– 8 new ETFs tracking 2x short and 2x leveraged versions of Europe’s main equity indices: Dow Jones EURO STOXX 50®, FTSE 100®, CAC 40® and DAX®
– 6 new ETF listings on the London Stock Exchange
– All ETFs issued as 3rd generation ETF model, with enhanced liquidity and reduced counterparty risk …
ETF Securities (ETFS), is launching Europe’s first complete platform of ETFs tracking double leveraged (2x) and double short (-2x) benchmarks based off Europe’s main equity indices: the Dow Jones EURO STOXX 50®, the FTSE 100®, the CAC 40® and the DAX®.
The eight new ETFs further enhance ETFS’ position as the leading global issuer of leveraged and short ETFs and ETCs. ETFS is already operating Europe’s largest platform of short (-1x) and double leveraged (2x) ETCs, with up to 66 of these ETCs listed on three European exchanges (the London Stock Exchange, Deutsche Borse and the Borsa Italiana). Short and leveraged ETCs have been highly successful with ETFS Short Crude Oil (SOIL) and ETFS Leveraged Crude Oil (LOIL) among the most traded ETFs/ETCs listed on the LSE, with the platform having already attracted over US$450m in Assets Under Management (AUM) since listing in March 2008.
The new ETFs track double leveraged (2x) and double short (-2x) equity indices, which provide 2x long or 2x short exposure to the daily % return of various benchmarks through a simple ETF, allowing investors to express directional views on major European equities. These ETFs are intended for investors who do not wish to use derivatives to set up short-term leveraged directional strategies. They can also be used to hedge a portfolio or to implement market neutral, long-short and pairs trading strategies. The products also allow traditional long managers, including UCITS funds, to use leveraged long and leveraged inverse strategies without the need to enter into complex and costly stock loan arrangements. In today’s market where it is increasingly difficult to obtain credit and margin, ETFs tracking short and leveraged equity indices free up additional capital for investor’s to gain additional portfolio diversification.
The new double leveraged (2x) and double short (-2x) ETFs complement the existing platform of 13 equity ETFs providing exposure to global and European themes such as Alternative Energy, Water, Agribusiness, Coal, Steel, Shipping and Nuclear Power. These ETFs were launched last year and have seen strong performance and growth as the economic cycle improves. ETC investors are using these commodity-equity ETFs to enhance their direct commodity strategies. The ETFs are now listed on five major European stock exchanges in dedicated ETF trading segments and available in three currencies (USD, EUR and GBP).
ETFs tracking double leveraged (2x) equity indices allow investors to earn a positive return when the index is rising with 50% less capital. ETFs tracking double leveraged equity indices seek to deliver a leveraged return which corresponds to twice the daily percentage change in the level of the underlying index (excluding fees and other costs). For example, if the underlying index rises by 2% in a day, an ETF tracking the 2x leveraged version of this underlying index will increase by 4% and vice versa.
ETFs tracking double short (-2x) equity indices allow investors to earn a leveraged positive return when the index is falling with 50% less capital. ETFs tracking leveraged inverse equity indices seek to deliver the inverse of twice the daily percentage change in the level of the underlying index (excluding fees and other costs). For example, if the underlying index falls by 2% in a day, an ETF tracking the 2x short version of this underlying index will fall by 4% and vice versa.
Leveraged and short exposure ETFs and ETCs have been highly popular for investors in Europe, and particularly in the US, where trading volumes and AUM have grown dramatically over the last few years as investors seek efficient investment and trading tools. These products have arguably been the most recent major innovation in ETF development.
The eight new ETFs tracking double leveraged (2x) and double short (-2x) European equity indices are:
Source: ETFWorld.co.uk – ETFSecurities
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