Credit Suisse on Tuesday launched its Credit Suisse Gold Shares
Covered Call ETN (NasdaqGM:GLDI), a strategy that provides long
exposure to physical gold coupled with an overlay of call
The ETN, comes with an annual expense ratio of 0.65 percent,
will have notional exposure to the bullion ETF SPDR Gold Shares
(NYSEArca:GLD) while notionally selling monthly "out of the money"
call options, the fund's prospectus said.
The strategy is designed to enhance current cash flow through
premiums on the sale of the call options. Those premiums will be
received monthly in exchange for giving up any gains beyond 3
percent a month. In other words, the premiums would soften the blow
if GLD were to face a sell-off, but that's the extent of the fund's
There's still growing uncertainty in the market on whether the
12-year-long gold rally has run its course, which makes Credit
Suisse's launch of GLDI timely, as the ETN represents a somewhat
neutral view on gold.
ETNs are senior unsecured obligations; in this case, of Credit
Suisse's Nassau branch. Unlike
, they have no tracking error, but, also unlike ETFs, they
represent a credit risk. For example, if Credit Suisse ever faced
bankruptcy, holders of GLDI would likely lose their entire
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