UBS Announces Notable Coupon Yields on ETRACS ETNs: SLVO Tops List at 27.82%
Variable Coupon Payments Feature Double-Digit Yields for December
UBS has just released its latest coupon payment details for eight of its ETRACS Exchange Traded Notes (ETNs), drawing attention with current annualized yields that stretch as high as 27.82%. With double-digit figures on several ETNs, investors eyeing income-focused strategies have a fresh slate of opportunities—and risks—to evaluate.
SLVO and SMHB ETNs Offer Some of the Highest Annualized Yields
In the most recent update, the ETRACS Silver Shares Covered Call ETN (SLVO) leads the group, showing an expected annualized yield of 27.82% with a monthly coupon of $2.69 per ETN. Hot on its heels are GLDI, offering 18.63%, and USOI at 16.17%. On the NYSE-traded side, the SMHB (US Small Cap High Dividend) boasts a yield of 19.76%, while MVRL (Mortgage REITs) shows 18.58%.
| ETN | Monthly Coupon | Current or Expected Yield (Annualized) | Underlying Index |
|---|---|---|---|
| SLVO | $2.69 | 27.82% | Nasdaq Silver FLOWS™ 106 |
| GLDI | $3.24 | 18.63% | Nasdaq Gold FLOWS™ 103 |
| USOI | $0.63 | 16.17% | Nasdaq WTI Crude Oil FLOWS™ 106 |
| SMHB | $0.04 | 19.76% | Solactive US Small Cap High Dividend |
| MVRL | $0.17 | 18.58% | MVIS US Mortgage REITs |
| CEFD | $0.22 | 14.36% | S-Network Composite Closed-End Fund |
| PFFL | $0.14 | 13.39% | Solactive Preferred Stock ETF |
| HDLB | $0.17 | 12.52% | Solactive US High Dividend Low Volatility |
Current Yield May Fluctuate Sharply—Investors Should Approach with Caution
It’s important to note that these headline-grabbing yields are not fixed. The variable coupons are directly linked to the underlying index distributions, and future payments can change significantly based on market volatility, performance, and UBS’s own creditworthiness. Both UBS and the official release emphasize that no coupon or distribution amount is ever guaranteed on these ETNs.
Coupon Mechanisms Differ Across ETNs
The coupon calculation formulas add further nuance. For example, HDLB, SMHB, and PFFL offer payouts at two times the underlying index distributions, while CEFD and MVRL use a 1.5 times multiplier. SLVO, GLDI, and USOI distribute notional cash from covered call options strategies tied to their respective commodities or sector ETFs, a factor that often results in greater variability.
Broader Implications: Risk Remains Despite Eye-Catching Yields
High current yields can look attractive for yield seekers, but with variable coupons, they can also signal heightened risk. Past distribution rates are not indicative of future payouts, especially for leveraged or covered-call ETNs whose performance depends on both market returns and the persistence of dividends or option premium. Furthermore, UBS ETNs are unsecured debt and subject to the issuer’s credit risk.
Key Takeaway: Potential Income with Volatility and Risk Attached
UBS’s latest declaration offers investors a spectrum of yield-oriented ETNs to consider, from metals and crude oil to high-dividend equity and mortgage REIT strategies. However, the magnitude and unpredictability of coupon payments should encourage careful analysis and consideration of one’s own risk tolerance. Before committing, investors are urged to review the associated prospectuses, risk factors, and how these instruments fit with broader portfolio goals.
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