Assets under management of short and leveraged (S&L) ETPs reached a record of USD56bn at the end of January, up USD0.9bn or 1.7 per cent from December, according to figures released by Boost ETP.
Inflows of USD331m into short US equity ETPs, the largest global inflow of such equity ETPs in January, combined with outflows of USD150m from long US equity ETPs suggests a bearish sentiment taking hold in US equities.
S&L investors bought USD162m of short European equity ETPs, while they also sold USD177m of long European equity ETPs (USD339m net short), reversing the moderate upbeat sentiment in European equity markets in December 2013.
S&L investors shifted bullish positioning to Japan, which has enjoyed the strongest inflows in S&L equity ETPs of USD1.2bn.
Inflows into short US Treasury ETPs have slowed from USD1.2bn in December to USD0.4bn in January 2014.
The strongest flow movements in commodities occurred in natural gas, with S&L investors buying USD379m short ETPs and selling USD178m long ETPs. S&L investors are moderately bearish in natural gas.
AUM and trading volumes in Boost ETPs also continue to reach new records as AUM rose by 200 per cent in 12 weeks and trading volumes rose 2,000 per cent in seven months. In January 2014, the most popular Boost ETP was the Boost Natural Gas 3x Short Daily ETP (3NGS), where volumes were the highest and comprised 27 per cent of total Boost turnover.
Viktor Nossek, head of research at Boost ETP, says: “Globally, investors continue to increase their usage of short and leveraged ETPs. Global S&L ETP assets have risen by USD0.9bn (1.7 per cent) in January to a record USD56bn. Demand for S&L ETPs was also reflected in BOOST ETP’s AUM having more than doubled in the second half of 2013. In total, there is USD38bn of assets held in S&L equity ETPs and USD3.7bn of assets held in S&L commodity ETCs globally.
“The introduction of BOOST’s range of 3x short and 3x leverage ETPs was a first in the UK in December 2012 and a first in Italy in October 2013, and it is proving to be a useful tool for investors to hedge risk or express a view with less capital.”