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BOOST launches Europe’s first 3x Short Fixed Income ETPs on Borsa Italiana

Monday 04th August '14

  • Europe’s first range of 3x Short Fixed Income ETPs listed
  • Italy’s first ever BTP 10Y, 10Y US Treasuries and Bund 10Y 3x short ETPs
  • Demand for short exposure to Fixed Income expected to increase as rates rise 
  • A staggering 98% of Global AUM for short and leverage Fixed Income ETPs is in short ETPs (1)
  • BOOST’s Short and Leverage ETPs approx. 23% of ETP & ETC market share in Italy (2)
  • Global demand for S&L products continues to grow, with $60bn in AUM (June 2014) (1)

Milan, 04 August 2014: BOOST ETP, A WisdomTree Company and Europe’s award winning, specialist Short and Leverage (S&L) Exchange Traded Product (ETP) provider is proud to announce that it has listed Europe’s first ever range of 3x short fixed income ETPs on Borsa Italiana. 

BOOST’s 3x short fixed income ETP’s listed on Borsa Italiana are: 

Product Name ISIN Ticker
Boost BTP 10Y 3x Short Daily ETP IE00BKS8QM96 3BTS
Boost Bund 10Y 3x Short Daily ETP IE00BKS8QN04 3BUS
Boost US Treasuries 10Y 3x Short Daily ETP IE00BKS8QT65 3TYS

The new ETPs will track indices giving exposure to the returns from holding 10yr US Treasury, BTP 10Y (Italian Government) futures and 10yr Bund (German Government) futures. With AUM of US$7.9 billion, S&L debt ETPs tracking US Treasuries represent the overwhelming majority of S&L debt ETPs globally. German and Italian government debt are the most popular S&L European debt ETPs, with US$1.1 billion and US$216 million in AUM as at 30 June 2014, respectively. This year’s unwinding of QE in the US may have set a precedent for looming interest rate increases as the US economy continues to grow. Upbeat producer and consumer sentiment indicators for the US, combined with the Fed’s confident tone in justifying the trimming of QE by another $10 billion per month, has driven S&L investors to cut their long positions in Treasuries. The strong US jobs numbers for June furthermore support the view that interest rate increases may come sooner rather than later (1).

A strong bearish conviction in US, Italian and German government debt by S&L investors is evident in the disproportionate allocation into short positions, which represent 90%, 82% and 97% of AUM in S&L debt ETPs, respectively1.
The three new fixed income ETPs are designed to return minus 3x the daily movement of the relevant benchmark index. For example, if the BNP Paribas Long Term BTP Future Index falls by 1% on a day, then "3BTS" will rise by 3% on that day (less fees and adjustments). Conversely, if the BNP Paribas Long Term BTP Future Index rises by 1% on a day, then "3BTS" will fall by 3% on that day.

The ETPs trade and settle the same as equities and the advantages of 3x short ETPs include: 

  •  trebling daily returns of an investment (less fees and adjustments)
  • achieving the same exposure as a delta 1 position with 1/3rd of the capital employed
  • hedging existing positions in one simple trade
  • using in a long or short strategy to take advantage of any rises or falls in the market
  • using in a pairs trade to take advantage of undervalued assets
  • getting short the market/asset class quickly, efficiently and cheaply
  • enhancing a balanced portfolio by investing a small percentage tactically when short-term opportunities arise. 
BOOST’s S&L ETP platform now covers the world’s major asset classes, which include equities, fixed income and commodities.

This brings BOOST ETP’s product range to a total of 75 listings on Borsa Italiana, the London Stock Exchange, and Xetra.

Hector McNeil, Co-CEO of Boost ETP, A WisdomTree Company, commented:
"We believe that 3x short Fixed Income ETPs are exciting additions to Italy’s ETP market and introduce investment products which investors currently demand, but have not been available until now. Given the persistence of low interest rates which cannot fall much further and which the market expects to begin increasing in the near term, BOOST's 3x short ETPs should now give investors a valuable range of new tools which could enhance their investment returns or hedge against rising rates.

The addition of sovereign fixed income 3x short ETPs further enhances BOOST’s extensive multi asset ETP platform. Investors have had strong appetite for BOOST’s equity and commodity offerings and have been requesting fixed income products. BOOST are thought leaders in the short and leverage space, we will continue to innovate and add to our line up in response to investor needs."

Viktor Nossek, Head of Research at Boost ETP, A WisdomTree Company, commented:
“Growing bearishness of S&L investors on fixed income securities was evident in the US$1.1 billion in outflows from long positions, globally. Following these large redemptions, 92% of S&L fixed income ETPs’ AUM is now held in short positions, suggesting S&L investors remain overwhelmingly bearishly positioned.”

1) Source: Bloomberg e report Boost ETP Short & Leveraged Flussi Globali, Giugno 2014
2) Source: Borsa Italiana, giugno 2014