Bringing you live news and features since 2006 

WisdomTree’s short and leveraged products show sharp reversal in US equity trading


January trading figures from WisdomTree’s Boost range of short and leveraged products reveal a sharp reversal from the end of 2016 as investors piled into leveraged long US equities at the expense of short positions.

The trading reversal came as investors anticipate pro-growth policies from President Trump following his inauguration. The firm writes that in total, flows into leveraged long US equities came in at almost USD54 million in January, while USD4.6 million came out of short positions. This compares with withdrawals of USD40 million from long positions (and inflows of USD14.6 million into short positions) in the final two months of 2016.

Such was the demand for long US exposure in January that flows into the 3x Long S&P 500 ETF surpassed total net flows in (leveraged and short) US equity ETPs for the whole of 2016, although Nick Leung, Research Analyst at WisdomTree, notes there is still a lot of uncertainty surrounding Trump’s plans.

“S&L investors continued to position bullishly around Trump and US equities, with expectations hinging around Trump offering more details on proposed corporate tax cuts, infrastructure spending and regulation reform,” he says. “All of which would provide another shot in the arm for US equities.”

Trades in US equities in January were made against a backdrop of climbing valuations, with the S&P 500 index up 2 per cent over the month.

Elsewhere, investors also switched views on the outlook for both oil and natural gas. Both commodities were avoided en masse by investors in December as USD69 million was withdrawn from long positions in US Crude oil, alongside withdrawals in Brent and Natural Gas.

However, last month sentiment turned, with USD27 million invested in leveraged long oil ETPs, and a further USD26 million invested in Natural Gas. Short positions were also unwound across both commodities, and Leung says this was yet another sign of contrarian positioning in commodity markets.
“The flows contrasted with the trend in prices, with Natural Gas futures prices falling 16.2 per cent in January, and WTI Crude oil down 3.4 per cent,” he says.

Latest News

ETF data consultant ETFGI reports that assets invested in the global ETF industry reached a new record of USD12.71 trillion..
Calastone has published an ETF white paper which examines several of the processes that take place across the lifecycle of..
Adapting product lines to fit into changing methodologies and meet shifting demand is essential to remaining relevant in the industry..
Investors urgently need greater access to diversified investment strategies aligned with the Paris Agreement on climate change if the world..

Related Articles

Taylor Krystkowiak, Themes ETFs
Themes ETFs opened its doors in December 2023, with an introductory suite of 11 ETFs – seven thematic and four...
Konrad Sippel, Solactive
At the end of March, financial index specialist, Solactive, published its 2024 annual report on future trends.  ...
Lorraine Sereyjol-Garros, BNP Paribas
Following changes to the French Monetary and Financial Code and of the French market authority AMF’s General Regulation, it is...
Ed Rosenberg, Texas Capital
Texas Capital Bank first opened its doors back in December 1998 and nowadays offers wealth-management services, as well as commercial,...
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