Short & Leverage Report: August Volatility Drives Global AUM in Short & Leveraged ETPs to Record High $70bn
Wednesday 14th October '15
- Heightened volatility in August was a key catalyst for driving up AUM in short & leveraged (S&L) ETPs. AUM reached a record $70 billion at the end of September, a 14% rise YTD.
- S&L Equity ETPs saw substantial inflows with investors pouring over $3.7 billion last month into ETPs tracking US, Japanese and European equities.
- Meanwhile, S&L’s investors’ bearish positions in US debt reversed following the Fed’s delay in hiking interest rates.
- YTD inflows into oil S&L ETPs of over $3 billion drove the rise of AUM in commodity ETPs as investors continue to reposition around volatility.
- AUM and trading volumes in Boost ETPs continue to grow with AUM hitting over $500 million in late August.
London, 14 October 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 Short & Leveraged ETFs/ETPs Global Flows Report for September 2015. The report reveals the AUM of S&L ETPs at the end of September is a record $70 billion, up 14% YTD. The report demonstrates that investors globally 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 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.
In terms of asset allocation at the end of September, equity ETPs are the most popular with 72% of total AUM ($50.7 billion), followed by debt (12%, $8.7 billion) and commodities (9%, $6.1 billion). In equities, most of the AUM is focused on US large cap and US small cap equities ($18.5 billion), Asia-Pacific equities ($13.1 billion) and European equities ($6.9 billion). In Europe, broad European indices are the most popular ($2.7 billion in AUM), followed by Germany ($1.7 billion), Italy ($642 million) and France ($541 million). In debt, most of the AUM is in US government debt ($5.2 billion), German government debt ($1.5 billion), and Italian ($266 million) and European-region focused ($263 million) government debt. In commodities, oil is the most popular ($3.3 billion in AUM), followed by natural gas ($936 million), gold ($737 million) and silver ($594 million).
Viktor Nossek, Director of Research for WisdomTree Europe commented:
“September was a strong month for short & leveraged ETPs as investors took advantage of heightened volatility to position opportunistically or hedge their exposures.
Of particular note were the inflows of over $3.7 billion into S&L ETPs tracking US, Japanese and European equities last month. S&L investor sentiment towards US equities was clearly mixed as evident in the build-up of both long and short positions. This was also the case for Europe, with inflows into both long and short ETPs to the tune of $326 million. By contrast, there was bullish sentiment with regards to Japanese equities as S&L investors poured into long positions, bringing inflows over the past 12 months to over $7.3 billion. Within fixed income, S&L investors’ bearish positions reversed in September following the Fed’s decision to not hike interest rates in September. Investors took a more bearish stance on German bunds however, with falling bund yields compelling investors to position bearishly. Similarly, investors were bearish towards crude oil with S&L activity in oil YTD helping to drive up AUM of commodity ETPs to $6 billion.”
The introduction of Boost’s range of 3x short and 3x leverage ETPs was a first in the UK in December 2012 and a first in Italy in October 2013, 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. As a result of this increased usage and interest in S&L ETPs, BOOST recently launched a monthly Global Short & Leverage ETF / ETP Report and a Short & Leverage ETF / ETP Advisor Tool Kit.
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 (as of 10 October 2015). For more information, please visit www.wisdomtree.com.
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