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UBS ETRACS – Most Innovative North American ETN Provider


Last year was a significant one for UBS ETRACS, the bank’s ETN platform. Its assets climbed an impressive 50 per cent to reach USD4.5bn, leading to an increase in market share from 15 per cent to 20 per cent. 

UBS surpassed JP Morgan in the league tables as the second largest ETN provider in the US out of a total of 12 firms. It appears that the income-oriented products accounted for the majority of last year’s inflows. 

Exchange-traded Notes are senior, unsecured, unsubordinated debt securities that provide investors with exposure to the total returns of various market indices, including those linked to stocks, bonds, commodities and/or currencies, less investor fees. ETRACS are innovative investment products offering easy access to markets and strategies that may not be readily available in the existing marketplace.

These products come in two versions: plain vanilla and 2x leveraged for investors with a higher risk tolerance. They track a wide range of high-yielding securities whether they be Master Limited Partnerships, business development companies, high yielding stocks, or closed-ended funds. 

The result is that investors can potentially generate product yields close to 20 per cent.  Take, for example, the ETRACS Monthly Pay 2x Leveraged Closed-End Fund ETN, which currently yields 18.92 per cent (annualised). This was one of the most popular products with investors in 2014. 

One interesting product launch last year was ETRACS Monthly Pay 2xLeveraged Wells Fargo® MLP Ex-Energy ETN (LMLP) and underscores the commitment of the UBS ETRACS team to devising unique products. 

Energy MLPs have become popular in the US but this particular product targets non-energy MLPs. 

“We are always looking for new, interesting income opportunities and when we have the ability to go into an area like non-energy MLPs which previously had no investment product available, that’s a big win for our clients,” states Christopher Yeagley (pictured), Head of UBS ETRACS.

On winning the award for a second consecutive year, Yeagley comments: “It’s extremely rewarding to create high-quality investment products for our clients.  We like to think that this award is validation of our focus on clients and thank ETF Express for the recognition of our efforts.”

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