Global short & leveraged ETF assets hit record $71.2bn, finds WisdomTree’s Boost

May 19th, 2016 | By | Category: Alternatives / Multi-Asset

Assets under management in short & leverage (S&L) exchange traded products globally hit a record high of $71bn at the end of March, according to BOOST ETP’s most recent Short & Leverage (S&L) ETFs/ETPs Global Flows Report.

Global short & leverage ETPs reach $71.2bn in AUM, finds WisdomTree

According to BOOST ETP, AUM of S&L ETPs at the end of March reached a new record high of $71bn, up 4.9% since the start of the year.

The assets, which are up 4.9% since the start of the year, were driven by global meltdown fears triggering significant bearish repositioning by S&L investors.

S&L ETPs reveal a broader range of sentiment than flows or AUM data for mutual funds and other ETPs due to the directional exposure and degree of leverage adopted by investors. Additionally, as S&L ETPs are generally used for short term tactical positioning, they may provide valuable insight into the market sentiment of a relatively sophisticated set of investors.

Nick Leung, Research Analyst at WisdomTree Europe, commented in a press release: “Heightened volatility pushed S&L AUM to new record highs of $71bn…. Sentiment in global equities collapsed amidst an increasingly downbeat global growth outlook as S&L investors redeemed $4.3bn from long ETPs and poured $3.1bn into short ETPs tracking major equity benchmarks. US and South Korean equities suffered the heaviest punishment, with S&L investors responding to deepening concerns of a Chinese hard-landing and fresh fears of a European banking collapse with stark reversals in positioning. At the same time, the zero and sub-zero rates environment has also added to dampened global growth outlook; the BoJ’s negative deposit rate introduction accelerating risk-off positioning in S&L Japanese equity ETPs with $720m outflows from long ETPs and $590m into short ETPs.

“By contrast, S&L fixed income investors were buoyed by the ECB’s expanded March stimulus package, with falling Bund yields also compelling S&L investors to increase their short exposure to German debt…. In commodities, the rebound in oil prices from January lows encouraged opportunistic repositioning by S&L investors with $400m outflows from long ETPs and $155m inflows into short ETPs tracking crude oil.”

S&L ETPs are currently available covering all major assets classes and geographies. In terms of asset allocation, as of the end of March, equity ETPs account for $52.6bn (72%) of total AUM, followed by debt with $7.0bn (12%) and commodities with $6.8bn (9%). Within equities, US large and small cap exposures account for $19.0bn, Asia-Pacific equities for $15.9bn, and European equities for $5.7bn.

Within debt, most of the AUM follow US government debt ($3.6bn), German government debt ($1.5bn), Italian ($254m) and European-region focused ($216m) government debt. In commodities, oil ETPs contain the most AUM ($4.4bn), followed by gold ($705m), natural gas ($637m) and silver ($623m).

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