WisdomTree Europe’s BOOST, provider of specialist Short and Leverage (S&L) Exchange Traded Products, reports that AUM of S&L ETPS at the end of December was up 14 per cent in 2015, with inflows of USD68 billion.
Boost writes that investors in S&L ETPs can express bullish as well as bearish sentiment by investing in either a leveraged or a short ETP. The firm writes: “The AUM of S&L ETPs can reveal a broader range of investor sentiment than flows or AUM data for mutual funds and other ETPs. 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.”
The BOOST Short & Leveraged ETFs/ETPs Global Flows Report highlights the key flows and trends in S&L ETPs across asset classes and geographies.
Nick Leung, Research Analyst at WisdomTree Europe, says: “December capped a record year for short & leveraged ETPs as investors took advantage of persistent volatility to position opportunistically or hedge their exposures.
“The build-up of bearish sentiment on fixed income, following the much anticipated first Fed rate hike since 2006, was cut short by China’s slowdown fears amidst falling industrial confidence pressuring the RMB. This triggered redemptions of USD260 million on short ETPs tracking US debt, accelerating the unwinding of short positions that had built up in the first half of 2015. At the same time, investors in S&L equity ETPs responded to the Fed rate hike by repositioning bullishly in US and European equities, as evident by contrasting flows in long and short ETPs.
“Flows into Japanese equities continued to strengthen but the positioning was mixed, with an additional USD870 million flowing into both long and short positions in equal measure last month. 2015 inflows into S&L ETPs tracking Japanese equities now stand at over USD5.2 billion. S&L commodity ETPs also enjoyed substantial inflows of USD710 million in December, underpinned by contrarian bets in response to the RMB devaluation raising geopolitical tensions in Asia.”