Scalable Capital writes that following the successful launch of the Scalable World ETF – which already manages over EUR700 million in client assets – comes the logical evolution of the product suite for active investors: the Scalable MSCI AC World Leveraged Daily Swap Xtrackers UCITS ETF.
The ETF replicates the daily performance of global equity markets leveraged by a factor of 2x. The firm writes that, with a TER of 0.45 per cent p.a., it is the lowest-cost global equity ETF with leverage on the market and the first of its kind in Europe.
“There is clear demand among active and experienced investors to capitalise on global market movements in a more targeted manner. With this new product, we ensure they can do so with the familiar Scalable quality: efficiently, transparently, and with the best cost structure,” says Jannik Klasing, Head of Investment Management at Scalable Capital. “Following the success of our World ETF, we are expanding our offering to give active investors the opportunity to invest with leverage in a broadly diversified way.”
“We see a high appetite for innovative ETF solutions. With this second joint product with Scalable Capital, we are now offering investors efficient access to a leveraged global equity strategy,” says Ferat Öztürk, Head of Digital Distribution EMEA at Xtrackers.
The firm writes that the product offers a wide range of tactical and strategic applications: active investors with a strong market view will find the ETF an efficient tool to leverage global upward trends and gain amplified exposure to market movements.
“However, the leverage effect can also be used for risk-oriented, systematic wealth building: when using automated savings plans, the cost-averaging effect helps smooth entry prices and mitigate path-dependent effects like “volatility drag”.
“Furthermore, in combination with the unleveraged Scalable World ETF, the leverage can be tailored individually to one’s own risk profile. For instance, a 50/50 allocation between both variants results in an effective 1.5x leverage.
“Due to the daily resetting of the leverage combined with price fluctuations over longer periods, total performance may not correspond exactly to double the performance of a corresponding unleveraged product. The most suitable market environment consists of upward trends with low volatility. Sideways phases or volatile markets can adversely affect proportional performance compared to an unleveraged investment. In all scenarios, regular monitoring and potential rebalancing of the position are required.”
The Scalable MSCI AC World Leveraged Daily Swap Xtrackers UCITS ETF aims to track the MSCI ACWI Leveraged 2X Select Index Daily. The index covers 47 countries (23 developed and 24 emerging markets) with over 2,400 companies, reaching approximately 85 per cent of global equity market capitalisation.
European retail investors gain the opportunity to take a position on this leveraged index for the first time, benefiting from the safety of an ETF structure with protection as separate asset funds and without any margin calls. Borrowing occurs in euros at money market rates without funding cost markups inside the product itself, making leverage significantly cheaper via the ETF. As part of the ETF’s price performance, financing costs directly reduce capital gains tax – a tax consideration usually not possible with a private loan outside of a fund. Additionally, investors benefit from a 30 per cent partial tax exemption in Germany.
The ETF relies on smart synthetic replication via collateralised swaps on the reference index, leveraging the expertise of Xtrackers as an experienced provider and Scalable Capital’s role in advising on portfolio construction, especially regarding the swap structure. The reference index was developed by MSCI, a leading provider of critical decision support tools and services for the global investment community
All Scalable Broker clients can buy the new ETF free of charge with immediate effect. The firm writes that they benefit from EUR0 order fees on savings plans starting from EUR1, as well as on single purchases above EUR250 order volume on the European Investor Exchange (Hanover Stock Exchange). As part of the trading flat rate, all buys and sells above EUR250 volume on the European Investor Exchange are included for PRIME+ clients, otherwise just EUR99.
Alongside the European Investor Exchange, the ETF will be available on major stock exchanges across Europe and thus also through other banks and brokers. These include gettex (Munich Stock Exchange), Xetra (Deutsche Börse), Tradegate, and Lang & Schwarz.
