Image Credit: Alex Nabaum
By Jason Zweig | May 15, 2020 11:00 am ET
The catchier an investment’s name, the more you should ask: What’s the catch?
Just consider YES. Offered to wealthy advisory clients of UBS Group AG, YES stands for Yield Enhancement Strategy. Who doesn’t love getting to yes? And who wouldn’t want to enhance yield?
YES, whose holdings peaked around $6 billion in mid-2018, effectively borrows against clients’ holdings at UBS and uses the proceeds to trade options. The product is akin to a margin loan against existing holdings; losses could compel an investor to put in extra cash or securities.
Although clients say UBS financial advisers told them the strategy was conservative, in reality it often embedded risky bets that markets would stay placid — gambles on which many investors lost 20% or more. The Securities and Exchange Commission is looking into how it was marketed.…
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For further reading:
Benjamin Graham, The Intelligent Investor
Jason Zweig,The Devil’s Financial Dictionary
Jason Zweig, Your Money and Your Brain
Jason Zweig, The Little Book of Safe Money
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