Key Takeaways
- • Credit Suisse launched an exchange-traded note (ETN) with ticker symbol CSLS designed to track the performance of the Credit Suisse Long/Short Liquid Index (Net), replicating long/short equity hedge fund sector returns through 18 liquid, investable market factors.
- • The ETN's underlying index uses a monthly reweighting algorithm to correlate with the historical performance of the Credit Suisse/Tremont Long/Short Equity Hedge Fund Index, offering investors liquid, cost-efficient access to alternative beta strategies.
- • Michael Clark, head of structured retail products at Credit Suisse's investment bank, stated the firm plans to leverage its Credit Suisse/Tremont expertise—developed over a decade ago as a pioneer in alternative beta measurement—to launch additional ETNs tracking other alternative strategies.
- • The product addresses growing institutional and retail demand for liquid alternative investment vehicles that provide hedge fund-like exposure at lower cost and with greater accessibility than traditional hedge fund investments.
Summary
Credit Suisse's investment banking division has launched an exchange-traded note (ETN) designed to provide investors with liquid, cost-efficient exposure to hedge fund sector performance. The ETN, trading under ticker CSLS on NYSE Arca, seeks to replicate the performance of the Credit Suisse Long/Short Liquid Index (Net), which tracks the long/short equity hedge fund sector through a systematically managed portfolio of 18 liquid, investable market factors.
The underlying index employs a monthly reweighting algorithm to correlate historical performance with the Credit Suisse/Tremont Long/Short Equity Hedge Fund Index. Importantly, the ETN's returns depend on the performance of the Credit Suisse Long/Short Liquid Index (Net) rather than direct exposure to the broader Credit Suisse/Tremont hedge fund index itself. This structure allows Credit Suisse to deliver hedge fund-like return characteristics while maintaining the liquidity and transparency required for exchange-traded products.
Michael Clark, head of structured retail products at Credit Suisse's investment bank, emphasized the firm's competitive positioning in alternative beta. "Credit Suisse/Tremont was a pioneer in the measurement of alternative beta over a decade ago and we are now leveraging this expertise to meet the growing demand for liquid, cost-efficient, alternative products," Clark stated. The launch reflects Credit Suisse's strategy to capitalize on institutional and retail investor appetite for alternative investment exposure, particularly among investors seeking alternatives to traditional hedge fund structures with their higher fees and liquidity constraints.
The firm has signaled its intention to expand the product line, with Clark noting that additional ETNs tracking other alternative strategies will launch in the near future. This move positions Credit Suisse to address a significant gap in the alternative investment marketplace where institutional investors increasingly demand transparent, liquid vehicles that provide hedge fund-like exposure without traditional hedge fund drawbacks.
The underlying index employs a monthly reweighting algorithm to correlate historical performance with the Credit Suisse/Tremont Long/Short Equity Hedge Fund Index. Importantly, the ETN's returns depend on the performance of the Credit Suisse Long/Short Liquid Index (Net) rather than direct exposure to the broader Credit Suisse/Tremont hedge fund index itself. This structure allows Credit Suisse to deliver hedge fund-like return characteristics while maintaining the liquidity and transparency required for exchange-traded products.
Michael Clark, head of structured retail products at Credit Suisse's investment bank, emphasized the firm's competitive positioning in alternative beta. "Credit Suisse/Tremont was a pioneer in the measurement of alternative beta over a decade ago and we are now leveraging this expertise to meet the growing demand for liquid, cost-efficient, alternative products," Clark stated. The launch reflects Credit Suisse's strategy to capitalize on institutional and retail investor appetite for alternative investment exposure, particularly among investors seeking alternatives to traditional hedge fund structures with their higher fees and liquidity constraints.
The firm has signaled its intention to expand the product line, with Clark noting that additional ETNs tracking other alternative strategies will launch in the near future. This move positions Credit Suisse to address a significant gap in the alternative investment marketplace where institutional investors increasingly demand transparent, liquid vehicles that provide hedge fund-like exposure without traditional hedge fund drawbacks.
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