S&L Investors Driving Equities and Commodity Flows, According To Q4 2015 BOOST ETP’s Industry Report
Monday 08th February '16
Viktor Nossek, Director of Research, WisdomTree Europe
• Global slowdown fears reinvigorate investor appetite in short and leveraged (S&L) Exchange Traded Products (ETP) as equities and commodities slump
• Global AUM of S&L ETPs continues to hold steady at near record highs of $68.3 billion or +14% for 2015
• S&L investors reallocated bullishly to US and European equities with conviction: creations in long ETPs coincided with redemptions in short ETPs tracking major benchmarks
• Flow into Japanese equities continued to strengthen with investors taking both long and short positions (total of $870m). S&L ETPs tracking Japanese equities now stand at over $5.2 billion.
• Downbeat sentiment on China’s outlook overwhelmed an upbeat Fed: S&L investors cut their bearish positions in US debt by $260 million accordingly.
• Contrarian bets from S&L investors in response to crashing commodity prices drove $725 millions of inflows into long ETPs tracking crude oil.
London, 3 Feb 2016: BOOST ETP, Europe’s award winning, specialist Short and Leverage (S&L) Exchange Traded Product (ETP) provider has released its quarterly December 2015 Short & Leveraged ETFs/ETPs Global Flows Report. According to the report, AUM of S&L ETPs at the end of December remains close to record highs at $68 billion, up 14% in 2015 as 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.
Nick Leung, Research Analyst at WisdomTree Europe, commented:
“December capped a record year for short & leveraged ETPs as investors took advantage of persistent volatility to position opportunistically or hedge their exposures.
The build-up of bearish sentiment on fixed income, following the much anticipated first Fed rate hike since 2006, was cut short by China’s slowdown fears amidst falling industrial confidence pressuring the RMB. This triggered redemptions of $260 million on short ETPs tracking US debt, accelerating the unwinding of short positions that had built up in the first half of 2015. At the same time, investors in S&L equity ETPs responded to the Fed rate hike by repositioning bullishly in US and European equities, as evident by contrasting flows in long and short ETPs.
Flows into Japanese equities continued to strengthen but the positioning was mixed, with an additional $870 million flowing into both long and short positions in equal measure last month. 2015 inflows into S&L ETPs tracking Japanese equities now stand at over $5.2 billion. S&L commodity ETPs also enjoyed substantial inflows of $710 million in December, underpinned by contrarian bets in response to the RMB devaluation raising geopolitical tensions in Asia.”
See the full report here: http://www.boostetp.com/Documents/12666/Monthly-Short-Leveraged-Flows-Report-2015-12.PDF
About S&L ETPs
Today S&L ETPs cover all major assets classes and geographies. In terms of asset allocation at the end of December, equity ETPs were the most popular with 72% of total AUM ($49.8 billion), followed by debt (12%, $8.0 billion) and commodities (9%, $6.0 billion). In equities, most of the AUM is focused on US large cap and US small cap equities ($17.5 billion), Asia-Pacific equities ($13.7 billion) and European equities ($5.9 billion). In Europe, broad European indices are the most popular ($2.3 billion in AUM), followed by Germany ($1.4 billion), Italy ($626 million) and France ($520 million). In debt, most of the AUM is in US government debt ($4.8 billion), German government debt ($1.4 billion), and Italian ($203 million) and European-region focused ($197 million) government debt. In commodities, oil is the most popular ($3.6 billion in AUM), followed by natural gas ($739 million), gold ($696 million) and silver ($539 million).
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