UBS Launches 2X Cloud Computing ETN
October 5, 2011
UBS, the company behind the ETRACS suite of ETNs, rolled out a double-exposure exchange-traded note targeting the world of cloud computing, bringing it into competition with a so-far successful single-exposure ETF that First Trust brought to market during the summer…
The ETRACS Monthly 2xLeveraged ISE Cloud Computing TR Index ETN due October 4, 2041 (NYSEArca: LSKY) seeks to match the performance of the ISE Cloud Computing Index, the same benchmark that First Trust’s “SKYY” is based on. Its exposure is compounded monthly.
Cloud computing refers to computer users accessing many different servers to meet their needs, as opposed to using centralized computing resources. Numerous companies—including Amazon with immense computing resources that go beyond their internal demands—have become huge players in the quickly expanding world of cloud computing.
The UBS ETN comes with an annual expense ratio of 0.60 percent, the same as SKYY’s.
According to UBS, the current top 10 holdings in the ISE Cloud Computing Index, and their weightings, are:
- Amazon.com Inc., 4.54 percent
- NetSuite, 4.49 percent
- RightNow Technologies Inc., 4.37 percent
- Cisco Systems Inc., 4.11 percent
- Teradata Corp., 3.96 percent
- Google Inc., 3.93 percent
- Equinix Inc., 3.67 percent
- Oracle Corp., 3.67 percent
- TIBCO Software Inc., 3.50 percent
- VMware Inc., 3.48 percent
The ISE Cloud Computing Index is a total return benchmark that uses a market-capitalization-weighted allocation across the pure-play, nonpure-play and technology conglomerate categorizations, and equal-weights the individual companies within each sector allocation.
Index components are reviewed semiannually for eligibility, and the weights are reset according to that distribution.
The index was created on June 6, 2011 and has no performance history prior to that date.