Deep dive into short and leveraged ETPs

ETF Express newsletter 13.05.22

This week’s feature from Philippa Aylmer features Will Rhind, founder and CEO of GraniteShares and gives us a deep dive into single stock short and leveraged ETPS.

Rhind explains the structure that lies behind the products, which have enjoyed enormous growth over recent years. Rhind explains that it is important for investors to consider, how the leverage is structured. “The business of providing leverage to customers is a huge industry across the board. Instead of accessing leverage through a prime broker, traditional margin account or CFDs and warrants, the leveraged ETF is designed to use swaps.”

And when it comes to guaranteeing the underlying index, rather than use a prime broker with a margin account, swaps, says Rhind, are still the tried and tested institutional-grade structure.

Market volatility and geo-political impact are having their effect on ETF inflows, with BlackRock reporting that April saw monthly allocations to global ETPs fall to their lowest level since March 2020 in April, with just USD27.4 billion of inflows, down from USD117.4 billion in March.

The firm says that while inflows dropped across asset classes, they fell most acutely in equities, where just USD2.8 billion was added (down from USD76.2 billion in March). Fixed income flows also fell slightly from USD25.5 billion to USD18.8 billion, while commodity flows tempered to USD3.6 billion.

Beverly Chandler, managing editor, ETF Express

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Companies in this issue

Dimensional Fund Advisors
Pacer ETFs
Tabula Investment Management


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