The ETRACS 2X Monthly Leveraged ESG (Environmental, Social, and Governance) Focus Total Return ETN (ESUS) is an exchange-traded note issued by UBS AG, a Swiss multinational investment bank and financial services company. The ETN is designed to provide 2x leveraged exposure to the performance of the MSCI USA ESG Focus Index, a subset of the MSCI USA Index that includes companies with high ESG ratings and excludes companies involved in certain controversial activities.
The MSCI USA ESG Focus Index is constructed using MSCI's ESG rating system, which assesses a company's exposure to ESG risks and opportunities based on over 1,000 data points across 37 ESG issues. The index includes companies that score in the top 50% of their industry group on ESG criteria and have a positive trend in their ESG score over the past year. Companies involved in controversial activities such as tobacco, weapons, and fossil fuels are excluded.
ESUS provides investors with leveraged exposure to the performance of the MSCI USA ESG Focus Index, allowing investors to potentially amplify returns in a rising market, but also magnifying losses in a falling market. The ETN is issued by UBS AG, and its returns are linked to the performance of the underlying index, less any investor fees.
It is important to note that ETNs are debt instruments that are subject to credit risk, meaning that the issuer's financial stability could impact the value of the investment. Additionally, leveraged investments such as ESUS carry a higher degree of risk and are typically suitable only for investors with a high risk tolerance and a clear understanding of the risks involved.
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