Short & Leveraged ETFs/ETPs Global Flows Report - March 2014

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Global Assets Under Management

  • The total global AUM of Short & Leveraged (S&L) ETPs at the end of March 2014 is a record $62.1 billion, an increase of 1% from the end of February and an increase of 6.7% from the end of December 2013.
  • 48% of AUM is held in short products with leverage factors ranging between -1x to -3x. However the leverage factor with the most assets is +2x, with 39% of AUM. 52% of AUM is held in long products with leverage factors ranging between +1.5x to +3x.
  • In terms of S&L asset allocation, equity ETPs are the most popular with 71% of AUM, followed by debt with 17% and commodities with 7%. The remaining 5% is allocated equally between currency and alternative ETPs.
  • The largest individual S&L ETPs are short US treasuries and leveraged US equities.

Short & Leverage Equities: Global

  • Currently there is $43.8 billion of AUM held in S&L equity ETPs of which 66% is held in leveraged (long) ETPs.
  • S&L equity ETPs have seen $4.1 billion of inflows in March, a marked reversal from the $2.7 billion of outflows in February. Leading the inflows were US equity ETPs with $3.6 billion, $3.3 billion of which went into long ETPs.
  • AUM in S&L US equity ETPs as at the end of March was $18.4 billion, a 23% increase from February.

Short & Leverage Equities: Europe

  • Currently there is $6 billion of AUM held in S&L equity ETPs tracking Europe (as a region) or European countries of which 59% is held in leveraged ETPs and 41% is held in short ETPs.
  • European S&L equity ETPs recorded inflows of $205 million, equally split between long and short ETPs. The inflows are a sharp reversal from the $47 million of outflows in February.
  • S&L investors’ repositioning within European country-focused equity ETPs was mixed. Flows in Italian equity ETPs were bearish, with inflows of $56 million into short ETPs and $17 million of outflows from long ETPs. In contrast, flows in French and German equity ETPs were bullish, with inflows into long ETPs of $52 million and $39 million, respectively and outflows from short ETPs of $23 million and $18 million, respectively.
  • S&L investors’ repositioning within European region-focused equity ETPs was bearish, with $69 million of inflows into short ETPs and $24 million of outflows from long ETPs.
  • Underpinned by bullish conviction Russian equity ETPs stood out as recording the largest inflows of $64 million within Europe. Amidst tensions in Crimea driving a sell-off in Russian equities, the contrarian stance of S&L investors on Russia was evident in the $53 million of inflows into long ETPs and $11 million outflows from short ETPs.

Short & Leverage Debt: Global

  • Currently there is $10.6 billion of AUM in S&L debt ETPs, a decrease of 8% (from $11.4 billion of AUM in February).
  • Of the $10.6 billion of AUM in S&L debt ETPs, $9.4 billion is government debt and $844 million is corporate debt and preferred stock. Of the remaining AUM, $351 million is held as a blend of government and corporate debt, and $25million is held as alternative debt.
  • Globally, debt ETPs saw a total of $2.8 billion of outflows, $2.7 billion of which was from US debt. The US outflows are a result of S&L investors reducing their long positions by $2.9 billion, following a near equal increase in long positions by S&L investors during February.
  • As a result of the marked reversal of flows in US debt, S&L investors repositioned themselves with a strong bearish conviction. Globally, 98% of AUM in S&L debt ETPs is now held in short ETPs, up from 77% in February.

Short & Leverage Commodities: Global

  • The AUM of S&L commodity ETPs for the end of February is $4.1 billion, a decrease of 1% (from February’s AUM of 4.2 billion). 46% is currently held in long commodity ETPs.
  • S&L commodity ETPs are dominated by gold, silver, oil and natural gas, representing 89% of total AUM. Natural gas is the largest commodity ETP with over $1 billion in AUM, followed by silver with $940 million. The 3rd and 4th largest commodity ETPs by AUM is oil with $882 million and gold with $829 million, respectively.
  • The $48 million of inflows into long ETPs and $22 million of outflows from short ETPs suggest S&L investors have turned more bullish on silver. Currently 83% of AUM in S&L silver ETPs is comprised of long positions.
  • In oil ETPs S&L investors reduced their short positions by $23 million and moderately increased the long positions by $4 million. However, given that 75% of AUM in S&L oil ETPs comprises short positions, positioning in oil of S&L investors at the end of March remains overly bearish.
  • Within commodities, S&L investors have become most bearish on natural gas. Although the flows in natural gas ETPs during March were mixed, the $15 million of net inflows into short ETPs resulted in short ETPs now comprising 76% S&L AUM of natural gas, up from 73% in February.

Read the full report here.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , ETFs , Economy , International

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