ETF Securities Launches First Short & Leverage China ETFs

ETF Securities has launched two 3x short and leverage exchange traded products (ETPs) tracking the FTSE China 50 Index, the first ETPs in Europe to offer such leveraged exposure and expanding the ways in which foreign investors can access China.

The two new ETPs will be listed on the Borsa Italiana today (3 November) and track an index of 50 large and liquid stocks listed and traded in Hong Kong.

The ETFS 3x Daily Long FTSE China 50 (CH3L) and the ETFS 3x Daily Short FTSE China 50 (CH3S) aim to deliver three times the positive or negative performance of the underlying index. They have delivered negative returns of 35.2 percent and 10.5 percent year to date respectively.

Top holdings in the index are financials at over 52 percent – like Tencent Holdings and China Construction Bank – while telecommunications and oil and gas are around 22 percent of the fund.

Massimo Siano, head of Southern Europe, ETF Securities (UK), said in a statement that the launch is due to strong demand from Italian clients.

"Investors’ appetite for Chinese equity exposure continues to grow in reaction to heightened volatility and we believe these products provide opportunities to trade on a short term basis with a competitive total cost of ownership," he said.

The ETPs’ structure is synthetic – fully funded collateralised swaps (learn more about how these work here). Annual fees amount to 0.98 percent per year.

European-listed short and leverage ETPs and ETFs are already available across commodities, various equity markets and bonds, but this is a first for Europe in offering these funds for Chinese equities.

The provider is also launching 18 3x short and leverage commodity-focused exchange traded products in Italy today, from coffee to silver and wheat, all with fees of 0.98 percent.