchange-traded note that seeks to provide investors with a leveraged exposure to the performance of the Solactive US High Dividend Low Volatility Index. It focuses on high dividend-yielding, low-volatility US stocks and aims to deliver twice the monthly performance of the underlying index. As an ETN, it represents the debt of the issuer, not direct ownership of the underlying assets.

Reputation and Reliability

The ETN is issued by UBS, a global financial services company. UBS has a long track record in financial markets, but ETNs carry issuer risk.

Management Expertise

The management of the ETN is based on the index it tracks, so there is limited active management. UBS's expertise is in structuring and issuing ETNs.

Goal

To provide 2x leveraged exposure to the monthly performance of the Solactive US High Dividend Low Volatility Index.

Investment Approach and Strategy

Strategy: The ETN tracks the Solactive US High Dividend Low Volatility Index, aiming for a 2x leveraged return. This means the ETN is designed to amplify the index's monthly gains, but also its losses.

Composition The ETN's value is linked to the performance of the Solactive US High Dividend Low Volatility Index, which consists of US stocks selected for their high dividend yields and low volatility.

Market Share: Due to the specific nature of leveraged ETNs and the issuer risk involved, HDLB holds a small market share in the broader high-dividend ETF/ETN sector.

Total Net Assets (AUM): 21500000

Key Competitors

• DIV
• VYM
• SPHD
• DVY

Competitive Landscape

The competitive landscape is dominated by larger, unleveraged dividend ETFs. HDLB offers higher potential returns (and risks) through leverage, distinguishing it from these funds. However, due to ETN structure and leveraging risks, investors often prefer unleveraged ETFs for long-term holdings. HDLBu2019s leverage can lead to outperformance in rising markets, but significantly underperform in declining or volatile markets.

Historical Performance: Historical performance can vary significantly due to the 2x leverage. Returns will amplify those of the Solactive US High Dividend Low Volatility Index. Data unavailable at time of generation due to limitations.

Benchmark Comparison: HDLB aims to deliver twice the monthly percentage change of the Solactive US High Dividend Low Volatility Index. Any difference in returns may be due to fees, leverage costs, and tracking error.

Expense Ratio: 0.5

Average Trading Volume

The average trading volume for HDLB tends to be low, reflecting the ETN's niche focus and risk profile.

Bid-Ask Spread

The bid-ask spread can be relatively wide, especially compared to more liquid ETFs, which can increase trading costs.

Market Environment Factors

Economic conditions, interest rate changes, and overall market volatility significantly affect HDLB. Low interest rates can reduce the cost of leverage, while high volatility can erode returns due to the leveraged nature.

Growth Trajectory

HDLB's growth is tied to the performance of the underlying index and investor appetite for leveraged products. Changes in investor sentiment toward high dividend stocks and risk tolerance can impact its growth.

Competitive Edge

HDLB's primary advantage is its 2x leverage, which provides the potential for amplified returns compared to unleveraged high dividend ETFs. This can attract investors looking for aggressive short-term gains. However, the leveraged nature exposes investors to higher risk, especially during market downturns. The ETN structure also introduces issuer risk, which is not present in traditional ETFs. Its competitive advantages are largely dependent on market conditions and investor risk appetite.

Volatility

HDLB exhibits significantly higher volatility than unleveraged dividend ETFs due to the 2x leverage. Investors should expect larger price swings.

Market Risk

The value of HDLB is directly tied to the performance of the US high dividend low volatility stocks. A market downturn or a decline in the dividend-paying capacity of these stocks would negatively impact the ETN. Additionally, it also bears issuer risk.

Ideal Investor Profile

HDLB is suitable for sophisticated investors with a high risk tolerance who seek short-term, leveraged exposure to high-dividend, low-volatility stocks.

Market Risk

HDLB is more suitable for active traders with a short-term investment horizon than for long-term investors or passive index followers due to its leveraged nature and associated risks.

ETRACS Monthly Pay 2xLeveraged US High Dividend Low Volatility ETN Series B (HDLB) offers leveraged exposure to US high dividend stocks, making it a high-risk, high-reward investment. It is best suited for sophisticated investors with a short-term focus and a high tolerance for volatility. As an ETN, it carries issuer risk, which investors should carefully consider. Its performance is directly tied to the Solactive US High Dividend Low Volatility Index, amplified by its 2x leverage. Investors should monitor economic conditions and market volatility closely due to the leveraged nature of the product.

• DIV
• VYM
• SPHD
• DVY
• HDV

Data Sources:

• UBS website
• Solactive Indexes

Disclaimers:

This analysis is for informational purposes only and does not constitute financial advice. Investment decisions should be based on individual circumstances and consultation with a qualified financial advisor. Data accuracy is not guaranteed.