October volatility boosts AUM in Short & Leverage ETPs to $61 billion
Tuesday 18th November '14
- Rising volatility in October triggered $3 billion of inflows into Short & Leverage (S&L) ETPs tracking equities, $273 million inflows into debt and $319 million into commodities.
- The equity inflows were overwhelmingly bullish, underscored by S&L investors buying $4.3 billion in long ETPs, while selling $1.4 billion in short ETPs, globally.
- The sharp correction in energy commodities drove S&L investors to take contrarian positions and reinforce their bullish positioning on oil and natural gas. Net inflows totalled $318 million into oil and natural gas ETPs combined.
- At the end of October, the AUM of S&L ETPs stood at $61 billion. At the same time, BOOST reached a record $157 million AUM, with $285 million turnover for October, a new record high.
BOOST ETP, Europe’s award winning, specialist Short and Leverage (S&L) Exchange Traded Product (ETP) provider, is proud to announce the release of the BOOST Short & Leveraged ETFs/ETPs Global Flows Report for October 2014. The report reveals that $61 billion of AUM is held in S&L ETPs as at the end of October, an increase of 5.7% from the end of September and a rise of 5.5% from the end of December 2013.
Investors in S&L ETPs can express bullish as well as bearish sentiment by investing in either a leveraged or a short ETP. Thus the AUM of S&L ETPs can reveal a broader range of investor sentiment than flows or AUM data for mutual funds and other ETPs. 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 asset classes and geographies.
Today S&L ETPs cover all major assets classes and geographies. In terms of asset allocation at the end of October:
- Equity ETPs are the most popular with 69% of total AUM ($42.2 billion). The majority of AUM is focused on the US equities ($16.5 billion, excluding US sector equities of $6.1 billion) and European equities ($5.8 billion).
- Debt (17%, $10.3 billion) and commodities (6%, $3.8 billion) are the next largest single segments.
- AUM in currency and alternative ETPs comprised $4.8 billion.
- In Europe, broad European region indices (excluding sector focused ETPs) are the most popular ($2.2 billion in AUM).
- Germany ($1.2 billion) is the most popular single country.
- Italy ($642 million) and France ($530 million) are the next most popular single countries.
- In debt, most of the AUM is in US government debt ($7.4 billion).
- German government debt ($1.1 billion) and Italian government debt ($259 million) are the next largest segments.
- In commodities, natural gas ($1.1 billion of AUM), oil ($869 million of AUM), silver ($717 million of AUM) and gold ($698 million of AUM) are the most popular.
Viktor Nossek, Director of Research at WisdomTree Europe commented:
“Demand for S&L ETPs was also reflected in BOOST ETP’s AUM, which stood at $157 million at the end of October 2014. The introduction of BOOST’s range of 3x short and 3x leverage ETPs was a first in the UK in December 2012, a first in Italy in October 2013 and Germany in July 2014, and it is proving to be a useful tool for investors to hedge risk or express a view with less capital.”
Investors are increasingly using S&L ETPs for a variety of reasons. There is wider product availability, greater product knowledge from improved educational resources, and increased demand for hedging tools and leveraged instruments available. There is also a move towards independent, transparent and exchange traded instruments such as ETFs and ETPs.