Boost Short & Leveraged ETPs Reach Record $503m AUM as Market Volatility Spikes
Tuesday 08th September '15
Nik Bienkowski, Co-CEO
- AUM in Boost ETP, A WisdomTree Company, reached a record $503m at the end of August following a week of record trading volumes in short & leveraged ETPs.
- Boost’s AUM has more than tripled in the past year from $130m to $503m. Trading volumes have also been on the increase, topping $3bn in notional turnover in August.
- Boost ETPs emerged again as the tool of choice for investors as volatility spiked, with Boost’s oil ETPs taking 64% of Europe’s S&L oil ETP trading last week, and 58% of trading in commodity S&L ETPs overall.
- Investors had over 82% of oil AUM in (long) leveraged ETCs just before the price of oil rebounded 27% over the last 3 days in August , with the price of Boost’s 3OIL rising 96% and 3OIL AUM reaching a record $216m.
London, 08 September 2015: WisdomTree Europe, an exchange traded fund (“ETF”) and exchange traded product (“ETP”) sponsor, and specialist in short and leverage (S&L) ETPs through the Boost ETP product range, is proud to announce a record $503m of AUM as of 31st of August following a week of record trading volumes.
European S&L ETPs in general saw record turnovers recently, led by S&L oil ETPs which experienced turnovers of $266m. Boost ETPs emerged again as the tool of choice for investors, with Boost’s oil ETPs contributing 64% of S&L oil trading in Europe, and 58% of trading in S&L commodity ETPs overall.
Boost also had the highest turnover in natural gas, gold and silver S&L ETPs. Over the last week of August, as WTI surged 29%, Boost Crude Oil 3x Leverage Daily ETP (3OIL) rose by 101% and AUM hit a record $216m.
The recent heightened volatility began as weaker-than-expected Chinese manufacturer sentiment data triggered a dramatic collapse on the Chinesestock market with global equities quickly following suit. The slump in manufacturer sentiment deeper into contractionary territory also triggered fresh concerns over the global excess in crude oil. However, with the EIA reporting lower-than-estimated US oil production and with OPEC hinting at possible talks with producers, WTI rebounded sharply by 27% in only three days on the back of this news.
Nik Bienkowski, Co-CEO of WisdomTree Europe had this to comment:
“Reaching the $500m AUM mark signifies investors’ increased usage of the Boost platform for trading and hedging needs. The last week or so was a prime example of the usefulness of S&L oil ETPs in a volatile market. Most of the action was in oil. Boost’s 3x Leverage Oil (3OIL) and 3x Short Oil (3OIS) ETCs continued to demonstrate the best liquidity, with twice the turnover of any other S&L oil ETP, as well as the most favourable spreads. Our investors have been positioning bullishly in oil with positions being added as oil declined in prior sessions. Investors had over 82% of oil AUM in (long) leveraged ETCs just before the price of oil rebounded 27% over the last 3 days of August, with the price of Boost’s 3OIL rising 96% and 3OIL AUM reaching a record $216m”.
“Boost’s total AUM more than tripled in the past year from $130m to $503m. Trading volumes have also been on the increase, topping $3bn in notional turnover in August having risen from just over $500m the same time last year. This trend reflects the confidence of investors in Boost’s structure, the market-leading liquidity of the ETPs, a better understanding of the capital-efficiency short & leveraged ETPs offer, and a platform of many leading benchmarks in equities, commodities, FX and fixed income”.
Boost offers the largest product choice on oil, with leverage factors up to 3x as well as unleveraged oil ETCs:
Boost’s growth has been driven by product innovation and a focus on proactively educating investors about the benefits and risks of using S&L ETPs. The many different investment strategies that investors can employ also add to the usefulness of the product. Boost now offers ETPs covering all the major indices across equities, commodities, fixed income and currencies. In total, Boost ETP’s product range totals of 118 listings on Borsa Italiana, the London Stock Exchange, and Germany’s Xetra.
About WisdomTree Europe Ltd.
WisdomTree Investments, Inc., through its subsidiaries in the U.S. and Europe, including WisdomTree Europe Ltd. based in London, is an exchange-traded fund (“ETF”) and exchange-traded product (“ETP”) sponsor and asset manager. WisdomTree offers products covering equities, fixed income, currencies, commodities and alternative strategies. Through WisdomTree Europe Ltd, it sponsors WisdomTree UCITS ETFs and Boost short and leverage ETPs. WisdomTree currently has approximately $57 billion in assets under management globally. For more information, please visit www.wisdomtree.com.
WisdomTree® is the marketing name for WisdomTree Investments, Inc. and its subsidiaries worldwide.
