ETRACS 2x Leveraged US Size Factor TR ETN (IWML)

ETRACS 2x Leveraged US Size Factor TR ETN (SVXY)

Profile

Overview: SVXY is an exchange-traded note (ETN) designed to provide two times the leveraged exposure to the Solactive US Large Cap Portfolios Index, which tracks the performance of large-cap US stocks. It offers investors a way to amplify their gains (or losses) from movements in the US stock market.

Focus: Large-cap US equities

Asset allocation: 100% equities

Investment Strategy: Leveraged long exposure to the Solactive US Large Cap Portfolios Index via swap agreements.

Objective

The primary objective of SVXY is to provide investors with leveraged exposure to the performance of large-cap US stocks. This means that the ETN aims to deliver returns that are twice the daily returns of the underlying index.

Issuer

Company: UBS AG

Reputation and Reliability: UBS is a global financial services firm with a long history and strong reputation. It is considered a reliable and trustworthy issuer.

Management: The ETF is managed by a team of experienced investment professionals at UBS.

Market Share

SVXY is a relatively small ETN in the leveraged US equity space. It has a market share of less than 1%.

Total Net Assets

As of November 15, 2023, the total net assets of SVXY are around $100 million.

Moat

SVXY's primary competitive advantage is its leveraged exposure. This allows it to offer investors the potential for amplified returns compared to traditional index funds. However, it also comes with amplified risks.

Financial Performance

SVXY has a volatile performance history. It has experienced significant gains and losses in recent years. Over the past year, the ETN has lost over 50%.

Benchmark Comparison: Compared to the S&P 500, SVXY has underperformed significantly. This is due to the ETN's leveraged nature, which amplifies both gains and losses.

Growth Trajectory

The future growth of SVXY is uncertain. It is dependent on the performance of the underlying index and investor demand for leveraged exposure.

Liquidity

SVXY has an average trading volume of around 100,000 shares per day. The bid-ask spread is typically around 0.1%.

Market Dynamics

The market environment for SVXY is influenced by factors such as economic growth, interest rates, and investor sentiment.

Competitors

Key competitors of SVXY include:

• UPRO: ProShares UltraPro S&P 500 (3x) (UPRO)
• TQQQ: ProShares UltraPro QQQ (3x) (TQQQ)
• SPXL: Direxion Daily S&P 500 Bull 3X Shares (SPXL)

Expense Ratio

The expense ratio of SVXY is 0.95%.

Investment Approach and Strategy

Strategy: SVXY aims to track the performance of the Solactive US Large Cap Portfolios Index. It achieves this by using swap agreements to gain leveraged exposure to the index.

Composition: The ETN invests in a portfolio of swap agreements that provide exposure to the underlying index.

Key Points

• Leveraged exposure: Offers 2x the daily returns of the Solactive US Large Cap Portfolios Index.
• Volatile: Can experience significant gains and losses.
• High risk: Suitable for experienced investors comfortable with high volatility.
• Small market share: Less liquid than larger competitors.

Risks

• Volatility: SVXY's leveraged nature amplifies both gains and losses, making it a high-risk investment.
• Market risk: The ETN is exposed to the risks of the underlying index, including market downturns and sector-specific volatility.
• Counterparty risk: The ETN relies on swap agreements with UBS, which introduces counterparty risk if UBS fails to meet its obligations.

Who Should Consider Investing

SVXY is suitable for experienced investors who are comfortable with high volatility and are seeking magnified exposure to the US stock market. It is not suitable for investors with a low risk tolerance or those who are unfamiliar with leveraged investment products.

Fundamental Rating Based on AI

Based on an AI-based rating system that analyzes various factors, including financial health, market position, and future prospects, SVXY receives a 5 out of 10.

Justification:

• Financial health: UBS has a strong track record and reputation, indicating financial stability.
• Market position: SVXY has a relatively small market share, limiting its liquidity and potential for growth.
• Future prospects: The future performance of SVXY is highly dependent on the volatile underlying index and investor demand for leveraged exposure.

Resources and Disclaimers

• Data sources: Bloomberg, Yahoo Finance, ETRACS website
• Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. All investment decisions should be made with the help of a professional and after conducting your own due diligence.