UBS Investment Bank has launched the ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN (CEFL) on the NYSE Arca.
CEFL is linked to the monthly compounded 2x leveraged performance of the ISE High Income Index, reduced by investor fees.
CEFL offers investors:
• Significant income potential in the form of a variable monthly coupon linked to two times the cash distributions, if any, on the index constituents. If the index constituents do not make distributions, then investors will not receive any coupons.
• Monthly compounded 2x leveraged exposure to an index comprised of 30 closed-end funds that vary by asset class, investment strategy, asset manager and investment region.
• Potential for price appreciation as the closed-end funds in the Index are selected, in part, on the basis of their share price discount from net asset value.
“The index tracked by CEFL selects and ranks the 30 component closed-end funds on the basis of their income yield and their discount from NAV,” says Paul Somma, senior ETRACS structurer. “So CEFL is expected to provide investors significant income potential, as well as the opportunity for price appreciation, all by way of a single, exchange-traded security.”