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Leveraged and inverse ETFs and ETPs reached record high in January

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ETF data provider ETFGI reports that assets invested in leveraged and inverse ETFs and ETPs listed globally reached a record high of USD87.3 billion at the end of January 2018, shattering the previous record of USD80.7 billion set at the end of 2017.

The firm writes that during January, leverage and inverse ETFs/ETPs listed globally saw net inflows of USD1.47 billion and assets invested in leveraged and inverse ETFs/ETPs listed globally increased by a record USD6.61 billion during January 2018 to reach a new high of USD87.3 billion at the end of the month.

The majority of assets were invested in leveraged ETFs/ETPs with USD53.8 billion, followed by inverse  products with assets of USD17.8 billion, and leveraged inverse with USD15.8 billion.

During January 2018 assets invested in leveraged and inverse ETFs/ETPs increased by USD6.61 billion, or 8.19 per cent. According to ETFGI’s data this growth represents the greatest absolute monthly increase in assets on record. The previous record was set in August 2015, when assets grew by USD4.65 billion.

The majority of assets were invested in leveraged ETFs/ETPs with USD53.8 billion, followed by inverse ETFs/ETPs with assets of USD17.8 billion, and leveraged inverse ETFs/ETPs with USD15.8 billion. The largest market for leveraged and inverse ETFs/ETPs was in the United States, which, at the end of January 2018, had assets of USD54.2 billion, or 62.1 per cent of global assets, invested in 273 ETFs/ETPs.

ETFGI writes that a large proportion of these assets are invested in relatively few products. For example, the ProShares UltraPro QQQ (TQQQ US) and the ProShares Ultra S&P500 (SSO US), both of which are leveraged products listed in the United States, had assets of USD3.40 billion and USD2.64 billion, respectively, at the end of January 2018.

This trend is also true outside of the US. For example, the YUANTA/P-shares Taiwan Top 50 1X Bear ETF (00632R TT), an inverse product listed in Taiwan, had assets of USD2.77 billion; and the NEXT FUNDS Nikkei 225 Leveraged Index ETF (1570 JP), a leveraged product listed in Japan, has assets of USD2.22 billion.

Globally, the top 20 ETFs/ETPs by assets collectively accounted for USD36.8 billion at the end of January 2018. Similarly, the top 20 ETFs/ETPs by net new assets collectively accounted for the majority of net inflows. During January 2018, leverage and inverse ETFs/ETPs listed globally saw net inflows of USD1.47 billion, of which the top 20 collectively gathered USD4.17 billion.

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