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Research from GraniteShares reveals wealth managers set to make greater use of leverage


New research from GraniteShares, a provider of short and leveraged single stock ETPs, reveals that over the next three years, 74 per cent of wealth managers and IFAs expect fund managers to make greater use of leveraged investment strategies and shorting. 

In November last year, GraniteShares launched its range of short and leveraged single stock daily ETPs on the London Stock Exchange, designed to enable sophisticated investors to take positions on both rising and falling share prices. 

The firm writes that beyond this, they can also be used to hedge individual stock exposures, including those in index or fund holdings.  

GraniteShares’ research shows that currently 60 per cent of wealth managers and IFAs believe their clients will increase their exposure to UK stocks this year, with the main reason being they expect it to be a good year for the economy. 

GraniteShares reports that, when asked why they think fund managers will make greater use of leverage strategies and the shorting of stocks, 50 per cent of wealth managers and IFAs said it was because there is increased news flow on individual stocks and markets in general, followed by 34 per cent who said it was due to the growth of social media and the growing use of this to communicate market data. Some 28 per cent cited increased volatility in UK stocks, and 12 per cent said the growth of ‘fake’ news around stocks and markets.

Some 18 per cent said it will be because there are more investment products and vehicles such as inverse ETPs available to do this.

Will Rhind, Founder and CEO at GraniteShares says: “Our analysis of industry data reveals that globally there is around USD77 billion invested in leveraged and inverse ETPs, and much of this is in the US.  Of the 20 largest leveraged and inverse ETPs in the world, 12 of them are in the US, six are in Asia and just two are in Europe.

“The UK is one of the most sophisticated and advanced investment markets in the world and our research shows that investors – both professional and retail – increasingly want to use leveraged and inverse strategies.  This is because they are gaining access to more information and data than ever before, and our products allow them to act on any strong views they have on key UK stocks. The UK is ripe for the launch of more leveraged and inverse ETPs.”

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