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ETF Securities sees increased interest in long oil ETCs

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ETF Securities, the developer of exchange traded commodities and provider of exchange traded funds, has seen strong inflows into long oil ETCs.

ETF Securities, the developer of exchange traded commodities and provider of exchange traded funds, has seen strong inflows into long oil ETCs.

This has corresponded with falling interest in ETF Securities Short Crude Oil.

The combined trend indicates that investors are becoming increasingly bullish on the oil price outlook.

It also reflects that ETCs are becoming an increasingly important way for investors to gain oil exposure.

The two most popular long oil ETCs are ETF Securities Brent Oil and ETF Securities Crude Oil.

ETF Securities has also seen increasing net flows into its short and leveraged ETCs, reflecting investors’ diverging views on the short term outlook for commodities.

Additionally, ETCs are increasingly being used for hedging commodity price risk, pair trades and building positions with less capital (in the case of the leveraged ETCs).

Flows into short and leveraged ETCs (excluding Securities Short Crude Oil) are up ten per cent in the past month, with flows into short ETCs (excluding Securities Short Crude Oil) up nearly 30%.

Short ETCs have experienced three consecutive weeks of inflows as investors have continued to build short positions in more cyclically oriented commodities such as energy and industrial metals.

Total assets under management in short ETCs now stand at USD123m.

The top leveraged and short ETCs last week included ETF Securities Leveraged Zinc up 20 per cent and Leveraged Wheat up 12 per cent, while Short Gasoline was up eight per cent and Short Heating Oil was up seven per cent.

Short ETCs allow investors to earn a positive return even when the index is falling. Short ETCs earn minus one times the daily change in the index (before fees and interest).

Leveraged ETCs allow investors to earn a positive return when the index is rising with 50 per cent less capital. Leveraged ETCs earn two times the daily change in the index (before fees and interest).

Hector McNeil, head of sales and marketing at ETF Securities, says: ‘We are seeing strong flows into our platform of ETCs that provide long oil exposure to investors. This is on contrast to earlier this year when ETF Securities Short Crude Oil was trading more than any other ETC or ETF when oil prices reached record levels of USD145 per barrel. Given the rapid fall in the oil price, investors are now starting to look at oil positively again. ETF Securities Brent Oil and ETF Securities Crude Oil have recently been the two most traded long oil ETCs.’

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