UBS AG, London Branch (ESUS) ETF Analysis

The UBS AG, London Branch ESUS (ESUS) is an Equity ETN with $0.03 billion in assets under management and an expense ratio of 0.95%.

ESUS offers a leveraged bullish bet on the MSCI USA ESG Focus Index, targeting large- and mid-cap companies with strong ESG profiles while aiming for market-like risk and return. As a leveraged product with 2x factor that resets quarterly, the fund is not a buy-and-hold investment and carries the credit risk of the issuer, UBS.

UBS AG, London Branch (ESUS) ETF — Price, Holdings & Analysis

The UBS AG, London Branch ESUS (ESUS) is an Equity ETN with $0.03 billion in assets under management and an expense ratio of 0.95%. ESUS offers a leveraged bullish bet on the MSCI USA ESG Focus Index, targeting large- and mid-cap companies with strong ESG profiles while aiming for market-like risk and return. As a leveraged product with 2x factor that resets quarterly, the fund is not a buy-and-hold investment and carries the credit risk of the issuer, UBS.

ETF Overview

ESUS makes a leveraged bullish bet on the MSCI USA ESG Focus Indexan index that holds large- and mid-cap companies exhibiting positive ESG characteristics, while maintaining a market-like risk and return profile. Eligible securities are initially screened to exclude firms involved in tobacco, controversial weapons, fossil fuel extraction, and thermal coal power. The portfolio is then optimized to maximize its exposure to ESG factors while staying true to a market-like exposure (subject to constraints). The underlying index rebalances quarterly. As a levered product with 2x factor that resets quarterly, the fund is not a buy-and-hold investment and should not be expected to provide index leverage return on a day-to-day basis. In addition, investors should note that ESUS is an ETN, and therefore carries the credit risk of the issuer, UBS.

ESUS provides investors with a leveraged exposure to U.S. companies demonstrating positive Environmental, Social, and Governance (ESG) characteristics. The fund tracks the MSCI USA ESG Focus Index, which screens out companies involved in controversial activities like tobacco, controversial weapons, fossil fuel extraction, and thermal coal power generation. The index then optimizes for ESG exposure while maintaining a market-like risk profile. ESUS employs a 2x leverage factor, resetting quarterly, meaning it aims to deliver twice the daily percentage change of the underlying index. It is structured as an Exchange Traded Note (ETN), not an ETF. This structure introduces credit risk, as the fund's performance is linked to the creditworthiness of the issuer, UBS. Due to the leveraged nature and quarterly reset, ESUS is designed for short-term tactical trading rather than long-term investing. Investors seeking ESG exposure with leverage may find ESUS appealing, but should carefully consider the risks associated with leverage and the ETN structure.

Risk Metrics

ESUS carries several risks that investors should carefully consider. As a leveraged product with a 2x factor, it is inherently more volatile than a non-leveraged ETF. The fund's beta of 2.04 (3Y) indicates significantly higher sensitivity to market movements. The quarterly reset of the leverage factor can lead to performance drag, especially in volatile markets. The fund's expense ratio of 0.95% is relatively high, which can erode returns over time. Furthermore, as an ETN, ESUS exposes investors to the credit risk of UBS; if UBS were to default, investors could lose their investment. The fund's relatively small AUM of $0.03 billion could pose liquidity risks. Past performance does not guarantee future results.

Expense Ratio

0.95%

Dividend Yield

0.00%

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Risk Metrics

Beta: 2.04

Questions & Answers

What is ESUS and what does it track?

ESUS is an Exchange Traded Note (ETN) issued by UBS AG, London Branch. It provides a leveraged bullish bet on the MSCI USA ESG Focus Index. This index is composed of large- and mid-cap U.S.

companies that exhibit positive Environmental, Social, and Governance (ESG) characteristics.

What is the expense ratio for ESUS?

The expense ratio for ESUS is 0.95%. This means that for every $10,000 invested in ESUS, $95 is deducted annually to cover the fund's operating expenses.

While there isn't a definitive category average for leveraged ESG ETNs, the expense ratio is relatively high compared to standard equity ETFs.

What are the top holdings in ESUS?

As ESUS tracks the MSCI USA ESG Focus Index with 2x leverage, its exposure mirrors the index's top holdings.

While the exact holdings can fluctuate due to the leverage and quarterly rebalancing, the top constituents generally reflect the largest ESG-focused companies in the U.S. market.

Is ESUS a good long-term investment?

ESUS is generally not considered a suitable long-term investment due to its leveraged nature and quarterly reset mechanism. The 2x leverage factor amplifies both gains and losses, leading to increased volatility.

The quarterly reset can also result in performance drag over extended periods, especially in choppy or declining markets.

How does ESUS compare to similar ETFs?

ESUS is unique due to its combination of ESG focus and 2x leverage within an ETN structure. Most ESG ETFs offer unleveraged exposure to socially responsible companies.

The ETN structure also differentiates ESUS from traditional ETFs, introducing credit risk related to the issuer, UBS. ESUS has a relatively small AUM of $0.03 billion.

Does ESUS pay dividends?

According to the available data, ESUS has a dividend yield of 0.00%. This indicates that the fund does not currently distribute any dividend income to its investors.

The fund's focus is on providing leveraged exposure to the price movements of the MSCI USA ESG Focus Index, rather than generating dividend income. Investors seeking dividend income may want to consider other ETFs that prioritize dividend payouts.