Tracker certificates - World stock markets on the exchange!
With a tracker certificate, you can invest in a variety of otherwise hard-to-access markets and assets on the stock exchange through a regular stock account. A tracker certificate is similar in many ways to an exchange-traded fund (ETF), but is issued by a bank that guarantees the product. The issuer commits to both buying and selling the security during the exchange's trading hours under normal market conditions.
The value of a tracker certificate depends on an underlying asset, which could be, for example, a stock index, a commodity, or a market segment.
You can see the underlying assets you can trade through tracker certificates on the NGM exchange in our investment matrix. Currently, this includes:
- Index: OMXS30 Sweden
- Commodities: Gold
- Currency: Bitcoin, Litecoin, Ripple, Eternal.
The value of a tracker certificate follows the underlying asset both up and down. Therefore, investing in a tracker certificate is similar to investing in the underlying asset.
If the price of natural gas goes up by 2%, a natural gas tracker certificate will also go up by 2%. If the price of natural gas falls by 2%, the price of the tracker certificate will also fall by 2%.
A tracker certificate, like a mutual fund, often has a management fee. This fee varies from certificate to certificate and is specified in the security's terms.
A tracker certificate usually does not have a fixed maturity date, which means you can keep the security for as long as you want. However, there are also tracker certificates with a fixed maturity date. Holding such a certificate means that the investor automatically receives the value of the investment in the stock account on the maturity date.
In cases where the underlying asset is quoted in a different currency (such as the Dow Jones in USD or DAX 30 in EUR), this means that in addition to market risk, there is also currency risk. This can cause the certificate's value to rise or fall even if the underlying asset remains unchanged. Some tracker certificates offer an embedded currency hedge, which is specified in the security's terms.
Keep in mind that when investing in a tracker certificate, you as an investor, similar to an equity investment, take on credit risk from the issuer.