Morgan Stanley has announced the launch on NYSE Arca of two exchange-traded notes, Market Vectors-Double Long Euro ETN and Market Vectors-Double Short Euro ETN, which aim to provide US investo
Morgan Stanley has announced the launch on NYSE Arca of two exchange-traded notes, Market Vectors-Double Long Euro ETN and Market Vectors-Double Short Euro ETN, which aim to provide US investors with leveraged directional exposure to the euro-US dollar exchange rate.
The ETNs are being marketed exclusively by New York-based investment manager Van Eck Global, which already offers 13 exchange-traded funds and two ETNs, and are the first leveraged index products to be issued under Van Eck’s Market Vectors brand.
The Double Long Euro ETN is designed to offer an investible alternative to a two times leveraged long investment in the euro. The underlying index is the Double Long Euro Index, which was developed by Morgan Stanley and is maintained by Standard & Poor’s. As the index is two times leveraged, for every 1 per cent strengthening of the euro relative to the dollar, the index level will increase by 2 per cent, and vice versa.
The Double Short Euro ETN provides an investible alternative to a two times leveraged short investment in the euro and uses as its underlying index the Double Short Euro Index. For every 1 per cent weakening of the euro relative to the dollar, the level of the index will increase by 2 per cent.
‘Market Vectors’ new leveraged index products should appeal to investors interested in doubling short-term movements in the markets or employing hedging strategies to manage risk,’ says Jan van Eck, principal of the eponymous firm. ‘These ETNs provide investors a more capital-efficient way to take directional positions on the euro.’
Jeffrey Barany, managing director for structured product origination at Morgan Stanley, adds: ‘With investors increasingly looking for new vehicles to access currencies, we provide a simple way for investors to express a leveraged bullish or bearish view on the euro.’
Market Vectors currency ETNs are senior unsecured debt securities of Morgan Stanley that deliver exposure to the exchange rate of a particular currency. The Double Long and Double Short euro ETNs join two existing currency ETNs launched in March, the Market Vectors-Chinese Renminbi/USD ETN and Market Vectors-Indian Rupee/USD ETN.
Van Eck Global, which was founded in 1955, managed an aggregate total of some USD5.1bn in exchange-traded products at the end of March. The firm also offers specialised products that invest in hard assets, emerging markets, precious metals including gold, and other asset classes.