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PRESS ROOM

Global AUM in Short & Leveraged ETPs at record $63bn as investors reposition bullishly in equities and bearishly in bonds

Wednesday 08th July '15

  • The AUM of Short & Leveraged (S&L) ETPs reached a record $63 billion at the end of June 2015, a 2% rise YTD. The growth was driven by S&L investors globally repositioning themselves bullishly in equities and bearishly in debt
  • S&L Equity ETPs saw $0.8 billion of net inflows as investors increased long positions in European and Japanese equities, while positions (long and short) in US equities were cut
  • A widely anticipated interest rate hike by the Fed coupled with heightened uncertainty surrounding Greece triggered the build-up of short positions in US Treasuries and Bunds. Cumulative inflows into short ETPs tracking debt globally rose to $980 million this year
  • S&L Investor sentiment in commodities lacked conviction following volatile and sideways moving oil prices since February 2015. ETPs tracking crude oil saw outflows in both long and short positions
  • Boost ETPs also continue to grow in popularity as AUM reached US$ 383 million and a new record in monthly turnover of $ 1.1 billion was achieved in.

London, 08 July 2015: WisdomTree, an Exchange Traded Fund (“ETF”) and exchange traded product (“ETP”) sponsor, and specialist in short & leverage (“S&L”) ETPs through the Boost ETP product range, is proud to announce the release of the Boost, A WisdomTree Company, Short & Leveraged ETFs/ETPs Global Flows Report for June 2015.

The report highlights a record AUM figure of $63 billion for S&L ETPs at the end of June, which is up 2% YTD. The report demonstrates that globally investors continue to increase their usage of S&L ETPs.
Investors in S&L ETPs can express bullish as well as bearish sentiment by investing in either a Short or Leveraged ETP. Since S&L ETPs tend to be held for shorter periods and used more for tactical positioning, AUM and flows data for S&L ETPs can provide valuable insight into the market sentiment of a relatively sophisticated set of investors. The Boost Short & Leveraged ETFs/ETPs Global Flows Report highlights the key flows and trends in S&L ETPs across all asset classes and geographies.

Viktor Nossek, Director of Research at WisdomTree Europe commented:

“June saw investors in Short & Leveraged ETPs reposition bullishly in equities and bearishly in bonds. A strong bullish conviction towards Japanese and European equity markets was evident in the building up of long positions and unwinding of short positions in ETPs tracking them. At the same time, S&L investors cut their US equity exposure by unwinding some of their long and short positions.

The bullish repositioning in equity markets outside the US resulted in inflows of $0.8 billion in S&L equity ETPs globally. By contrast, sentiment in fixed income soured, helped not least by the uncertainty of Greece’s membership in the EMU and rising rates expectations in the US as the Fed signalled its readiness to raise the policy rate before the end of this year. S&L Investors increased their short positions in US and German government bonds as a result, helping this year’s cumulative inflows into short ETPs tracking debt globally to peak to $980 million. Where investors lacked conviction was crude oil, underpinned by a directionless but volatile moving oil price that compelled investors to cut back on both their bullish and bearish positions in June.

The introduction of Boosts range of 3x short and 3x leverage ETPs was a first in the UK in December 2012,in Italy in October 2013 and within Germany at the end of 2014, and are proving to be a useful tool for investors to hedge risk or express a view with less capital.”

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. Please see the disclaimer for a full description of the risk involved with ETP’s.

Today, S&L ETPs cover all major assets classes and geographies. In terms of asset allocation at the end of June, equity ETPs are the most popular with 6% of total AUM ($43.2 billion), followed by debt (15%, $9.6 billion) and commodities (9%, $5.8 billion). In equities, most of the AUM is focused on US large cap and US small cap equities ($16 billion), US sector ETPs ($6.9 billion) and European equities ($6.7 billion). In Europe, broad European indices are the most popular ($2.8 billion in AUM), followed by Germany ($1.5 billion), Italy ($571 million) and France ($515 million). In debt, most of the AUM is in US government debt ($6.1 billion), German government debt ($1.4 billion), Italian ($308 million) and European-region focused ($300 million) government debt. In commodities, oil is the most popular ($3 billion in AUM), followed by natural gas ($1.1 billion), gold ($693 million) and silver ($683 million).

Investors are increasing their use of S&L ETPs for a variety of reasons. There is wider product availability, greater product knowledge from improved educational resources, and increased availability of hedging tools and leveraged instruments. There is also a move towards independent, transparent and exchange traded instruments such as ETFs and ETPs. As a result of this increased usage and interest in S&L ETPs, Boost issues the Global Short & Leverage ETF / ETP Report quarterly and have a Short & Leverage ETF / ETP Advisor Tool Kit, and other educational documents on the website, www.boostetp.com.

-END-

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 $62.3 billion in assets under management globally (as of 02 July 2015). 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 investors benefit from efficient products with liquidity, strong counterparty risk management and relatively low costs as well as the wealth of experience provided by Boost’s management and world class service providers 

• Transparency – Boost discloses all fees, collateral holdings and details on its website each day 

• Innovative and nimble - Boost aims to be a leader in innovation, as evidenced by the ETPs issued, and the product development and market research behind the products 

• 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

www.boostetp.com

Disclaimer

WisdomTree Europe Ltd is an appointed representative of Mirabella Financial Services LLP which is authorised and regulated by the Financial Conduct Authority. 

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, WisdomTree Europe Ltd 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. Within the United Kingdom, this document is only made available to professional clients and eligible counterparties as defined by the FCA. Under no circumstances should this document be forwarded to anyone in the United Kingdom who is not a professional client or eligible counterparty as defined by the FCA. 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 WisdomTree Europe Ltd 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.