WisdomTree has expanded its tactical ETP range with the launch of four inverse and leveraged products targeting specific sectors of the European equity market.
Alexis Marinof, Head of Europe, WisdomTree.
Two of the ETPs focus on travel & leisure stocks, providing leveraged (+200%) or inverse leveraged (-200%) exposure to the daily performance of this sector.
The other two products include a leveraged (+200%) ETP linked to the daily performance of Europe’s automobile industry and an inverse leveraged (-200%) ETP tracking oil & gas companies.
The ETPs’ underlying references are “supersector” subindices of the Stoxx Europe 600 which comprises large, mid, and small-cap stocks across 17 developed market countries in Europe: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.
The separation of stocks into their relevant subindices is based upon FTSE Russell’s Industry Classification Benchmark (ICB) which groups companies according to their primary revenue sources.
Constituents are weighted by float-adjusted market capitalization while capping the weight of stocks with low liquidity.
The new ETPs have been rolled out across Europe, including listings on London Stock Exchange in pound sterling as well as on Xetra and Borsa Italiana in euros.
WisdomTree STOXX Europe Travel & Leisure 2x Daily Leveraged (2TRV); expense ratio 0.80%
WisdomTree STOXX Europe Travel & Leisure 2x Daily Short (2STR); 0.85%
WisdomTree STOXX Europe Automobiles 2x Daily Leveraged (2CAR); 0.80%
WisdomTree STOXX Europe Oil & Gas 2x Daily Short (2OIG); 0.85%
Alexis Marinof, Head of Europe, WisdomTree, said: “As the European leader in inverse and leveraged ETPs, we remain committed to providing investors with the broadest range of tactical trading tools available on the market. These launches complement our existing range of solutions and are specifically designed to help investors navigate dynamic financial markets and challenging economic climates. We will continue to take a thoughtful approach to product development and look at opportunities to deliver the exposures investors want in their portfolios.”
Pierre Debru, Head of Quantitative Research & Multi-Asset Solutions, Europe, WisdomTree, added: “Investors frequently look for opportunities to express high conviction views on markets and require robust tools to be able to manage their portfolio exposures. Whether investors are looking to magnify daily returns through positive or inverse leverage, taking hedging positions, or seeking to deploy more sophisticated strategies, the ability to trade inverse and leveraged ETPs quickly and efficiently makes them a preferred trading tool. Our new launches give investors an even wider suite of products to choose from to express their investment views on the post-COVID economic recovery and the inevitable energy transition megatrend.”
Inverse and leveraged ETPs provide an efficient means for sophisticated traders to obtain tactical exposures; however, they tend to decay in value if held for an extended period of time, potentially leading to significant losses, especially in volatile but range-bound markets. WisdomTree recommends a holding period of just one day for all of its inverse and leveraged ETPs.