Leveraged ETFs Assets Flirt With $51 Billion

ETFtrends.com

Still just a small slice of the $2.16 trillion in assets under management across global exchange traded products, global inverse and leveraged ETFs saw their AUM total rise $1.7 billion, or 3.5%, to $50.9 billion at the end of June, according to Boost ETP. Boost is a boutique firm specializing in trading triple-leveraged ETFs listed in Europe.

Year-to-date, “global S&L ETF/ETP AUM is up $6.8 billion or 15%” and “57% of AUM is held in short products with leverage factors ranging between -1x to -3x. However the leverage factor with the most assets is +2x, with 33% of AUM. 43% of AUM is held in long products with leverage factors ranging between +1.5x to +3x,” according to Boost.

While leveraged ETFs have a reputation for diverging significantly from the indexes they are designed and a penchant for being reverse split, the products have found favor with investors looking to capture out-sized gains in short time frames. [Investors Still Like Leveraged ETFs]

Last month, a U.S. appeals court has rejected a lawsuit alleging leveraged ETF provider ProShares failed to adequately disclose the funds’ risks. ProShares is the largest U.S. issuer of leveraged and inverse funds and the sixth-largest U.S. ETF sponsor overall with $25.3 billion in AUM. Rival Direxion has almost $6.4 billion in AUM. [Court Rejects Suit Against ProShares]

“From January to May there was a decline in long equity positions and an increase in short equity positions. June saw a reversal of that trend with inflows of $4.1 billion into long equity ETFs/ETPs and outflows of $609 million from short equity ETFs/ETPs equal to $10.1 billion net long notional flows in June (after taking leverage factor into account),” said Boost.

Boost said $163 million was pulled from global bearish commodities ETFs in June while $1 billion was pulled from long, leveraged bets on U.S. government bonds, outflows that coincide with rising yields on 10-year Treasurys.

Popular U.S.-listed leveraged ETFs include the ProShares UltraShort 20+ Year Treasury (TBT) , the ProShares UltraPro Short QQQ (SQQQ) and the Direxion Daily Financial Bear 3X Shares (FAZ) .

Direxion Daily Financial Bear 3X Shares

ETF Trends editorial team contributed to this article.

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