UBS ETRACS - ProShares Daily 3x Inverse Crude ETN (WTID)

Overview

The UBS ETRACS - ProShares Daily 3x Inverse Crude ETN (SCO) is an exchange-traded note that seeks to deliver three times the inverse (opposite) of the daily performance of the Bloomberg WTI Crude Oil Subindex. It provides leveraged exposure to crude oil futures contracts, making it suitable for short-term trading strategies.

Reputation and Reliability

UBS is a reputable global financial services company with extensive experience in issuing exchange-traded products. While their reputation is generally solid, investors should still carefully consider the risks associated with leveraged ETNs.

Management Expertise

UBS has a team of experienced professionals managing its ETRACS product line, with expertise in structuring and managing complex exchange-traded products.

Goal

To seek daily investment results that correspond to three times (3x) the inverse (opposite) of the daily performance of the Bloomberg WTI Crude Oil Subindex.

Investment Approach and Strategy

Strategy: The ETN employs a leveraged strategy to achieve its objective by investing in futures contracts related to crude oil. It aims to magnify the inverse daily returns of the underlying index.

Composition The ETN's assets primarily consist of futures contracts on West Texas Intermediate (WTI) crude oil. It uses leverage to amplify the daily inverse movements of the underlying index.

Market Share: Insufficient data available to determine accurate market share.

Total Net Assets (AUM): Insufficient data available to provide accurate AUM

Key Competitors

• ProShares UltraShort Oil (SCO)
• Direxion Daily Energy Bear 3X Shares (ERY)
• MicroSectors U.S. Big Oil Index 3X Inverse Leveraged ETN (NRGD)

Competitive Landscape

The competitive landscape is characterized by several leveraged and inverse ETFs/ETNs offering exposure to the energy sector. SCO competes with other similar products by offering a 3x inverse leverage on crude oil. Advantages may include brand recognition and distribution network. Disadvantages include tracking error, potential for erosion of value due to compounding effects, and credit risk associated with the issuer.

Historical Performance: Historical performance data is not readily available without a specific date range. Investors should consult financial data providers for past performance.

Benchmark Comparison: The ETN's performance should be compared to the inverse of the Bloomberg WTI Crude Oil Subindex, multiplied by 3. Tracking error is expected due to leverage, fees, and compounding effects.

Expense Ratio: Unavailable. Consult the latest fund prospectus.

Average Trading Volume

Average trading volume can vary, but investors should assess recent volumes to ensure sufficient liquidity for their trading needs.

Bid-Ask Spread

The bid-ask spread reflects the cost of trading and can fluctuate depending on market conditions and trading volume.

Market Environment Factors

Economic indicators such as global GDP growth, supply and demand dynamics in the oil market, geopolitical events, and inventory levels can significantly impact SCO's performance.

Growth Trajectory

The growth trajectory of the ETN depends on investor demand for leveraged and inverse exposure to crude oil. Changes in strategy or holdings are disclosed in the fund's prospectus.

Competitive Edge

SCO's competitive advantage lies in its 3x inverse leveraged exposure to crude oil, offering investors a tool to potentially profit from short-term declines in crude oil prices. Its well-known issuer and transparent structure also attract investors. However, the daily reset feature and leverage contribute to significant risks and potential for value erosion over longer periods, especially in volatile markets. It is designed for short-term trading and not for long-term investment strategies, as its value can decay quickly with market fluctuations. As such, UBS ETRACS - ProShares Daily 3x Inverse Crude ETN is suitable for sophisticated investors with a high risk tolerance.

Volatility

The ETN is expected to exhibit high volatility due to its leveraged nature and exposure to crude oil futures. Investors should be prepared for significant price swings.

Market Risk

Specific risks include fluctuations in crude oil prices, counterparty risk associated with futures contracts, and the potential for magnified losses due to leverage. Compounding effects and tracking error can also negatively impact returns over time.

Ideal Investor Profile

The ideal investor for SCO is a sophisticated trader with a high risk tolerance who seeks short-term, leveraged inverse exposure to crude oil. They should understand the risks associated with leveraged ETNs and be able to actively monitor their positions.

Market Risk

SCO is best suited for active traders seeking short-term tactical exposure and not for long-term investors due to its leveraged nature and potential for value erosion.

The UBS ETRACS - ProShares Daily 3x Inverse Crude ETN (SCO) offers a leveraged way to bet against crude oil's short-term performance. This ETN can experience significant fluctuations in value, making it unsuitable for long-term investments. It is designed to deliver three times the inverse of the daily percentage change in the price of WTI crude oil. Due to the leveraged structure, the value of the ETN can diminish significantly, especially if crude oil prices fluctuate over longer periods. Investors should only consider this product if they have a high risk tolerance and a solid understanding of leveraged ETFs/ETNs.

Data Sources:

• ETF provider websites
• Financial news sources
• Investment research reports

Disclaimers:

This analysis is for informational purposes only and does not constitute investment advice. Investors should consult with a qualified financial advisor before making any investment decisions. Leveraged and inverse ETFs/ETNs are complex financial instruments that involve significant risks and are not suitable for all investors.