ETRACS 2xMonthly Pay Leveraged US Small Cap High Dividend ETN (SMHB)

Overview

The ETRACS 2xMonthly Pay Leveraged US Small Cap High Dividend ETN is an exchange-traded note designed to provide 2x leveraged exposure to the performance of the Solactive US Small Cap High Dividend Index, while distributing monthly income.

Reputation and Reliability

The issuer, UBS, is a major global financial institution with a generally solid reputation, but ETNs carry issuer risk.

Management Expertise

While UBS structures and issues the ETN, the performance is directly linked to the underlying index. Management expertise is less directly involved.

Goal

To seek a return linked to two times the monthly performance of the Solactive US Small Cap High Dividend Index, plus a monthly coupon.

Investment Approach and Strategy

Strategy: The ETN uses leverage to amplify the returns of the underlying index. It is not passively tracking; it actively employs a leveraged strategy.

Composition The ETN's value is linked to a basket of US small-cap high-dividend-yielding stocks selected and weighted based on the Solactive US Small Cap High Dividend Index methodology.

Market Share: Data Unavailable

Total Net Assets (AUM): Data Unavailable

Key Competitors

• SDIV
• DVY
• SCHD
• VYM

Competitive Landscape

The ETF industry is highly competitive. SMHD (the ETRACS ETN) provides leveraged exposure, which is its primary differentiator. Competitors like SDIV, DVY, SCHD, and VYM offer diversification in dividend-paying stocks but without the leverage. This difference makes SMHD suitable for risk-tolerant investors seeking higher potential returns and income, but also exposes them to greater volatility and potential losses.

Historical Performance: Historical performance can be found through financial data providers; however, leveraged ETNs can experience significant volatility and are not suited for long-term buy-and-hold strategies.

Benchmark Comparison: Comparison should be made against 2x the Solactive US Small Cap High Dividend Index, but this is complex due to the monthly reset and leverage decay.

Expense Ratio: 0.4

Average Trading Volume

Average trading volume data is available from financial data providers and the liquidity can fluctuate significantly.

Bid-Ask Spread

The bid-ask spread can vary depending on market conditions and the ETN's popularity, consult a live quote.

Market Environment Factors

Economic growth, interest rates, and investor sentiment towards small-cap stocks and high-dividend strategies will influence the ETN's performance.

Growth Trajectory

The ETN's growth is directly tied to the performance of the Solactive US Small Cap High Dividend Index and the level of investor interest in leveraged products. Strategy changes are unlikely.

Competitive Edge

SMHD's primary advantage is its leveraged exposure to US small-cap high dividend stocks, which provides an opportunity for higher potential returns, along with higher risks. This focus caters to investors seeking to amplify their exposure to this segment of the market. However, the leveraged structure can lead to significant losses if the index performs poorly. The monthly reset of leverage can also introduce volatility, especially in choppy markets, making it a high-risk, high-reward investment vehicle.

Volatility

High volatility is expected due to the 2x leverage. The ETN's price can fluctuate significantly.

Market Risk

The ETN is exposed to market risk related to small-cap stocks, dividend yields, and the potential for leverage decay and issuer risk.

Ideal Investor Profile

This ETN is suitable for sophisticated, short-term investors with a high-risk tolerance who understand the complexities of leveraged products and are seeking high potential returns.

Market Risk

This ETN is not suitable for long-term investors or those with a low-risk tolerance. It's more appropriate for active traders seeking short-term gains.

The ETRACS 2xMonthly Pay Leveraged US Small Cap High Dividend ETN (SMHD) offers leveraged exposure to the Solactive US Small Cap High Dividend Index, making it a high-risk, high-reward investment. The 2x leverage amplifies both gains and losses, and the monthly reset can result in volatility. It is suited for sophisticated investors with short-term horizons and a high-risk tolerance. Investors should carefully consider the potential for leverage decay and issuer risk before investing.

Data Sources:

• Bloomberg
• ETF.com
• UBS
• Solactive US Small Cap High Dividend Index Fact Sheet

Disclaimers:

This analysis is for informational purposes only and does not constitute financial advice. Investment decisions should be made based on individual circumstances and consultation with a qualified financial advisor. Data may be delayed or inaccurate. Leverage increases risk of loss.