Seeking Alpha
Research analyst, ETF investing
Profile| Send Message| ()  

Short & Leveraged ETFs/ETPs Global Report (30 June 2013)

Global Assets Under Management

  • The global Short & Leveraged (S&L) ETFs/ETPs industry grew further in June, with AUM up $1.7 billion or 3.5% to $50.9 billion (as of June 30th 2013)
  • YTD, global S&L ETF/ETP AUM is up $6.8 billion or 15%
  • 57% of AUM is held in short products with leverage factors ranging between -1x to -3x. However the leverage factor with the most assets is +2x, with 33% of AUM. 43% of AUM is held in long products with leverage factors ranging between +1.5x to +3x
  • In terms of S&L asset allocation, equity ETFs/ETPs are by far the most popular with 70% of AUM, followed by Debt with 18% and Commodities with 8%
  • The largest individual S&L ETFs/ETPs are short US treasuries and long US equities.

Short & Leverage Equities (Global)

  • Currently there is $35.4 billion of AUM held in S&L equity ETFs/ETPs of which 54% is held in long ETFs/ETPs and 46% is held in short ETFs/ETPs
  • S&L equity ETFs/ETPs experienced $3.5 billion of inflows in June, with US, Japan and South Korean equities as the major winners. YTD net flows total $7.2 billion
  • From January to May there was a decline in long equity positions and an increase in short equity positions. June saw a reversal of that trend with inflows of $4.1 billion into long equity ETFs/ETPs and outflows of $609 million from short equity ETFs/ETPs equal to $10.1 billion net long notional flows in June (after taking leverage factor into account).
  • June saw $246 million of outflows from short US equity ETFs/ETPs and inflows of $1.7 billion into long leveraged US equity ETFs/ETPs.
  • For the second consecutive month, Japanese equity ETFs/ETPs experienced over $400 million of inflows, almost entirely into long ETFs/ETPs. Since the start of 2013, Japanese S&L equity ETFs/ETPs experienced $1.3 billion of inflows, of which $1.2 billion have been into long leveraged ETFs/ETPs

Short & Leverage Equities (Europe)

  • Currently there is $4.1 billion of AUM held in S&L equity ETFs/ETPs tracking Europe or European countries of which 46% is held in long ETFs/ETPs and 54% is held in short ETFs/ETPs, with the largest positions being in German, French, Italian and broad European equities
  • S&L European equities experienced $74 million of net outflows in June. Italian and German equity S&L ETFs/ETPs experienced $67 million and $64 million of outflows respectively, while broad European equities and French equities gained $27 million and $22 million respectively
  • Investors are becoming more bullish in the major European equity markets, which experienced outflows out of short ETFs/ETPs and inflows into long ETFs/ETPs in June, reversing a bearish trend since the end of last year

Short & Leverage Debt (Global)

  • Currently there is $9.2 billion of AUM held in S&L debt ETFs/ETPs of which 2% is held in long debt ETFs/ETPs and 98% is held in short debt ETFs/ETPs
  • There were $1.2 billion of outflows from debt ETFs/ETPs in June, however YTD there were $881 million of net inflows
  • In line with investors' expectations of a rise in interest rates, $1 billion (90%) of the flows in June were attributable to outflows from long debt ETFs/ETPs.
  • US debt holds the largest amount of AUM, with German and European debt a distant second and third. The Lyxor Double Short Bund ETF is the largest S&L ETF / ETP in Europe
  • All the main debt ETF / ETP markets are net short, consistent with investor's expectation of an increase in rates.

Short & Leverage Commodities (Global)

  • Currently there is $3.9 billion of AUM held in S&L commodity ETFs/ETPs of which 51% is held in long commodity ETFs/ETPs and 49% is held in short commodity ETFs/ETPs
  • There were $117 million of outflows from commodity ETFs/ETPs in June, consisting of $47m inflows into long commodity ETFs/ETPs and $163 million of outflows from short commodity ETFs/ETPs. YTD, there have been $97 million of net inflows into S&L commodity ETFs/ETPs
  • The S&L commodity ETFs/ETPs with the most assets are those on gold, silver, oil and natural gas
  • Precious Metals: S&L gold ETFs/ETPs have seen the largest outflows, most of which was from short ETFs/ETPs, indicating some S&L investors may think gold could turn. Silver also saw $205m net long positioning in June
  • Energy: in a repeat of May, long oil ETFs/ETPs saw outflows while short oil ETFs/ETPs saw inflows in June, equivalent to net short positioning of $272 million. In contrast, Natural Gas saw inflows into long ETFs/ETPs and outflows from short ETFs/ETPs, amounting to a net long positioning of $350m
  • Silver has by far the largest net long position while copper has the largest net short position

Read the full Short & Leveraged ETFs/ETFs/ETPs Global Report (30 June 2013).

Source: Global Short And Leveraged ETF Assets Hit $51B, As Equity Investors Become Bullish