Short and leverage ETP specialist BOOST ETP has hit a new record in AUM of USD160 million and total monthly exchange turnover of USD288 million.
The growth in AUM is a rise of 332% since November 2013. The record turnover of USD288 million across all BOOST’s products so far this month is up ten-fold from USD25m per month in November 2013 and is already a record for any months trading since BOOST launched its first products.
BOOST’s growth has been the result of providing innovative products and a focus on proactively educating investors about the benefits and risks of using S&L ETPs. The many different investment strategies that investors can employ also add to the usefulness of the product. The following are the key uses and benefits of S&L ETPs:
• S&L ETPs trade and settle the same as equities
• Investors can treble the daily return of their investment (excluding fees and adjustments”), or use less capital to achieve the same exposure as a delta-1 ETF
• Investors can hedge existing positions in one simple trade
• Investors can use S&L ETPs in a long or short strategy to take advantage of any rises or falls in the market
• S&L ETPs can be used in a pairs trade to take advantage of undervalued assets
• Investors can get short the market/asset class quickly, efficiently and cheaply
• Investors can enhance a balanced portfolio by investing a small percentage tactically when short-term opportunities arise.
Demand for transparent, liquid and robust S&L ETPs has increased over the past few years with global S&L ETP assets rising to USD61bn (BOOST Short & Leveraged ETFs/ETPs Global Flows Report, October 2014). The rise in volatility in the month of October triggered major inflows across major asset classes, including USD3 billion inflows into S&L equity ETPs, USD273 million inflows into S&L debt ETPs and USD319 million into S&L commodity ETPs. S&L ETPs tracking alternative asset classes such as real estate and multi-asset benchmarks also received a boost of USD975 million inflows in the same period. As many financial markets have trended in volatile sideway trends this year, investors have increasingly needed to focus on tactical, short-term trades and hedging opportunities to ensure they preserve and grow their capital.
Hector McNeil, Co-CEO of WisdomTree Europe, says: “The 332% growth in AUM and 1,000% growth in trading volumes in BOOST ETPs over the past 12 months is very impressive. It clearly shows that investors have a strong appetite for robust and transparent leveraged investment vehicles. We have worked hard to help educate the investment community on how best to use the products. Demand has risen significantly especially around events where investors want to hedge their risks, such as the Scottish Referendum and European rates QE speculation.
“We will continue to provide innovative products backed up by educational tools, conference calls and face to face events in order to ensure our customers have a deep understanding of what is on offer. Investors have also enjoyed the expansion of our ETP platform, which includes a comprehensive multi asset range of equities, commodities and sovereign fixed income.”
Viktor Nossek, Director of Research at WisdomTree Europe, says: “Volatility helped the S&L ETP industry to grow by 5.7% in October, as investors sought geared exposure to take bullish positions in equity, debt and commodity markets. The strongest conviction was in equities where USD4.2bn long ETPs were bought even as more than USD1bn short ETPs were sold in the period. However, October’s sharp correction in energy commodities also drove S&L investors to take advantage of the fall in prices, by reinforcing their bullish positioning on oil and natural gas. Net inflows totalled USD318 million into oil and natural gas ETPs combined. Hence, while spiking volatility typically gives strategic investors and excuse to sell, for S&L investors, it is yet another opportunity to buy.”
BOOST has worked hard to develop its educational materials to help investors better understand the structure, benefits and risks of S&L ETPs/ETFs. Educational tools include the ‘Adviser/Investor Tool Kit’ which includes a Tutorial and Test, a Returns Simulator and various fact sheets and FAQs. BOOST also provides regular conference calls and face to face educational opportunities for investors.