WisdomTree Issues Its First Unleveraged Exchange Traded Commodities on London Stock Exchange
Tuesday 14th April '15
• Boost, A WisdomTree Company, lists four new unleveraged ETCs on the LSE
• The new ETCs track the most popular commodities of oil, gold and natural gas
• With commodity prices having trended down in recent times, there has been renewed interest in ETCs from investors with longer term horizons
• Boost offers the most liquid oil, natural gas and gold short & leveraged ETC platform in Europe, as the Boost platform’s monthly notional turnover exceeded $2.2bn and total AUM rose above $300m for the first time
London, 14 April 2015: WisdomTree Europe, 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 launch its first unleveraged Exchange Traded Commodities (“ETCs”) on London Stock Exchange:
Hector McNeil, Co-CEO of WisdomTree Europe, had this to say about the launch:
“On the back of record demand for oil ETCs, Boost is offering four new unleveraged oil ETCs, two of which are tracking the world’s two most liquid oil benchmarks of WTI and Brent. The London Stock Exchange was the home of Europe’s first oil ETCs and unleveraged ETCs trade three times more on the LSE than any other European exchange.
The record $324m of AUM and $754m in monthly volumes with trading volumes exceeding $2.2bn is clear evidence of investors’ appetite for Boost’s unique product offering. The introduction of the four new unleveraged ETCs reinforces Boost’s commitment to UK investors, and Boost hopes to attract new investors as well as cater to existing investors with cost-effective ETCs for longer term investments. ”
Viktor Nossek, Director of Research for WisdomTree Europe, had this to comment:
“The path of US natural gas and crude oil prices ahead is likely to be volatile in the short term against an uncertain global macro backdrop. In the longer term, commodities may regain strength as uncertainty in the Middle East ebbs, emerging markets deleverage, and early signs of Europe recovering translate into a more upbeat sentiment on energy commodities. Boost’s new unleveraged ETCs offer investors the chance to take a long term view that the price of these commodities will rise.”
For the first time, Boost is launching unleveraged ETCs tracking the most popular commodities. There are $2bn invested in unleveraged oil ETCs in Europe and $23bn in unleveraged gold ETCs and ETFs . With gold prices having fallen from nearly $1,900/oz in September 2011 to $1,200/oz today, and with Brent oil having fallen from $115/bl in June 2014 to $58/bl today , commodities are returning to investors’ radar screens. While Short and Leveraged ETCs are used by investors for short term strategies, unleveraged ETCs may be considered for short term as well as longer term strategies. With commodity prices off their highs as well as the potential diversification properties of commodities in a portfolio, unleveraged ETCs are a useful addition to Boost’s ETC platform.
The launch comes on the back of increasing AUM and volumes for Boost with particular demand for ETCs tracking oil. Boost WTI Oil 3x Leverage Daily ETP (“3OIL”) reached AUM of $130m with YTD net inflows of $98m, and monthly turnover exceeding $300m or over $900m in notional terms. Boost’s notional trading volumes for short & leveraged ETCs exceeded those of every other issuer in oil (by 35%) but also in gold (by 16%) and in natural gas (by 140%). Boost’s platform has been on a clear growth trend with monthly turnover more than tripling over the past 6 months. Boost reached a record $324m of AUM in March alongside monthly trading volumes hitting a new record of $754m, or more than $2.2bn in notional volume.
Boost’s ETCs track NASDAQ commodity indices which reflect an investment in front-month contracts which are generally the most liquid futures contracts for any commodity. Boost is listing two oil ETCs tracking WTI oil and Brent oil, which provide access to the world’s two most traded oil benchmarks being West Texas Intermediate and Brent Crude. By offering investors both oil benchmarks, Boost investors can allocate strategically as well as tactically to oil depending on specific factors affecting the relevant benchmark.
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 Boost platform. Boost now offers 57 ETPs & ETCs across four exchanges, covering the world’s major benchmarks in equities, commodities, fixed income and currencies.
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 $58.4 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 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
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.
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