UBS Investment Bank has launched two new ETRACS Exchange Traded Notes (“ETNs”) linked to the daily performance of The Fisher-Gartman Risk Index on the NYSE Arca.
The ETNs are ETRACS Fisher-Gartman Risk On ETN (ONN), and ETRACS Fisher-Gartman Risk Off ETN (OFF).
Investors now have the ability to implement comprehensive “risk on” and “risk off” trades through the purchase of these new exchange-traded securities, ONN and OFF, respectively.
The Risk On ETN provides investors with the ability to implement a comprehensive “risk on” trade through the purchase of a single, exchange-traded security, ONN. The Risk On ETN provides long exposure to the daily performance of The Fisher-Gartman Risk Index (the “Index”). As such, investors gain exposure to an index comprised of long positions in “risk on” instruments and short positions in “risk off” instruments linked to commodities, equities, currencies and sovereign bonds. The Risk On ETN’s value is expected to rise when the outlook on markets and the broader economy is positive and to decrease when such outlook is negative.
The Risk Off ETN provides investors with the ability to implement a comprehensive “risk off” trade through the purchase of a single, exchange-traded security, OFF. Due to its daily short (inverse) exposure to the Index, the Risk Off ETN provides investors with effective long exposure to “risk off” instruments and short exposure to “risk on” instruments. The Risk Off ETN’s value is expected to rise when the outlook on markets and the broader economy is negative and to decrease when such outlook is positive.
“Correlation between asset classes and across geographic regions has risen dramatically over the past two decades as investors move in concert in reaction to changes in the global economic outlook,” says Christopher Yeagley, Managing Director and US Head of Equity Structured Products. “These two ETNs are designed to give investors the ability to take advantage of this in a straightforward manner: if they expect economic growth, they can purchase ONN to express a “risk on” view, and if they don’t expect growth, they can purchase OFF to express a “risk off” view.”
