ETRACS 2x Leveraged MSCI US Momentum Factor TR ETN (MTUL)MTUL

ETF ETRACS 2x Leveraged MSCI US Momentum Factor TR ETN (MTUM)

Profile

Focus: MTUM is an exchange-traded note (ETN) that seeks to provide 2x the daily performance of the MSCI US Momentum Factor Total Return Index. This index tracks large and mid-cap US stocks exhibiting strong relative price momentum.

Asset Allocation: Primarily invests in US equities with exposure to various sectors based on the index methodology.

Investment Strategy: Utilizes a leveraged approach to amplify the returns of the underlying index.

Objective

The primary investment goal of MTUM is to achieve 2x the daily performance of the MSCI US Momentum Factor Total Return Index, before fees and expenses.

Issuer

Issuer: UBS AG

Reputation and Reliability: UBS is a globally recognized Swiss investment bank and financial services firm with a long history of providing financial products and services.

Management: The ETF is managed by UBS Asset Management, a subsidiary of UBS AG known for its expertise in managing various investment strategies.

Market Share

MTUM represents a small portion of the leveraged and inverse ETN market. However, it holds a significant share within the US momentum factor ETN space.

Total Net Assets

As of October 26, 2023, MTUM has approximately $250 million in total net assets.

Moat

Unique Strategy: MTUM offers leveraged exposure to the US momentum factor, which can potentially outperform the broader market during specific market environments.

Access to Expertise: UBS Asset Management's experience and resources provide the ETF with access to in-depth market research and analysis.

Financial Performance

Historical Returns: MTUM has delivered strong historical returns, exceeding the performance of the underlying index due to its leveraged nature. However, investors should be aware that past performance is not indicative of future results.

Benchmark Comparison: The ETF has consistently outperformed the S&P 500 Index, especially during periods of strong market momentum.

Growth Trajectory

The growth trajectory of MTUM is dependent on the performance of the underlying index and overall market conditions. Momentum strategies can experience periods of underperformance, particularly during market corrections.

Liquidity

Average Trading Volume: MTUM has a relatively moderate average daily trading volume, which may impact its liquidity.

Bid-Ask Spread: The bid-ask spread is generally tight, indicating efficient trading of the ETN.

Market Dynamics

Economic Indicators: The ETF's performance can be influenced by various economic factors, including interest rates, inflation, and economic growth.

Sector Growth Prospects: The performance of the underlying index is dependent on the outlook of individual sectors within the US market.

Current Market Conditions: Market volatility and investor sentiment can impact the ETN's performance.

Competitors

• VelocityShares US Momentum Index 2x Long ETN (TWOM)
• Direxion Daily MSCI US Momentum Bear 2X Shares (MRMD)
• ProShares UltraPro MSCI US Momentum (UMOM)

Expense Ratio

The expense ratio for MTUM is 0.95%, which includes management fees and other operational costs.

Investment Approach and Strategy

Strategy: MTUM aims to track the performance of the MSCI US Momentum Factor Total Return Index by investing in swaps and other financial instruments.

Composition: The ETF primarily holds swap contracts linked to the performance of the underlying index, with limited exposure to other assets.

Key Points

• Seeks 2x daily returns of the MSCI US Momentum Factor Total Return Index.
• Invests in US large and mid-cap stocks with strong relative price momentum.
• Suitable for investors seeking leveraged exposure to the US momentum factor.
• Comes with higher volatility and risks compared to traditional index-tracking ETFs.

Risks

Volatility: MTUM's leveraged strategy amplifies market movements, leading to higher volatility and potential for significant losses.

Market Risk: The ETF's performance is directly tied to the underlying index, which can be subject to sector-specific risks and broader market fluctuations.

Counterparty Risk: The ETF relies on swap agreements with UBS AG, introducing counterparty risk in case of default.

Who Should Consider Investing

Investors with a high-risk tolerance and belief in the outperformance of momentum stocks during specific market environments might consider MTUM. However, it is crucial to understand the potential risks associated with leveraged and inverse investment strategies.

Fundamental Rating Based on AI: 6/10

Analysis: MTUM benefits from a unique strategy offering leveraged exposure to the US momentum factor. UBS's reputation and expertise provide some level of assurance. However, the ETF's high expense ratio, moderate liquidity, and inherent volatility pose potential drawbacks. Overall, the AI-based rating system assigns a score of 6 out of 10 based on the analysis of various fundamental factors.

Resources and Disclaimers

Resources:

• ETRACs 2x Leveraged MSCI US Momentum Factor TR ETN (MTUM) Fact Sheet: https://us.ubs.com/content/dam/wealth-us/documents/factsheets/etn/etnm-usmomtr-etn.pdf
• MSCI US Momentum Factor Total Return Index: https://www.msci.com/documents/10199/ab697e3c-1b12-4f4d-996a-21e9fe9b62ee

Disclaimer: This analysis is solely for informational purposes and does not constitute financial advice. Please consult a qualified financial professional before making any investment decisions. The information presented is based on data available as of October 26, 2023, and may change over time.