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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).

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: Boost ETP is an independent ETP issuer.This article was written by Viktor Nossek, our Head of Research. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.This communication has been provided by Boost ETP LLP which is an appointed representative of Mirabella Financial Services LLP which is authorised and regulated by the Financial Conduct Authority.