Assets Of Short/Leveraged ETPs Soar

May 21, 2013

Assets under management in these funds grew 10 percent in the first four months of the year.


[Another version of this article previously appeared on our sister site,]


Global short and leveraged exchange-traded products have seen assets under management rise 10 percent in the first four months of the year to $48.5 billion (€37.7 billion) as the global ETP market hits record highs and investors use ETPs for tactical plays.

Monthly traded volumes have also boosted the rise in AUM. ETP on-exchange traded volumes increased by 40 percent from $113 billion (€87.9 billion) to $160 billion (€124.4 billion) per month in the first four months.

According to data from Boost ETP, the uptick in short and leveraged ETPs is a result of the increased number of providers offering the products, availability of asset classes and indices and improved client understanding of how the ETPs work.

Nik Bienkowski, co-CEO of Boost ETP, said: “Continued inflows show that short and leverage ETPs are useful tools for investors, not least because they can be used to hedge portfolios or profit in falling markets. As equity indices continue to break medium-term or all-time highs, we have seen an increase in those investors wanting to go short the equity market.

Coincidentally, total U.S.-listed ETF assets—a figure that includes leverage and inverse funds as well as ETNs—also rose over the same period by 10 percent to $1.49 trillion from $1.35 trillion at the end of 2012. But, importantly, the Boost ETP data is global in scope and not confined to the United States.

The Boost Data

Data from the ETP provider also showed that, on average, each of the 700 or so short and long ETPs currently trading do so at just over three times their total AUM each month. This demonstrates that investors are using ETPs for short-term and tactical trading. On average, 3x short and leveraged ETPs are being held for approximately 3 days, 2x short and leveraged ETPs for eight days and 1x ETPs for 14 days.

It also concluded that investors favour short ETPs over long (leveraged) and of the $48.5 billion in AUM, 69 percent is in equities, 17 percent is in fixed income, 9 percent in commodities and 2 percent in foreign exchange.

However, another provider has also seen a rise in its short ETPs. Short gold products at ETF Securities reached a record high of $48 million in early May.

Martin Arnold, research director at ETF Securities, said: “Investors are very pessimistic about fold prices, and there are indications that rotation into cyclical assets is continuing as investors become more comfortable with the idea of the global recovery remaining on track.”

“Institutional investors have been comfortable with short products for some time, but we are seeing them use them to implement more tactical investment ideas,” added Arnold.



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