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Increased interest in Crude Oil and Short & Leveraged ETCs

ETF Securities Limited has seen strong inflows into long oil ETCs …

 

 

 

 

  This has corresponded with falling interest in ETFS Short Crude Oil (SOIL). The combined trend indicates that investors are becoming increasingly bullish on the oil price outlook. It also reflects that ETCs are becoming an increasingly important way for investors to gain oil exposure. The two most popular long Oil ETCs are ETFS Brent Oil (OILB) and ETFS Crude Oil (CRUD).

ETF Securities has also seen increasing net flows into its Short and Leveraged ETCs reflecting investors’ perging views on the short term outlook for commodities. Additionally, ETCs are increasingly being used for hedging commodity price risk, pair trades and building positions with less capital (in the case of the leveraged ETCs). Flows into Short & Leveraged ETCs (ex SOIL) are up 10% in the past month, with flows into Short ETCs (ex SOIL) up nearly 30%. Short ETCs have experienced three consecutive weeks of inflows as investors have continued to build short positions in more cyclically oriented commodities such as energy and industrial metals. Total assets under management (AUM) in short ETCs now stand at $123mn.

The top Leveraged and Short ETCs last week included ETFS Leveraged Zinc (LZIC) up 20%, ETFS Leveraged Wheat (LWEA) up 12%, while ETFS Short Gasoline (SGAS) was up 8% and ETFS Short Heating Oil (SWEA) was up 7%.

Short ETCs allow investors to earn a positive return even when the index is falling. 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% and vice versa.

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% and vice versa.

 

 

Source:ETFWorld.co.uk – ETFSecuritie

 

 

 

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