ETF Securities’ Short and Leveraged ETCs Exceed $1 bn in AUM

Sign up for our weekly Newsletter and receive the latest ETF and ETC news. Click here to register for your free copy

ETFS Leveraged Natural Gas and ETFS Leveraged Crude Oil have the highest AUM, curerently representing 27% and 19% respectively of the total AUM in ETF Securities’ short and leveraged ETCs. This is followed by ETFS Short Crude Oil and ETFS Short Copper which currently represent 10% and 7% respectively.

Commenting, Nik Bienkowski, Managing Partner of ETF Securities Marketing LLP, said:

“Overall, investors are appearing bullish as leveraged ETCs outnumber short ETCs, making up 70% of our short and leveraged AUM. This is in contrast to the same time last year, where our leveraged and short ETCs were more evenly split.

ETF Securities’ Short Oil (SOIL) was the most liquid ETC on the London Stock Exchange in 2008 around the time oil hit a high of $147/bl, which resulted in weekly trading of up to $600m ².

Passing the $1bn AUM mark for ETF Securities’ short and leveraged ETCs is a significant milestone for us. ETF Securities’ ETC platform is the most liquid in Europe and with the maturing of ETCs, investors have looked to our ETF Securities’ range of ETCs to develop and execute a variety of trading strategies using long, leveraged, short and forward ETCs.”

Short ETCs earn minus one times (-1x) the daily change in the index (before fees and interest). For example, if the underlying index falls by 2% in a day, a short ETC will increase by 2%: conversely a short ETC will decrease by 2% if the index increases by 2%. Until now, it has been difficult for investors to benefit from falling prices as to go short, investors would have had to borrow ETCs and then sell those ETCs in the market – both of which were difficult and relatively expensive . Additionally, shorting exposed investors to unlimited losses. Our short ETCs limit the maximum loss to the investors’ initial investment.

Leveraged ETCs allow investors to earn a positive return when the index is rising with 50% less capital. Leveraged ETCs earn two times (+2x) the daily change in the index (before fees and interest). For example, if the underlying index rises by 2% in a day, a Leveraged ETC will increase by 4%: conversely a leveraged ETC will decrease by 4% if the index decreases by 2%. In today’s market where it is increasingly difficult to obtain credit and margin, Our leveraged ETCs free up additional capital for investor’s to gain additional portfolio diversification.