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ETF Securities launches first short ETCs

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ETF Securities, the London-based provider of exchange traded commodities, has announced the launch of its first 29 short exchange-traded commodity shares on the London Stock Exchange.
ETF Securities, the London-based provider of exchange traded commodities, has announced the launch of its first 29 short exchange-traded commodity shares on the London Stock Exchange.

The new ETCs can be be used by investors to take advantage of a fall in the price of the underlying commodity, in the same way that equity investors can sell borrowed stocks in traditional short selling.

ETF Securities has 31 traditional ETCs,  as well as 33 forward and 33 leveraged products, which it plans to launch during March. Its exchange trade products now include agriculture, energy, industrial metals, livestock, and precious metals. It has just announced the introduction of four new commodities – cocoa, lead, tin and platinum.

The success story for the firm’s ETCs is precious metals, on the back of the mounting gold price, which have now accumulated over USD1.5bn of assets, mostly gathered since May last year.

In the past month, precious metal ETC assets have increased by USD330m or 28 per cent. ETFS Physical Platinum and ETFS Physical Gold have contributed nearly USD250m of these new assets. ETFS Physical Platinum in particular has experienced huge interest, with assets growing by USD95m to a total of more than USD330m.

Including ETFS Physical PM Basket, which includes a 21 per cent allocation to platinum, ETF Securities now holds more than 210,000 ounces of physical platinum. On an annualised basis, this represents nearly 5 per cent of annual new mine production. Similar to the gold ETCs, whose combined bullion holdings would rank fifth among the world’s central banks, ETFS Physical Platinum is liquid and transparent and is accessible to all investor types.

The increase in these assets has occurred, says ETF Securities, on the back of volatile equity and bond markets, with the major equity markets falling by between 5 and 10 per cent in January. This volatility has prompted a flight to non-correlated assets such as precious metals. During this period, precious metals have experiencing returns of between 8 and 16 per cent.

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