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ETF Securities short and leveraged ETCs attract USD155m in first eight weeks


Exchange-traded commodities provider ETF Securities has seen inflows of USD155m to its new short and leveraged ETCs in the first eight week since their launch, accounting for 15 per cent o

Exchange-traded commodities provider ETF Securities has seen inflows of USD155m to its new short and leveraged ETCs in the first eight week since their launch, accounting for 15 per cent of net inflows into all its ETCs over the period.

The firm attributes the high demand for the new ETCs to the current market conditions, with volatile equity markets creating demand for non-correlated assets. Despite some volatility in the commodity markets, ETCs, which are listed in dedicated trading segments on five European stock exchanges, have enjoyed more than USD1bn in net inflows over the past eight weeks.

ETF Securities’ 33 short ETCs have attracted USD110m since being listed on February 22, with 80 per cent of assets invested in ETCs tracking individual commodities and the remaining 20 tracking baskets of commodities. The most popular short ETCs so far are ETFS Short Crude Oil, ETFS Short Gold and ETFS Short All Commodities. The top-performing short ETC, ETFS Short Coffee, has gained some 17 per cent since launch.

The 33 leveraged ETCs listed on March 11 have taken in USD45m in assets, with the total doubling over the past week, again with 80 per cent of assets tracking individual commodities and the remainder commodity baskets.

The most popular leveraged ETCs are ETFS Leveraged Crude Oil, ETFS Leveraged Gasoline, ETFS Leveraged Heating Oil and ETFS Leveraged Gold. Last week ETFS Leveraged Natural Gas returned 14.9 per cent, while the top-performing leveraged ETC since launch has been ETFS Leveraged Heating Oil with 28 per cent.

ETF Securities has also announced the appointment of three new market makers for the ETC platform, with Banca IMI and Goldman Sachs becoming authorised participants and La Branche a liquidity provider. They join Flow Traders, Nyenburgh, Susquehanna, Morgan Stanley, Barclays Capital, UBS, ABN Amro, HVB, HSBC, Merrill Lynch, Citigroup, Société Générale, Winterflood and JPMorgan. ETF Securities says it now has more authorised participants and liquidity providers than any other issuer of ETCs or exchange-traded funds in Europe.

The firm’s ETC platform includes physically-backed precious metal ETCs, as well as long, forward, short and leveraged ETCs providing exposure to indices tracking energy, agriculture, livestock, industrial metals and precious metals futures markets. Over the past eight weeks, ETFS Physical Gold experienced USD310m in net inflows, reaching USD1bn in total assets, while ETFS Agriculture took in a net USD210m to bring its total assets to USD960m.

‘The rationale to launch the platform of short and leveraged ETCs is twofold,’ says ETF Securities chief operating officer Nik Bienkowski. ‘It provides the most complete access to commodities and allows more trading strategies for a broader investor base, allowing investors to enjoy impressive returns.

‘Secondly, we wanted to offer investors exposure to a broad range of commodities that historically have been extremely difficult to access. Investors appreciate the liquidity, transparency and cost efficiency of ETCs, leading to our assets more than doubling since the start of this year to USD5.4bn.

‘Over the past eight weeks the surge in demand for ETCs has continued. The new 66 short and leveraged ETCs have garnered USD155m assets in eight weeks, the fastest asset-gathering we have experienced in any ETC launches to date.

‘We welcome Banca IMI, Goldman Sachs and La Branche to what is now the largest panel of market makers of any ETF or ETC Issuer in Europe. As a result, weekly ETC trading volumes have exploded to more than USD800m.’

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