Inverse, Leveraged ETFs Hit Another AUM Record

ETF Trends

Investors in search of outsized gains in short time frames continue to embrace inverse and leveraged exchange traded products in a big way.

Assets under management for global inverse and leveraged ETPs jumped to $61.3 billion at the end of February, a 3.7% increase from January and a 6% rise on a year-to-date basis, according to Boost ETP. Boost is a boutique provider of Europe-listed inverse and leveraged ETFs and the first European ETF provider to focus exclusively on inverse and leveraged products.

Globally, investors in inverse and leveraged ETFs “repositioned themselves bullishly in bonds and bearishly in equities. February saw record flows into long US debt ETPs, at $2.9 billion, which were countered by flows of $3.8 billion out of long equity ETPs,” said Boost in a statement.

In January, Boost noted that the “largest individual S&L ETPs are short U.S. treasuries and leveraged U.S. equities.” The largest U.S.-based providers of inverse and leveraged ETFs are ProShares and Direxion. [Leveraged ETF Assets Soar]

Leveraged natural gas ETFs, including the VelocityShares Daily 3x Inverse Natural Gas ETN (DGAZ) and the VelocityShares 3x Long Natural Gas ETN (UGAZ) have been among the most popular geared commodities ETFs this year.[Nat Gas Surge Boosts These ETFs]

“The strong performance of natural gas this year, up by over 20%, continues to drive S&L investors to short Natural Gas ETPs. Underpinned by high volatility, last month’s bearish positioning in natural gas was augmented in February with $335 million of flows into short natural gas ETPs,” said Boost in the statement.

Traders have also been willing to leverage their bets on silver with funds such as the ProShares Ultra Silver ETF (AGQ) as the bulk of leveraged ETF bets on the white metal are bullish in nature.

“With nearly $0.9 billion (84%) of AUM in S&L silver ETPs comprising long positions, S&L investors’ overwhelmingly bullish positioning remains unaltered,” according to Boost.

Lingering volatility in Russia ETFs, the result of that country’s conflict with Ukraine, has stoked interest in triple-leveraged Russia ETFs. Over the past week, volume in the Direxion Daily Russia Bear 3x Shares (RUSS) and the Direxion Daily Russia Bull 3x Shares (RUSL) has been well above the 20-day average and over the past month, creation activity in both funds has been positive, according to Direxion data.

ProShares Ultra Silver

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ETF Trends editorial team contributed to this post.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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