Boost is launching a monthly Global Short & Leverage ETF/ETP Report, which complements the recently launched Short & Leverage ETF/ETP Advisor Tool Kit.
Global short and leveraged exchange-traded product assets rose by USD5.1bn (11.5 per cent) in the first five months of 2013 to USD49.3bn.
On-exchange traded volumes for S&L ETPs have also increased this year. Increasing from USD113bn to USD154bn per month, representing a 36 per cent increase. S&L ETPs traded an amount equal to 3.1x their total AUM each month on average. 3x ETPs are being held for approximately three days, 2x ETPs for eight days and -1x ETPs for 14 days suggesting that investors are using S&L ETPs for short-term and tactical trading.
Investors are increasing their use of S&L ETPs for a variety of reasons. There is wider product availability, greater product knowledge from improved educational resources and increased demand for hedging tools and leveraged instruments due to current market conditions. There is also a move towards independent, transparent and exchange traded instruments such as ETFs and ETPs.
Amid flat and low-return markets, Boost ETP recently launched a platform of 3x Short and 3x Leverage equity ETPs and ETCs (exchange traded commodities). The platform enables investors to gain leverage exposure to rising or falling markets in order to hedge their portfolio or magnify returns. Additionally, Boost ETPs allow investors to execute a wide range of investment strategies. For example, using short ETPs to profit from falling prices or protect existing positions, using a long and short ETP as part of a pairs trade, or using leverage to invest the remaining capital in other assets.
Nik Bienkowski (pictured), co-chief executive of Boost ETP, says: “Boost is launching its monthly Global Short and Leverage ETF/ETP Report as a result of increased demand for transparent information regarding Short and Leverage ETPs. The report highlights investor bearishness and bullishness across asset classes and indices previously not available in other ETF/ETP reports. The benefits of a report incorporating short ETPs can help to determine whether investors are becoming bearish on certain indices, or whether they are just rotating assets into different indices.
“Global AUM in short and leverage ETPs is approaching USD50bn, after increasing by USD5.1bn this year. Fifty eight per cent of global short and leverage ETPs assets are currently short, indicating that investors are commonly using Short ETPs to hedge portfolios or take a view on a negative conviction.
“During May, short and leverage equity ETP investors became increasingly bearish with net short notional flows of USD4bn. Since the start of the year, short equity ETP saw notional inflows of USD10bn. Investors also continued to be bearish on gold, however the largest change in commodity ETP flows during May was for oil, with notional net short flows of USD507m.”