The Royal Bank of Scotland today launched another of its âTrendPilotâ ETNs, this one serving alternating exposure between the Nasdaq 100 and short-term Treasurys.
The RBS Nasdaq 100 Trendpilot ETN (NYSEArca:TNDQ) will track an RBS index by the same name that provides exposure to either the Nasdaq 100 Total Return Index or to the yield of three-month U.S. Treasury bills. The exposure shifts to T-bills if the Nasdaq index drops below its 100-day moving average for five consecutive business days.
The price structure also alternates with the exposure. The fund costs 1.00 percent when its benchmark is tied to the Nasdaq index, but drops to 0.50 percent when it tracks T-Bills.
The company has five other ETNs, four of which are in the dual-exposure TrendPilot family. Those are focused on U.S. large-cap stocks, U.S. midcap stocks, gold and oil.
And like TNDQ, each of the ETNs can flip to exposure to three-month Treasury bills if the price of each of the targeted investments falls below a predetermined moving average for five consecutive trading days.
Investment exposure would shift away from T-bills in each of the Trendpilot ETNs if the price of the index being targeted rises above its respective moving average for five consecutive trading days.
Its other ETN thatâs not part of the TrendPilot family is focused on large pharmaceutical companies.
A Tool For Uncertain Times
The trend-following ETNs offer a built-in hedge that has appealed to investors looking to navigate uncertain waters. The strategies only stick with their equities benchmark when the markets are in a positive trend, but switches to fixed income via T-Bills when markets are trending downward.
The RBS U.S. Large-Cap Trendpilot ETN (NYSEArca:TRND) is the largest of the group, having gathered more than $57.5 million in assets since its December 2010 inception. The midcap strategy âTRNMâ has some $30 million in assets.
At launch, Apple Inc. was the new ETN TNDQâs largest holding, representing 14 percent of the portfolio. Microsoft Corp. was second, with an 8.4 percent share, followed by the likes of Oracle, Google, Intel and Cisco Systems.
The ETNs are unsecured and senior obligations of RBS, and subject to the bankâs credit risk.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.