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SHORT & LEVERAGED ETP CENTRE

 

The WisdomTree Short & Leveraged (S&L) family of exchange traded products (ETPs) is one of the most comprehensive, innovative ranges of specialist S&L ETPs in the world. Our extensive Short & Leveraged platform offers a range of fully collateralised ETPs which are available in leverage factors between -5x and +5x. 

 

Through these award-winning products, investors can access a broad range of Equities, Commodities, Fixed Income, Alternatives and Currency strategies, meaning they can look to magnify returns on a daily basis through positive or inverse leverage, take a hedging position efficiently, and access alternative or unique strategies.

 

This specialised branch of ETPs, like other investment products offering short and leveraged exposure, requires a certain level of understanding and due diligence. In this centre, WisdomTree aims to provide an informative reference point for investors seeking to educate themselves about the opportunities and the risks presented by short and leveraged ETPs.

S&L HEATMAP

 

The WisdomTree S&L heatmap illustrates the daily movement of underlying benchmarks for all asset classes. 

 

MARKET NEWS

Continued skirmishes around the Arabian Peninsula lent support to oil prices in the past week

15 Jul 2019

A risk we have highlighted in “40 Years of fraught US-Iran tension in the Persian Gulf plays on” is now being crystallised with the flow of oil moving through the Strait of Hormuz – the world’s most important transit choke-point – being hampered. Added to that, tropical storm Barry is shuttering production in the US Gulf Coast, temporarily tightening US supply of oil. Despite fears of oil demand slowing amid little progress with US-China trade talks, constrained supply is continuing to support oil prices.

Tariff war continues to affect China’s equity markets

14 Jul 2019

Chinese stocks posted a loss last week as trade data underscored the impact of the tariff war. Export growth in June slowed 1.3% versus the prior year while imports fell more than expected by 7.3% over the prior year. The weak import data provided evidence of weaker domestic demand. June imports from the US dipped by 31.4% versus last year while US bound exports fell 7.8%. The latest trade data was a reflection of the latest tariff hike on US$200bn worth of Chinese good to 25% from 10% on May 10 due to the breakdown of trade talks in May.

The latest tweet by President Trump that China is “letting us down” by not increasing its purchases of American farm products as previously agreed by the two nations, provides further signs that little progress has been achieved since the G-20 meeting and the potential for further escalation remain high. Chinese producer prices over the year to June which were lower than expected and led to concerns about deflation. Meanwhile consumer prices rose by 2.7% over the prior year to June as a spike in food prices continues to drive consumer price growth trend higher. Milder reaction across Chinese equity and bond markets suggest investors continue to expect more stimulus by the Chinese government. Chinese GDP came in at 6.2% marking its lowest level since 1992. We believe this is in line with the government’s range bound target of 6- 6.5% outlined at the start of 2019 and were largely in line with estimates.

US Equity Markets’ mixed reaction.

14 Jul 2019

While the large cap indices represented by the S&P 500 Index and the Dow Jones Index attained record highs at 3,000 and 27,000 points respectively, the smaller cap Indices posted modest losses. Technology stocks represented by the Nasdaq Composite Index ended the week as the best year to data performer among US Indices posting 24% gains helped by gains among the chipmakers. The release of the Federal Reserve (Fed) chairman Jerome Powell’s testimony to the House Financial Services Committee was the main reason behind the strong performance US stocks. Powell was slated to tell the committee that “uncertainties surrounding trade tensions and concerns about the strength of the global economy continue to weigh on the US economic outlook. Bad news become the good news as it provided investors with further signs that the tentative resumption of US-China trade talks and string June payrolls won’t be enough to derail the Fed from additional rate cuts.
,br/> Expectations of a rate cut at the Fed’s July 30-31 Meeting continued to dominate market sentiment. However, it looks like the recent positive economic data has dampened the odds of a 50Bps rate cut to only 21% according to the CME Group. Economic data last week surprised on the upside. The labour department reported that the core (excluding food and energy) inflation rose 0.3% in June versus consensus expectations for a 0.2% gain. Data showed that producer price inflation and consumer price inflation also increased more than expected. Inflation is within control and the market is pricing in another 2 to 3 rate cuts within the next 6 months. Weekly jobless claims fell to a 5-decade low. On the flip side, Small business sentiment snapped its winning streak of gains over the past 5 months. The positive data sent the yield on the benchmark 10-year Treasury note to its highest level in a month.

RESOURCES & TOOLS

 

Browse through our educational content and simulator to understand more how Short & Leveraged products work, and what are the latest trends in the industry. 


SHORT & LEVERAGED ETP SMART FAQ

Ask us anything about Short & Leveraged ETPs through our S&L ETP Smart FAQ search.

ANIMATED INTRODUCTION TO SHORT & LEVERAGED ETPS

Watch our short, animated video for a quick introduction to S&L ETPs

GUIDE TO SHORT & LEVERAGED ETPS

Access our Guide to Short and Leveraged ETPs to understand more of the risks and benefits of S&L ETPs and how they may be used in a portfolio

S&L ETP MONTHLY FLOW

See the latest trends in the S&L ETP industry through our Monthly S&L ETP Flows report.

SHORT & LEVERAGED ETP SIMULATOR

Use our short & leveraged ETP simulator to model returns of a theoretical short & leveraged ETP across different market scenarios.

Important information

 

Short & Leveraged Exchange-Traded Products are only intended for investors who understand the risks involved in investing in a product with short and/or leveraged exposure and who intend to invest on a short-term basis. Any investment in short and/or leveraged products should be monitored on a regular basis (as frequently as daily) to ensure consistency with your investment strategy. You should understand that investments in short and/or leveraged exchange-traded products held for a period of longer than one day may not provide returns equivalent to the return from the relevant unleveraged investment multiplied by the relevant leverage factor. Potential losses in short and/or leveraged exchange-traded products may be magnified in comparison to investments that do not incorporate these strategies. Please refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in short and/or leveraged exchange-traded products. You should consult an independent investment adviser prior to making an investment in short and/or leveraged exchange-traded products in order to determine suitability to your circumstances.