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Tracker certificates - a kind of mini ETF for private investors

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Vontobel Markets
29/08/20223 min read
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If you do not have an appetite for leveraged investments, Vontobel also has certificates that are more reminiscent of a classic index fund or a so-called ETF, short for Exchange Traded Fund

The principle is the same as with the Bull and Bear certificates, in the sense that it is a security that has a debt structure and is traded on a stock exchange. Again, this means that as an investor in one of Vontobel's so-called Tracker certificates, you buy the security from Vontobel, which adds the underlying assets to an index, i.e. a basket of assets. The advantage of investing in a basket of stocks is that the risk of loss is less than if you had bet all the money on one and the same company. This gives you the opportunity to invest in a large number of companies, often more than 20 different ones, which reduces the likelihood that they will all do badly at the same time. If you wanted to create that diversity yourself, it would require you to buy one or more shares in each company and pay a commission, i.e. commission to the bank or broker for each trade.

But why not just buy one of the well-known large funds, which for example contain growth stocks in the US or bets on value stocks in Europe?

Because investors also have different tastes and interests or perhaps areas they know more about or believe in in particular. Here are a few examples of how you as an investor can speculate in areas or industries that are more niche and less mainstream. The basket of underlying assets is put together based on trends that Vontobel has identified as possible growth areas.

Cyber security or IT security is another megatrend in technology investment. Citizens, businesses and governments around the world are increasingly seeking to protect themselves from digital intrusions, thefts and attacks that take place wherever we set our digital footprints.

Everyday digital crime is on the rise, as are attacks on democratic processes, and digital warfare is developing rapidly. Therefore, there is a growing demand for technologies and products that can resist the digital criminals of the 21st century. And the world has only seen the tip of the iceberg when it comes to attacks on everything from banks and businesses to governments and the media, say IT security experts.

Vontobel's tracker certificate, TRACK CYBER VON, follows Solactive's Cyber Security Performance Index, which includes shares from 19 different listed companies, all of which work in cyber security.

Electric cars are now a widespread part of the street scene, but apart from diesel, petrol and electricity, hydrogen as a vehicle fuel is on the rise. Several car manufacturers are now producing and selling hydrogen-powered cars and the growth in hydrogen car production is expected to increase in the coming years as the technology behind hydrogen becomes cheaper and more efficient. International investment banks estimate that hydrogen cars will take 10 percent of the passenger car market, while over a third of future trucks will be powered by hydrogen. In time, hydrogen is also expected to be used in aircraft and ferries, for example.

The growing belief in hydrogen as one more new green energy source is also seen in the fact that both governments and companies are investing massively in hydrogen.

Vontobel's tracker certificate, TRACK HYDRO VON, follows Solactives' Hydrogen Top Selection Index( NTR), which contains shares from 15 different listed companies, all working in hydrogen technology.

As an investor, you should be aware that you are buying the certificate issued by Vontobel, which means that the money is lost if Vontobel goes bankrupt. This is called issuer risk. Certificates are not subject to any deposit protection.

You should remember that the value of a Tracker Certificate can fall significantly below the purchase price due to changes in market factors, especially if the value of the underlying assets falls. For the administration of the product or the underlying index a fee is charged which reduces the value of the certificate over time. If the currency of the underlying assets (for example, US dollars) is different from the product currency (for example, Kroner) you as an investor bear a currency (foreign exchange) risk.

Risks

This information is neither an investment advice nor an investment or investment strategy recommendation, but advertisement. The complete information on the trading products (securities) mentioned herein, in particular the structure and risks associated with an investment, are described in the base prospectus, together with any supplements, as well as the final terms. The base prospectus and final terms constitute the solely binding sales documents for the securities and are available under the product links. It is recommended that potential investors read these documents before making any investment decision. The documents and the key information document are published on the website of the issuer, Vontobel Financial Products GmbH, Bockenheimer Landstrasse 24, 60323 Frankfurt am Main, Germany, on prospectus.vontobel.com and are available from the issuer free of charge. The approval of the prospectus should not be understood as an endorsement of the securities. The securities are products that are not simple and may be difficult to understand. This information includes or relates to figures of past performance. Past performance is not a reliable indicator of future performance.