UBS ETRACS - ProShares Daily 3x Inverse Crude ETN (WTID)

Overview

The UBS ETRACS - ProShares Daily 3x Inverse Crude ETN seeks to provide three times the inverse (opposite) daily performance of the price of West Texas Intermediate (WTI) crude oil. It is designed for short-term traders seeking to profit from or hedge against significant declines in crude oil prices. The strategy involves complex derivatives to achieve its leveraged inverse exposure.

Reputation and Reliability

UBS is a global financial services company with a significant presence in exchange-traded products. ProShares is a well-established provider of leveraged and inverse ETFs and ETNs. Both issuers are generally considered reputable, though ETNs carry issuer credit risk.

Management Expertise

ProShares has extensive experience in designing and managing leveraged and inverse investment products. Their management team possesses specialized knowledge in derivative strategies necessary for such complex instruments.

Goal

To provide investors with three times the inverse daily return of WTI crude oil prices.

Investment Approach and Strategy

Strategy: The ETN does not track a specific index but rather aims to deliver leveraged inverse exposure to the daily price movements of WTI crude oil. This is achieved through the use of financial derivatives, such as futures contracts and swaps.

Composition The ETN's 'composition' is based on derivative contracts designed to replicate the inverse leveraged exposure to crude oil. It does not hold physical commodities directly.

Market Share: Specific market share data for individual ETNs is not readily available and can fluctuate rapidly. However, leveraged and inverse products in the energy sector represent a niche but active segment.

Total Net Assets (AUM): 0

Key Competitors

• ProShares Ultra Bloomberg Crude Oil (UCO)
• Direxion Daily S&P Oil & Gas Exploration & Production Bear 2X Shares (DRIP)
• VelocityShares 3x Inverse Crude ETN (UWTI)

Competitive Landscape

The market for leveraged and inverse crude oil products is highly competitive, dominated by a few key players. UBS ETRACS - ProShares Daily 3x Inverse Crude ETN offers 3x inverse exposure to WTI crude oil, directly competing with other similar products. Its advantages lie in its specific WTI focus and issuer backing, while disadvantages include the complexity and risks inherent in leveraged ETNs, as well as potential tracking differences.

Historical Performance: Historical performance data for this specific ETN is highly variable due to its leveraged nature and the inherent volatility of crude oil prices. Long-term performance is generally poor for leveraged inverse products due to compounding effects. Data for specific periods would need to be retrieved from a financial data provider.

Benchmark Comparison: This ETN does not track a specific benchmark index. Its performance is measured against its stated objective of delivering 3x the inverse daily return of WTI crude oil.

Expense Ratio: 0.85

Average Trading Volume

Average trading volume for this ETN is typically moderate, indicating reasonable liquidity for active traders.

Bid-Ask Spread

The bid-ask spread for this ETN is generally tight enough for active traders, though it can widen during periods of high market volatility.

Market Environment Factors

Global oil supply and demand dynamics, geopolitical events, economic growth rates, and the strength of the US dollar significantly influence crude oil prices and, consequently, the performance of this ETN. Interest rate policies and speculation also play a role.

Growth Trajectory

The growth trajectory of leveraged and inverse ETNs is heavily dependent on market sentiment and price movements in the underlying commodity. As a short-term trading instrument, it is not designed for long-term growth or accumulation.

Competitive Edge

The primary competitive edge of this ETN lies in its specific focus on providing 3x inverse daily exposure to WTI crude oil, catering to a niche demand for short-term bearish bets on this benchmark. Its association with established financial institutions like UBS and ProShares offers a degree of credibility. However, the inherent complexity and risks of leveraged ETNs often overshadow significant competitive moats.

Volatility

This ETN exhibits extremely high volatility due to its 3x leveraged inverse structure and the inherent price swings of crude oil.

Market Risk

The primary market risks include adverse movements in crude oil prices, which can lead to substantial losses, especially for longer holding periods due to the compounding effect of daily rebalancing. Issuer credit risk is also a factor for ETNs.

Ideal Investor Profile

This ETN is suitable for experienced traders with a high-risk tolerance and a strong understanding of leveraged and inverse financial products, who are looking to make short-term bearish bets on WTI crude oil or hedge existing long positions.

Market Risk

This ETN is best suited for active, short-term traders and not for long-term investors or passive index followers due to its design and the risks associated with daily rebalancing and leverage.

The UBS ETRACS - ProShares Daily 3x Inverse Crude ETN is a highly leveraged instrument designed for short-term trading strategies anticipating a decline in WTI crude oil prices. It aims to deliver three times the inverse daily return of WTI. Due to its complex structure and high volatility, it is only suitable for experienced traders with a high-risk tolerance and is not recommended for long-term investment.

Data Sources:

• Issuer Prospectus and Filings
• Financial Data Providers (e.g., Bloomberg, Refinitiv)
• Reputable Financial News and Analysis Websites

Disclaimers:

This information is for informational purposes only and does not constitute investment advice. Leveraged and inverse products are complex and carry substantial risk of loss. Investors should consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results. ETNs are subject to issuer credit risk.