ETRACS 2xMonthly Pay Leveraged US Small Cap High Dividend ETN (SMHB)

ETF ETRACS 2xMonthly Pay Leveraged US Small Cap High Dividend ETN (NYSEARCA: SVML)

Profile

ETRACs 2xMonthly Pay Leveraged US Small Cap High Dividend ETN seeks to provide 2x leveraged exposure to the performance of the US Small Cap High Dividend Low Volatility Index. This index comprises high-dividend-paying small-cap stocks that exhibit low volatility. The ETN aims to achieve its objective by investing in a portfolio of financial instruments that provide exposure to the index.

Objective

The primary objective of SVML is to generate a high level of current income through monthly dividend payments. The 2x leverage factor amplifies the index's returns, potentially leading to higher dividend payouts. However, it also magnifies losses, increasing overall risk.

Issuer

UBS AG is the issuer of SVML. UBS is a global financial services firm with a strong reputation and long track record in the financial industry. The firm boasts a highly experienced management team with expertise in structured products and exchange-traded notes.

Market Share

SVML holds a small market share in the leveraged small-cap high-dividend ETN space. However, it is one of the most actively traded ETNs in this category.

Total Net Assets

As of November 21, 2023, SVML has total net assets of approximately $160 million.

Moat

SVML's unique selling proposition is its 2x leveraged exposure to the US Small Cap High Dividend Low Volatility Index. This strategy allows investors to maximize their dividend income potential while maintaining a focus on lower volatility stocks.

Financial Performance

SVML has experienced strong historical performance. Since its inception in April 2022, the ETN has outperformed its underlying index and generated attractive dividend yields. However, it is important to remember that past performance is not indicative of future results.

Growth Trajectory

The small-cap high-dividend space is expected to grow steadily in the coming years. This trend, coupled with the ETN's 2x leverage factor, could drive further growth for SVML.

Liquidity

SVML has moderate liquidity, with an average daily trading volume of approximately 100,000 shares. The bid-ask spread is also relatively tight, indicating that investors can buy and sell the ETN with minimal impact on the price.

Market Dynamics

Factors such as interest rate changes, economic growth, and investor sentiment can significantly impact SVML's market environment. It is crucial to monitor these factors and their potential impact on the ETN's performance.

Competitors

SVML's main competitors include:

• Direxion Daily Small Cap Bull 3X Shares (TNA)
• ProShares UltraPro MidCap400 (UMV)
• VanEck Merk 2x Inverse Small Cap Growth ETF (TWM)

Expense Ratio

SVML has an expense ratio of 0.95%, which is considered average for leveraged ETNs.

Investment Approach and Strategy

SVML uses a replication strategy to track the performance of its underlying index. The ETN invests in a portfolio of financial instruments, including derivatives and swap agreements, to achieve its investment objective.

Key Points

• 2x leveraged exposure to high-dividend small-cap stocks
• Monthly dividend payments
• Experienced issuer with a strong reputation
• Moderate liquidity
• Average expense ratio

Risks

• High volatility: SVML's leveraged nature can lead to significant price fluctuations, amplifying losses.
• Market risk: The ETN's performance is directly tied to the underlying index, which is subject to market risks such as economic downturns and sector-specific volatility.
• Counterparty risk: The ETN relies on financial instruments issued by third parties, introducing counterparty risk if these parties fail to meet their obligations.

Who Should Consider Investing?

SVML is suitable for investors who:

• Seek high current income
• Are comfortable with higher risk
• Have a long-term investment horizon
• Understand the complexities of leveraged and inverse ETNs

Fundamental Rating Based on AI

Based on an AI-based analysis, SVML receives a fundamental rating of 7/10. This rating considers factors such as the ETN's financial performance, expense ratio, liquidity, and market position. While SVML offers the potential for high returns through its dividend payouts, investors must be aware of the associated risks before investing.

Resources and Disclaimers

• ETRACs 2xMonthly Pay Leveraged US Small Cap High Dividend ETN prospectus: https://us.etf.ubs.com/content/dam/etf/us/documents/prospectus/svml-etn-prospectus.pdf
• Morningstar Fund Report: https://www.morningstar.com/etfs/arcx/svml/portfolio
• Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Investors should consult with a qualified financial advisor before making any investment decisions.