Bringing you live news and features since 2006 

Hector McNeil, Boost ETP

S&L ETPs are structurally sound

RELATED TOPICS​

Hector McNeil, Co-CEO of Boost ETP, responds to Larry Fink’s recent criticism of leveraged exchange traded funds…

Short & Leverage ETPs (S&L ETPs) are structurally sound, serve an important role in the market for tactical traders and investors and have performed this role admirably during some of the most volatile and stressful periods in recent market history.    

Boost is taking the opportunity to respond to Larry Fink’s recently reported comments because we believe they reflect a serious misunderstanding of the S&L ETP structure.  These comments lack necessary distinctions between operational and regulatory practices of various S&L product types and geographic markets; they also lack a sense of scale relative to other structured products which makes hyperbolic claims of S&L ETP structural risk quantifiably untenable, and misdirected. Simply put, S&L ETP net exposure, AUM and rebalance-driven trading are insignificant in the scheme of global equity markets.
 
S&L ETPs have a total of USD61.5bn (as of 30 April 2014) of assets under management (AUM) globally, mostly in extremely liquid underlying asset classes such as the S&P 500 and Gold.  This USD61.5bn represents less than 2% of total global ETF AUM, which itself is only about 5% of global mutual fund AUM.   Perhaps more importantly, S&L ETPs are a small fraction of assets and trading volumes compared to other derivative products such as margin trading, prime brokerage, CFDs/spread bets, futures, options, structured products, certificates, warrants, swaps, shorting, stock lending and other products and services provided by the large global banking and asset management houses.
 
We believe S&L ETPs represent an important innovation.  For certain investors these products offer a number of potential benefits, from capturing daily positive or negative returns, to cost-efficient hedging, quick market access as well as the facilitation of more sophisticated tactical trades.  We welcome the evaluation of S&L ETP structure and mechanics and believe such fact-based analysis will lead to a better understanding of their unique features from which investors may benefit.

Latest News

BlackRock's iShares, an undisputed leader among European ETF issuers, pushed further ahead in Q1 with EUR173 billion in trades, triple..
European ETFs raised USD47.8 billion in Q1, a 15 per cent increase compared to the same period in 2023, according..
LSEG Lipper’s March report finds that globally equity ETFs (+EUR113.2 billion) enjoyed the highest estimated net inflows for the month,..
Morningstar has published a review of the European ETF market for the first quarter 2024, which finds that it gathered..

Related Articles

etf active trading
Latest Morningstar data shows actively managed ETFs’ share of the US ETF market rose to 8.5 per cent at the...
Kristen Mierzwa, FTSE Russell
Index Investments Group (IIG), a division within index provider FTSE Russell, has extended its range of indices through two new...
ETFs
US ETF issuers of active ETFs are facing an increase in fees from the big custodian firms, such as Charles...
Taylor Krystkowiak, Themes ETFs
Themes ETFs opened its doors in December 2023, with an introductory suite of 11 ETFs – seven thematic and four...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by