BOOST ETPs help expand the investment horizons of investors and allow them to execute a wide variety of strategies which include:
- Leverage the daily returns of an investment for the same capital as a non-leveraged trade
- Hedge existing positions in one simple trade
- Use a long or short strategy to take advantage of any short term rises or falls in the market, especially in a sideways trending market
- Pair trading to take advantage of undervalued assets
- Shorting the market efficiently and cheaply without having to arrange and finance complex stock borrowing positions
Similar to Exchange Traded Funds (ETFs), BOOST ETPs are liquid, accessible and simple. BOOST ETPs can be created and redeemed on a continuous basis by market makers, matching the tremendous liquidity of the underlying markets and can be traded by investors on a regulated exchange in the same way as any equity. BOOST ETPs provide accurate and transparent leveraged and short exposure to recognised benchmarks in a single trade. In addition, BOOST leveraged and short ETPs require no borrowing of stock or funds to gain the relevant exposure. BOOST ETPs are simply priced off transparent indices published by world class index providers.
BOOST ETPs are backed by robust risk management where (i) depending on the credit rating of BOOST’s counterparties, the mix of sovereign bonds held in the posted collateral will increase, and (ii) no cash or collateral will be delivered by BOOST to a counterparty unless BOOST has received payment first.
BOOST ETP's key features include:
Independence - BOOST is independent from any investment bank, swap provider, market maker, trustee or custodian
- Best of breed – BOOST’s founders have over 25 years of experience in the ETP market. With this experience, plus the wealth of experience provided by BOOST’s world class service providers, investors are able to enjoy efficient products with liquidity, strong counterparty risk management and relatively low costs
- Transparency – BOOST discloses all fees, collateral holdings and details on its website each day
- Focused and specialised - BOOST's strategy differs from the existing ETP issuers by not focusing on being everything to everyone
- Educational - BOOST focuses on providing all the educational and thought leadership tools needed by investors
This communication has been provided by WisdomTree Europe Ltd which is an appointed representative of Mirabella Financial Services LLP which is authorised and regulated by the Financial Conduct Authority.
The products discussed in this document are issued by BOOST Issuer PLC (the “Issuer”) under a Prospectus approved by the Central Bank of Ireland as having been drawn up in accordance with the Directive 2003/71/EC. The Prospectus has been passported from Ireland into the United Kingdom and is available on the websites of the Central Bank of Ireland and the Issuer. Please read the Prospectus before you invest in any Exchange Traded Products (“ETPs”). Neither the Issuer nor BOOST ETP is acting for you in any way in relation to the investment to which this communication relates, or providing investment advice to you. The information is not an offer to buy or sell or solicitation of an offer to buy or sell any security or investment. You are advised to seek your own independent legal, investment and tax or other advice as you see fit.
The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. An investment in ETPs is dependent on the performance of the underlying index, less costs, but it is not expected to match that performance precisely. ETPs involve numerous risks including among others, general market risks relating to the relevant underlying index, credit risks on the provider of index swaps utilised in the ETP, exchange rate risks, interest rate risks, inflationary risks, liquidity risks and legal and regulatory risks.
ETPs offering daily leveraged or daily short exposures (“Leveraged ETPs”) are products which feature specific risks that prospective investors should understand before investing in them. Higher volatility of the underlying indices and holding periods longer than a day may have an adverse impact on the performance of Leveraged ETPs. As such, Leveraged ETPs are intended for financially sophisticated investors who wish to take a short term view on the underlying indices. As a consequence, BOOST ETP is not promoting or marketing BOOST ETPs to Retail Clients. Investors should refer to the section entitled "Risk Factors" and “Economic Overview of the ETP Securities” in the Prospectus for further details of these and other risks associated with an investment in Leveraged ETPs and consult their financial advisors as needed. This marketing information is intended for professional clients & sophisticated investors (as defined in the glossary of the FCA Handbook) only.
This marketing information is derived from information generally available to the public from sources believed to be reliable although BOOST ETP does not warrant the accuracy or completeness of such information. All registered trademarks referred to herein have been licensed for use. None of the products discussed above are sponsored, endorsed, sold or promoted by any registered trademark owner and such owners make no representation or warranty regarding the advisability on dealing in any of the ETPs.
 Source: WisdomTree Europe, Bloomberg as of August, 24th of August to 31st of August
 Source: WisdomTree Europe, Bloomberg as of August, 24th of August to 31st of August
 Source: WisdomTree Europe, Bloomberg as of 31st of August 2015
 Source: WisdomTree Europe, Bloomberg. WTI and 3OIL returns over the week ending Aug 31st
 Source: WisdomTree Europe, as of 31st of August
 Source: WisdomTree Europe, Bloomberg. Oil’s rebound from $/bl 38.6 on the 26th to $/bl 49.2 on August 31st
 Source: WisdomTree Europe, from close of Wednesday, August 26th to close of Monday, August 31st
 Source: WisdomTree Europe, total AUM between 30th of August 2014 and 31st of August 2015
 Source: WisdomTree Europe, Bloomberg as of August 31st 2015