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- ETFS Short Oil sees assets surge to $130m in first 12 weeks
- ETFS Short Oil most highly traded ETC last week, trading 65% more than gold and agriculture
- Livestock ETCs see assets grow 475% this year to $230m
- ETFS Short and Leveraged ETCs add $275m in first 12 weeks, accounting for 23% of net inflows
ETF Securities Limited, the global pioneer of exchange traded commodities (ETCs), has seen assets and volumes expand massively making ETFS Short Oil ("SOIL") one of the most successful ETC launches in the past 18 months. ETFS Short Oil has experienced massive interest as the oil price hovers around record prices of $135 / barrel. In addition to high oil prices, ETFS Short Oil represents one of the few ways that investors can benefit from a fall in oil prices as investors seek to lock in gains achieved through their holdings of the listed oil majors. In addition, livestock has seen significant demand over the past 12 weeks.
Since listing on 22 February 2008, ETFS Short Oil ("SOIL") saw weekly trading volumes surge to almost $100 million last week in only four days of trading. Last week, ETFS Short Oil traded over $50 million in one day and was the most heavily traded ETC. ETFS Physical Gold (PHAU), ETFS Forward Industrial Metals (FIND) and ETFS Agriculture (AIGA) were the next most highly traded ETCs last week, trading between $47 and $55 million each. In addition, ETFS Short Oil has now risen to $130 million in assets, making oil the most popular individual commodity ETC outside of precious metals. ETFS Brent Oil (OILB), which provides long exposure to Brent oil prices, currently has $145 million in assets.
The sharp increase in interest in ETFS Short Oil indicates that a growing number of investors are using Short ETCs to hedge commodity price risk out of their equity portfolios. The strong interest in Short ETCs is also due to the fact that many 'long only' investors have been unable to 'sell short' as a result of their mandates and investment regulations. Short ETCs allow 'long' funds to go long on a security that provides an inverse return. 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.
In addition to 33 Short ETCs, 33 Leveraged ETCs were also added in March. In total 66 Short and Leveraged ETCs have added $275 million in assets since listing 3 months ago on the London Stock Exchange. Short and Leveraged ETCs have contributed to 23% of all net inflows. To date, the most popular Leveraged ETC has been ETFS Leveraged Wheat (LWEA) with $20 million in assets ($40 million equivalent). A range of leveraged energy ETCs have also been popular.
Livestock ETCs have also seen a sharp rise in interest recently, with assets rising 475% this year from $40m to $230m. ETFS Lean Hogs (HOGS) has been the most popular, growing to $68 million in assets including one trade of $40 million, while trading volumes over the past 12 weeks have increased by 2,700% compared to the same period last year. This interest in Livestock ETCs comes as a result of investors looking for non-correlated assets to equities. Much of the growth has been in the last few months as investors appear to be anticipating a turnaround in the livestock cycle and also likely due to investors using these ETCs to broaden their exposure to commodities other than Agricultural and Precious Metals ETCs. In total, ETF Securities offers twelve Livestock ETCs, which give investors the choice of long, forward, leveraged and short exposure to the sector.
ETF Securities now offers more than 120 ETCs which give investors greater choice to implement different investment strategies with the choice of physical, long, forward, leveraged and short exposure to a wide range of commodity sectors. ETCs are simple to access as they are traded in three currencies (Euros, USD andSterling) and listed on five major European Exchanges including the London Stock Exchange, Euronext Paris, Euronext Amsterdam, Deutsche Borse and Borsa Italiana. Each Exchange has created unique ETC trading segments resulting in trading volumes exploding by 500% to between $600 and $800 million per week. ETF Securities now has over $5.5 billion in assets, up from $1bn in June 2007.
Commenting on the massive growth of Short oil and Livestock ETCs, Nik Bienkowski, Chief Operating Officer, said: "The growth of ETFS Short Oil and our Livestock ETCs are proof that accessibility, liquidity and transparency are key to the success of ETCs.
The immense interest for ETFS Short Oil indicates that there is substantial demand from investors for short products. Short ETCs allow investors to directly access investment strategies that previously were only accessible to specialist investors who could sell short and borrow. Now any investor can benefit from raising or falling commodity prices through ETCs.
The growth in our livestock ETCs shows that investors are demanding access to more specific commodities and that investor's understanding of commodities has matured rapidly over the past few years. Livestock ETCs have not been correlated to precious metals or agriculture and this provides additional diversification benefits."
