Global short and leveraged exchange-traded product (ETP) assets rose by $4.4bn in the first four months of 2013, to $48.5bn, according to data released by Boost ETP. The growth in assets is a reflection, in part, of the increased breadth and depth of products available, improved education and understanding, and a general move by investors towards more transparent, exchange-traded products.
‘ Leveraged and Inverse ETFs ’
Despite price gains across a range of commodities last week, many commodity investors remain deeply cautious and indeed bearish. This has led many to allocate capital to specialist short exchange-traded products (ETPs), which last week enjoyed one of their best ever weeks on record, in terms of asset flows. London-headquartered ETF Securities saw particularly strong inflows into its gold and copper-based products.
ETF Securities believes that the commodity super-cycle is far from over, despite recent falls in commodity prices which have wiped billions off the firm’s assets under management. The London-headquartered exchange-traded product (ETP) provider asserts that the main fundamental drivers of the super-cycle are still in force and that recent commodity price weaknesses are more related to business-cycle fluctuations and short-term commodity-specific supply increases than a change in structural fundamentals.
Expectations of a recovery for gold are mixed, according to a survey of Barclays Stockbrokers clients. Just under a third of respondents think the value of gold will bounce back above $1,500/oz in the next six months, while more than a quarter expect it to drop below $1,300/oz. The broker also revealed that the top five traded exchange-traded commodities (ETCs) in the week following the metal’s dramatic fall were all related to precious metals, comprising three gold ETCs – led by ETF Securities’ ETFS Physical Gold (PHAU) – and two silver ETCs.
Exchange-traded funds (ETFs) and related exchange-traded products (ETPs) linked to the inverse performance of the gold price have surged over the past few weeks as the precious metal has tumbled following downgrades from a number of prominent research houses. One of the best performing ETPs in this space is the London-listed Boost Gold 3x Short Daily ETP (3GOS), which provides triple short exposure to the gold price. It is up 48.5% month-to-date on the back of the dramatic sell-off.
Direxion, a leading US-based provider of alternative exchange-traded funds (ETFs), has launched two new leveraged equity ETFs on the NYSE Arca, the Direxion Daily Brazil Bull 3x Shares ETF (BRZU) and Direxion Daily South Korea Bull 3x Shares ETF (KORU).
The European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) recently published a warning about the dangers of investing in contracts for difference (CFDs), where losses can exceed an investor’s initial investment. The warning highlights the benefits of leveraged long and short exchange-traded products (ETPs), which provide an attractive, risk-controlled alternative to CFDs and spread betting.
Against a backdrop of core interest rate volatility, investors have been moving out of broad and long-term bond ETFs into products focused on shorter-maturity segments, in what Stephen Cohen of iShares calls a “duration rotation”. Several ETF-based strategies are available to investors to mitigate the impact of interest rate risk. One option is the iShares Barclays Euro Corporate Bond Interest Rate Hedged ETF (IRCP), which hedges against interest rate increases by shorting German bund futures.
Boost ETP, a leading provider of short and leveraged exchange-traded products (ETPs), has announced that its three-times leveraged long and short DAX products have been listed in sterling on the London Stock Exchange. The new GBP listings complement the products’ existing EUR listings, making them more accessible to UK investors, with tighter relative spreads. The listing follows a similar move last week, which saw the provider’s oil, gold and silver products also gain new GBP trading lines.
Fund managers are increasingly confident in the outlook for the dollar, according to the latest BofA Merrill Lynch Fund Manager Survey. This month registered the highest level of dollar bullishness in the survey’s history with a net 72% of respondents expecting the US currency to appreciate over the next year. The overwhelming bullishness for the dollar bodes well for exchange-traded funds offering long exposure to the currency, such as the Pimco US Dollar Short Maturity Source ETF (MINT).