UBS is marketing a new series of open-ended index certificates based on the Alpha 8 Global Disruptive Technology Index which tracks the performance of companies in the ten identified sectors, which are potential fields of development for disruptive technologies.
This is UBS' latest offering exposure to what the Swiss bank calls 'megatrends' which refers to an innovation that has itself, or together with other developments, the potential to partly suppress or completely replace an existing technology, product or service in the near future and includes sectors such as fintech, 3-d printing, big data and so on, according to Steffen Kapraun (pictured), structured products expert at UBS. "The interesting angle of this index is that it covers different sectors where technology is playing a leading role," said Kapraun. "This avoids concentration in one particular sector in one index. At the moment, the index represents 10 sectors but that universe can be expanded and can be adjusted and reflect new trends in different sectors."
The Swiss bank is offering a euro-denominated tranche available via the Frankfurt and Stuttgart exchanges, and via over the counter (OTC), as well as a Swiss-franc and US dollar-denominated certificates via the SIX Swiss Exchange. The products are available for retail investors in Germany, Austria, Switzerland and Luxembourg. The certificates are issued at par by UBS London and carry a 1.20% pa management fee and a 50bp recurring retrocession fee to distributors included in the management fee.
"We see increasing traction among investors for thematic investments that offer exposure to new assets and market trends," said Kapraun. "This particular index comprises assets that are attractive to retail investors but also to institutional investors as they can get exposure to areas of the market that are growing and can deliver good yields."
The products are aimed at investors with "semi to increased risk tolerance" as investors will bear the risk of losses if the price of the index declines. The index provider, Alpha 8 Partners, has identified 10 sectors with the potential to develop a disruptive technology in the future including: robotics and automation, 3d printing, cybersecurity, material science & battery technology, cloud computing, supercomputing & big data, social networking & advanced mobile computing technology, advanced biotech and genomics, advanced water and waste solutions, solar energy, and led & next generation light technology.
Every potential index member should already generate at least 50% of its turnover in one of the ten relevant sectors. In addition, the market capitalization of each index member has to be at least US$500m, and the average daily trading volume over the past three months has to be at least US$500k. Index adjustments are regular on a quarterly basis, and the index committee can increase or decrease the amount of sectors to react as soon as possible on the dynamic in the development. After every index adjustment each sector and each component within a sector will be equally weighted. The calculating agent of the index is Solactive.
UBS marketed in 2015 a number of tracker products offering exposure to Solactive underlyings including leveraged Etracs exchange-traded notes (ETN) linked to the Solactive US Small Cap High Dividend Index, and the Solactive Ethical Europe Equity Index in the US market; as well as open-ended index certificates based on the Solactive FinTech 20 index, and tracker certificates linked to the Solactive Swiss Equal-Weight Net Total Return Index which were listed in Germany, Austria and Switzerland.
"Solactive is an index provider with a focus on new trends and areas of the market that are very innovative and can add value to investors," said Kapraun. "We believe the focus for these underlyings has to be the tracker/delta one segment. Some of these indices have a significant amount of components (100) and is not easy to hedge and build structures around them."
Click in then link to see the product's terms and conditions.
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