Boost ETP has listed Europe’s first 10Y US Treasuries 3x short fixed income exchange-traded product (ETP) on the London Stock Exchange (LSE).
The Boost US Treasuries 10Y 3x Short Daily ETP will give exposure to returns from holding US 10 year Treasury futures.
With AUM of USD7.9 billion, S&L debt ETPs tracking US Treasuries represent the overwhelming majority of S&L debt ETPs globally.
This year’s unwinding of QE in the US may have set a precedent for looming interest rate increases as the US economy continues to grow, says Boost ETP. This, combined with the Fed’s confident tone to end QE by the end of the summer, has driven S&L investors to cut their long position in Treasuries by USD659 million and increase their short positions by USD885 million this year.
A strong bearish conviction in US debt is evident in the disproportionate allocation into short positions, which represent 90 per cent of AUM in S&L debt ETPs.
The fixed income ETP is designed to return minus 3x the daily movement of the relevant benchmark index. For example, if the BNP Paribas US Treasury Note 10y Future Index falls by one per cent on a day, then "3TYS " will rise by three per cent on that day (less fees and adjustments). Conversely, if the BNP Paribas US Treasury Note 10y Future Index rises by one per cent on a day, then "3TYS” will fall by three per cent on that day.
Hector McNeil, co-CEO of Boost ETP, says: “It’s very exciting to launch new products especially in new asset classes for the company. The launch of Boost US Treasuries 10Y 3x Short Daily ETP (3TYS) is a first for the LSE and follows closely on the heels of last week’s listing of the Boost Gilts 10Y 3x Short Daily ETP (3GIS). Investors can now use Boost’s un-paralleled range of short & leveraged ETPs to invest in all the major asset classes including equities, commodities and now sovereign fixed income exposures.
"Short & leveraged ETPs allow investors to invest in a capital efficient manner and in one simple trade on Exchange and in a central settlement system. Investors also have the security that they cannot lose more than their original investment unlike other forms of leverage trading. Investors can also hedge their long positions using short ETPs therefore helping them protect their portfolios in volatile markets. The addition of Boost US Treasuries 10Y 3x Short Daily ETP (3TYS) will allow investors to make positive returns on 10 year US Treasuries is falling. Boost will continue to innovate through introducing new ETPs, market leading research and client education to ensure investors are as well prepared as they can possibly be.”