UBS AG, Switzerland’s largest bank, began offering two exchange-traded notes today that allow bets on risky assets, based on an index created by Dennis Gartman and Mark Fisher.
“The ‘risk on’ index rises as the global appetite for risk increases,” Gartman, editor of the Gartman Letter, said on a call with reporters. “Off falters as appetite for risk declines.”
The ETRACS Fisher-Gartman Risk On ETN, which is expected to climb when the economy grows, trades under the ONN ticker and bets on higher or lower prices across commodities, stocks, bonds and currencies, the NYSE Euronext said in a statement today. The ETRACS Fisher-Gartman Risk Off ETN, listed as OFF, would gain when the outlook is negative. Both notes trade on the NYSE Arca exchange.
Gartman and Fisher, who is the founder of MBF Asset Management in New York, spent about a year and a half coming up with the gauge before listing it on Nov. 4.
The Fisher-Gartman index includes weightings in the Dow Jones-UBS Crude Oil Subindex, which makes up the largest component at 20 percent, the 10-year U.S. Treasury bond, the Dow Jones-UBS Corn Subindex, the Dow Jones-UBS Copper Subindex, the Dow Jones-UBS Silver Subindex, the SPDR S&P 500 ETF Trust and the euro, the exchange said.
UBS has issued 43 ETNs for a market capitalization of about $900 million in the U.S. The U.S. market has about $15 billion of the assets, with 70 new ETNs issued this year. London-based Barclays Plc listed the first securities in June 2006.
Banks sell the notes to raise funds that they can use for lending or other purposes. ETNs are backed only by their issuer’s credit, unlike exchange-traded funds, which hold assets.