I am trying to understand if it is possible to lose all my money in an UBS ETRACS Etn if it loses 60% of it's value or more.

According to this site https://etracs.ubs.com/product/detail/index/ussymbol/SDYL:

Minimum redemption amount - You must elect to redeem at least 50,000 of the ETNs for UBS to repurchase your ETNs, unless we determine otherwise or your broker or other financial intermediary bundles your ETNs for redemption with those of other investors to reach this minimum requirement and there can be no assurance that they can or will do so. Therefore, the liquidity of the ETNs may be limited.

Potential automatic acceleration - In the event the indicative value of the ETNs is equal to $5.00 or less on any Trading Day or decreases 60% in value from the closing indicative value of the ETNs on the previous Monthly Valuation Date, the ETNs will be automatically accelerated and mandatorily redeemed by UBS and you will receive a cash payment equal to the Acceleration Amount as determined during the applicable Measurement Period. The Acceleration Amount you receive on the Acceleration Settlement Date may be significantly less than $5.00 per ETN and may be zero if the price of the ETNs continues to decrease during trading on one or more Trading Days during such Measurement Period.

Does this mean that if I have less than 50,000 ETNs and an automatic acceleration (aka mandatory redemeption) occurs I will lose the entire value of my ETNs or will I still get cash value of the the ETNs?

  • The verbiage of the minimum says it applies when you "elect to redeem". – Ben Voigt Aug 7 '20 at 17:01
  • @BenVoigt Does that imply that if I owned 50,000 of said ETN the bank would redeem me at market value whenever I elected to do so? I am struggling to comprehend this since 50,000 of said ETN is more than there is available in the entire market if you take the market cap of said ETN... – user3586940 Aug 7 '20 at 18:05
  • Basically yes, although you'd receive net asset value not market value, and there's also likely to be some fee for exercising your early redemption right. The prospectus should have all the details. – Ben Voigt Aug 7 '20 at 18:07

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