Four of the world’s leading financial organizations have teamed up to launch a new series of exchange-traded notes (ETNs) called ELEMENTS.
The first product is linked to the SPECTRUM Large-Cap U.S. Sector Momentum index (EEH) and follows a proprietary momentum investment formula in the 10 sub-indexes of the S&P 500 Total Return index.
Each day, new sector weights are computed in two steps based on performance and correlation. First, if a sub-index performs better than the SPTR, its relative weight in the SPECTRUM Index will increase. If it performs worse, its relative weight will decrease. Second, if there is high correlation between a sub-index and the SPTR, its relative weight in the SPECTRUM Index will increase. With a low correlation, its weight will decrease.
Swedish Export Credit (SEK) is issuing the notes in cooperation with three heavyweight partners. “Certain strategies are difficult to invest in, in a cost-efficient manner,” explains Per Akerlind, the firm’s executive director, CFO and head of capital markets. “The ELEMENTS’ partnering of industry leaders BNP Paribas, Nuveen Investments and Merrill Lynch has created an investment vehicle that provides these opportunities with exchange-traded flexibility.”
The net result is products that bring an extraordinarily sophisticated investment profile down to retail level.
“We believe ELEMENTS can provide convenient access to new markets and strategies that are not easily accessible to individual investors and that can enhance portfolio performance and diversification,” says Bill Adams, executive vice president at Nuveen Investments.
Ron DeLegge is the San Diego-based editor of www.etfguide.com.