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August volatility boosts AUM in short and leveraged ETPs

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The September 2015  Boost Short & Leveraged ETFs/ETPs Global Flows Report from WisdomTree reveals assets under management in short and leveraged ETFs/ETPs at the end of September stood at USD70 billion, up 14 per cent year to date.

As short and leveraged ETPs offer investors the opportunity of expressing bullish and bearish sentiments, WisdomTree believes the size of assets under management reflects  a broader range of investor sentiment than flows or AUM data for mutual funds and other ETPs. The firm writes: “Since S&L ETPs tend to be held for shorter periods and used more for tactical positioning, AUM and flows data for S&L ETPs can provide valuable insight into the market sentiment of a relatively sophisticated set of investors.”
 
 In terms of asset allocation at the end of September, equity ETPs were the most popular with 72 per cent of total AUM (USD50.7 billion), followed by debt (12per cent, USD8.7 billion) and commodities (9 per cent, USD6.1 billion).
 
In equities, most of the AUM was focused on US large cap and US small cap equities (USD18.5 billion), Asia-Pacific equities (USD13.1 billion) and European equities (USD6.9 billion). In Europe, broad European indices were the most popular (USD2.7 billion in AUM), followed by Germany (USD1.7 billion), Italy (USD642 million) and France (USD541 million). In debt, most of the AUM was in US government debt (USD5.2 billion), German government debt (USD1.5 billion), and Italian (USD266 million) and European-region focused (USD263 million) government debt. In commodities, oil proved the most popular (USD3.3 billion in AUM), followed by natural gas (USD936 million), gold (USD737 million) and silver (USD594 million).
 
Commenting on the findings, Viktor Nossek, Director of Research for WisdomTree Europe says: “September was a strong month for short & leveraged ETPs as investors took advantage of heightened volatility to position opportunistically or hedge their exposures. 
 
“Of particular note were the inflows of over USD3.7 billion into S&L ETPs tracking US, Japanese and European equities last month. S&L investor sentiment towards US equities was clearly mixed as evident in the build-up of both long and short positions. This was also the case for Europe, with inflows into both long and short ETPs to the tune of USD326 million. By contrast, there was bullish sentiment with regards to Japanese equities as S&L investors poured into long positions, bringing inflows over the past 12 months to over USD7.3 billion. Within fixed income, S&L investors’ bearish positions reversed in September following the Fed’s decision to not hike interest rates in September. Investors took a more bearish stance on German bunds however, with falling bund yields compelling investors to position bearishly. Similarly, investors were bearish towards crude oil with S&L activity in oil YTD helping to drive up AUM of commodity ETPs to USD6 billion.”
 

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