Europe’s first range of 3x Leverage Fixed Income ETPs listed…
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Nik Bienkowski, Co CEO of WisdomTree Europe
Italy’s first ever BTP 10Y, 10Y US Treasuries and Bund 10Y 3x leverage ETPs
BOOST’s Short and Leverage ETPs approx. 28% of ETP & ETC market share in Italy (1)
Demand for S&L products continues to grow, with Boost ETP AUM growth of almost 300% over the past 12 months, reaching $165m on 31 December 2014 (2)
WisdomTree Europe, an exchange traded fund (“ETF”) and exchange traded product (“ETP”) sponsor is proud to announce that it has listed Europe’s first ever range of 3x leverage fixed income ETPs on Borsa Italiana.
BOOST’s 3x leverage fixed income ETP’s listed on Borsa Italiana are:
It comes on the back of BOOST’s recent launch in Italy of 3x Fixed Income short ETPs based on BTP 10Y, 10Y US Treasuries. This now completes the fixed income toolkit, enabling investors to express views on the direction of interest rates moves.
The new ETPs will track indices giving exposure to the returns from holding 10yr US Treasury, BTP 10Y (Italian Government) futures and 10yr Bund (German Government) futures. With global AUM of US$6.5 billion (3), S&L debt ETPs tracking US Treasuries represent the overwhelming majority, or 75%, of S&L debt ETPs globally. German and Italian government debt are the most popular S&L European debt ETPs, with US$1.1 billion and US$239 million in AUM as at 30 November 2014, respectively.
Even in the current low interest rate environment, demand for long exposure to Fixed Income is expected in volatile equity and commodities markets and for investors to express views on the timing and magnitude of expected rates changes.
The three new fixed income ETPs are designed to return 3x the daily movement of the relevant benchmark index. For example, if the BNP Paribas Long Term BTP Future Index rises by 1% on a day, then “3BTL” will rise by 3% on that day (less fees and adjustments). Conversely, if the BNP Paribas Long Term BTP Future Index falls by 1% on a day, then “3BTL” will fall by 3% on that day.
Recently, as volatility in the markets has risen, so too has the demand for S&L ETPs. Over the past 12 months, BOOST ETP’s AUM increased 293% to $165m and monthly exchange trading volumes increased by approximately 600% to $350m (to December 2014)3. Along with this growth, BOOST has taken approx. 28% of the ETP & ETC market in Italy over the past 14 months.
BOOST’s S&L ETP platform now covers the world’s major asset classes, which include equities, fixed income, currencies, and commodities. This brings BOOST ETP’s product range to a total of 95 listings on Borsa Italiana, the London Stock Exchange, and Germany’s Xetra.
Nik Bienkowski, Co CEO of WisdomTree Europe commented: “We believe that 3x leverage Fixed Income ETPs are very useful additions to Italy’s ETP market and complete the existing Boost range of 3x short Fixed Income ETPs launched back in August 2014. This will now enable fixed investors to express their views on either direction of sovereign bond price changes. These investment products have not been available until now. Boost now offers S&L ETPs covering equities, fixed income, FX and commodities. In 2014, exchange volumes increased by 600% to more than $350 million per month”.
Viktor Nossek, Director of Research at WisdomTree Europe, commented: “The decision by the ECB late last year to broaden its asset purchase plan by including government bonds has helped suppress long dated bond yields. This coming at a time just when uncertainty underpinned by rising deflation risks in the Eurozone threatened to undermine the stability of indebted economies, most notably that of Italy. While nominal bond yields there, as well as in Germany have reached record lows, in real, inflation adjusted terms they remain positive and close to historic trend. Hence, the potential for further yield compression as the ECB is looking to shrink the real rate of interest, opens up an opportunity for investors to position bullishly in BTPs and Bunds.”
1) Source: Borsa Italiana, December 2014
2) Source: Boost ETP, A WisdomTree Company
3) Source: Bloomberg and Boost ETP, A WisdomTree Company Short & Leveraged ETFs/ETPs Global Flows Report, 30 November 2014