WisdomTree

August Volatility Drives Global AUM in Short & Leveraged ETPs to Record High $70bn

WisdomTree, 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 release of the Boost Short & Leveraged ETFs/ETPs Global Flows Report for September 2015. The report reveals the AUM of S&L ETPs at the end of September is a record $70 billion, up 14% YTD. The report demonstrates that 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.

In terms of asset allocation at the end of September, equity ETPs are the most popular with 72% of total AUM ($50.7 billion), followed by debt (12%, $8.7 billion) and commodities (9%, $6.1 billion). In equities, most of the AUM is focused on US large cap and US small cap equities ($18.5 billion), Asia-Pacific equities ($13.1 billion) and European equities ($6.9 billion). In Europe, broad European indices are the most popular ($2.7 billion in AUM), followed by Germany ($1.7 billion), Italy ($642 million) and France ($541 million). In debt, most of the AUM is in US government debt ($5.2 billion), German government debt ($1.5 billion), and Italian ($266 million) and European-region focused ($263 million) government debt. In commodities, oil is the most popular ($3.3 billion in AUM), followed by natural gas ($936 million), gold ($737 million) and silver ($594 million).

Viktor Nossek, Director of Research for WisdomTree Europe commented:
“September was a strong month for short & leveraged ETPs as investors took advantage of heightened volatility to position opportunistically or hedge their exposures.
Of particular note were the inflows of over $3.7 billion into S&L ETPs tracking US, Japanese and European equities last month. S&L investor sentiment towards US equities was clearly mixed as evident in the build-up of both long and short positions. This was also the case for Europe, with inflows into both long and short ETPs to the tune of $326 million. By contrast, there was bullish sentiment with regards to Japanese equities as S&L investors poured into long positions, bringing inflows over the past 12 months to over $7.3 billion. Within fixed income, S&L investors’ bearish positions reversed in September following the Fed’s decision to not hike interest rates in September. Investors took a more bearish stance on German bunds however, with falling bund yields compelling investors to position bearishly. Similarly, investors were bearish towards crude oil with S&L activity in oil YTD helping to drive up AUM of commodity ETPs to $6 billion.”

The introduction of Boost’s range of 3x short and 3x leverage ETPs was a first in the UK in December 2012 and a first in Italy in October 2013, and it is proving to be a useful tool for investors to hedge risk or express a view with less capital.

Investors are increasingly using S&L ETPs for a variety of reasons. There is wider product availability, greater product knowledge from improved educational resources, and increased demand for hedging tools and leveraged instruments available. There is also a move towards independent, transparent and exchange traded instruments such as ETFs and ETPs. As a result of this increased usage and interest in S&L ETPs, BOOST recently launched a monthly Global Short & Leverage ETF / ETP Report and a Short & Leverage ETF / ETP Advisor Tool Kit.

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