ProShares announced the launch of two new leveraged exchange-traded products linked to West Texas Intermediate crude oil.
UBS ETRACS – ProShares Daily 3x Long Crude ETN (WTIU) – and UBS ETRACS – ProShares Daily 3x Inverse Crude ETN (WTID) – are linked, respectively, to the daily compounded 3x leveraged and 3x inverse performance of the Bloomberg WTI Crude Oil Subindex ER.
The exchange traded notes (ETNs) are issued by UBS AG and listed on NYSE Arca.
According to UBS AG’s registration statement with the Securities and Exchange Commission, the ETNs are intended to be tools for sophisticated investors to manage daily trading risks as part of an overall diversified portfolio.
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Additionally, the ETNs require an understanding of futures contracts, daily compounding and path dependence of investment results. The return on the ETNs is linked to the performance of the Bloomberg WTI Crude Oil Subindex ER, which in turn is linked to the performance of futures contracts on WTI crude oil.
“Unlike equities, which entitle the holder to a continuing stake in a corporation, commodity futures contracts specify a delivery date for an underlying physical commodity,” according to the announcement.
The index notionally purchases WTI futures contracts and, as the relevant futures contracts approach their expiration dates, replaces such contracts with other futures contracts with later expirations. The index thus “rolls” its futures positions, and continually avoids delivery of the physical commodity. The WTI crude oil futures contracts tracked by the index roll approximately every other month to the contract that is two months longer in maturity.
According to Steve Cohen, managing director of ProFunds Distributors, the marketing agent for the ETNs, “These ETNs offer investors new tools to manage risk and potentially enhance returns.”
ProShares notes that WTI crude oil prices can be subject to volatile price movements over short periods of time, affected by numerous factors including changes in supply and demand relationships, governmental programs and policies, as well as national and international monetary, trade, political and economic events.
Pacific Life Launches Fee-Based Variable Annuity at LPL Financial
Pacific Life Insurance Company launched Pacific Odyssey, the company’s fee-based variable annuity, at LPL Financial within LPL’s Strategic Asset Management and Strategic Wealth Management platforms, according to an announcement.
The product offers more than 100 investment options across several different asset classes along with more than 50 funds with net fund expenses currently less than 1%.