A leveraged exchange-traded fund (ETF) based on the Dow Jones EURO STOXX 50 has been admitted to listing on Euronext. This is the world's first leveraged ETF based on the Dow Jones EURO STOXX 50.
This product is designed to replicate up to 200% of the gains and losses of the Dow Jones EURO STOXX 50. The product is intended for institutional and corporate investors as well as for active and experienced retail investors looking for leverage in a simple and liquid investment wrapper.
The fund is launched by SGAM Alternative Investments, and is quoted on the Structured Funds compartment of Euronext's NextTrack segment. Allowing investors to gain leveraged exposure to the index through a simple ETF, the product combines real time trading and the transparency of an ETF with the advantages of a UCITS III fund.
Dow Jones EURO STOXX 50¨ is the most traded index on Euronext's segment dedicated to trackers and to Structured Funds, NextTrack. The launch of this new ETF is therefore a very important step for the SGAM ETF product range whose objective is to give access to differentiated pay-offs (leverage or capital protection) based on active investment.
Based on equity holdings rather than derivatives, it can be used by institutional investors facing limitations in the use of futures, other derivatives or funds including such instruments. This structured ETF is also intended for investors interested in acquiring leverage on the Dow Jones EURO STOXX 50¨ without taking on additional debt.
Philippe Brosse, Chief Executive of SG AM Alternative Investments, said: 'We launched the first structured ETFs in October 2005, which were based on the CAC40¨ Index, and these were followed by others, including those linked to the Nasdaq-100. We are now extending our product range with a new ETF based on a flagship European index, composed of the 50 largest stocks in the Eurozone. By offering leveraged exposure to this index SGAM Alternative Investments is bringing its ETF range more strongly into the focus of institutional investors seeking simple leveraged exposure that is convenient to trade.'
Marianne Demarchi, Director of Business Development, Strategy & Products, Euronext, said: 'The introduction of this new structured fund extends the range of active ETFs already listed on NextTrack, where Euronext was a pioneer with the launch in October 2005 of a structured fund based on the CAC 40. Today this is one of NextTrack's most actively traded funds. The Structured Fund compartment currently has eight structured funds based on four different underlying assets, which enables it to serve investors by offering the simple, transparent tools they need to invest in the indexes they wish.'
Structured ETFs are as easy to trade as shares since their exposure to index is known at all times and their net asset value is calculated and communicated continuously.
SGAM structured exchange-traded funds combine the benefits of structured management with the transparency of continuously quoted ETFs. Based on an actively managed exposure to the index, they provide either a cushion (i.e. partial capital protection) or leverage, depending on their 'Flexible' or 'Leveraged' profile.
Launched in 1998, the Dow Jones EURO STOXX 50¨ is composed of the fifty most important stocks of the Eurozone ranked by free float market capitalisation, and respecting country and sector weightings.