UBS in Stamford, Conn. has structured an investment note linked to a basket of exchange-traded funds. The five-year note, which closed last month, offers investors leveraged exposure to the Dow Jones Select Dividend Index Fund and the MSCI European, Australian and Far Eastern Index Fund.
The basket is weighted, with 75% of assets allocated to the DJ Select Fund, and 25% to the EAFE fund. The note is not capital protected, but the exposure to the basket is one-for-one if its value is lower than its starting level at maturity, while the leverage factor is 1.5225 if the note closes above its starting level. Officials at UBS could not be reached for comment on the deal by press time.
Structured notes are linked to exchange-traded funds for customers who want extra leverage or who have specific views on the funds. Single ETF-linked notes, however, like Citigroup's recent Brazil tracker (DW, 7/21), have been more common than basket deals.
