June ETF Short Report: EEM Shorts Jump 76%
Short-sellers ganged up on the iShares MSCI Emerging Markets ETF (EEM) last month, a bet that was certainly profitable given that the huge fund dropped 6.5 percent in price amid widespread nervousness about the effect higher interest rates would have on developing-markets investments.
Additionally, short interest in the iShares 20+ Year Treasury Bond ETF (TLT) rose more than 17 percent, another reflection of investor reaction to the Fed signaling beginning in May that the five years of quantitative easing and zero percent interest rates might soon begin to wind down as the ongoing economic recovery slowly morphs into a self-sustaining expansion.
TLT dropped 3.5 percent in price in June, part of an overall dislocation in bond markets that featured benchmark 10-year Treasury yields jumping 100 basis points to about 2.5 percent between the beginning of May and the end of June. June also saw record outflows from U.S.-listed ETFs—with the crux of redemptions coming from bond market- and emerging-markets-focused funds.
EEM’s huge jump in short interest followed a nearly 50 percent rise in the number of EEM shares being shorted in May . The percentage of the short interest relative to EEM’s total outstanding long float jumped to 19 percent from just shy of 8 percent in May.
TLT’s June jump in shorts meanwhile followed a nearly 21 percent drop in shorts in May, but the percentage of the short interest relative to TLT longs held about steady at just over half.
On the flip side, short-sellers took the heat off the CurrencyShares Japanese Yen Trust (FXY), with the number of shares short dropping slightly more than 30 percent, as investors took measure of Japan’s plans to weaken the yen to help stimulate the economy by making exports more competitive. Short interest in FXY is almost equal to the outstanding long float, according to data compiled by IndexUniverse.
Caveats
It’s important to keep in mind that short-interest data are sometimes flawed. For example, because of double-counting issues, it’s possible to have more reported short shares than actually exist in the market.
That said, looking at the short data is still a decent way to gauge market sentiment.
Big Bets | ||||
Ticker | Name | % Float Short | 1 Month % Change | $Short ($, M) |
SPY | SPDR S'P 500 | 27.41 | -5.17 | 36,546.55 |
IWM | iShares Russell 2000 | 64.08 | -1.03 | 13,886.55 |
EEM | iShares MSCI Emerging Markets | 19.00 | 76.60 | 6,601.28 |
QQQ | PowerShares QQQ | 12.80 | 25.61 | 4,306.68 |
XLE | Energy Select SPDR | 53.48 | 10.38 | 4,096.07 |
GLD | SPDR Gold | 9.11 | 3.64 | 3,498.68 |
IYR | iShares Dow Jones U.S. Real Estate | 63.64 | 19.20 | 3,043.84 |
XRT | SPDR S'P Retail | 229.63 | 6.61 | 2,418.94 |
XLF | Financial Select SPDR | 16.21 | -4.34 | 2,343.75 |
TLT | iShares Barclays 20+ Year Treasury Bond | 54.18 | 17.44 | 2,286.63 |
Really Really Short | ||||
Ticker | Name | % Float Short | 1 Month % Change | $Short ($, M) |
FXE | CurrencyShares Euro | 295.88 | 3.92 | 667.60 |
XRT | SPDR S'P Retail | 229.63 | 6.61 | 2,418.94 |
XOP | SPDR S'P Oil ' Gas Exploration ' Production | 227.79 | 13.52 | 1,908.37 |
SJH | ProShares UltraShort Russell 2000 Value | 193.73 | 1,574.20 | 2.25 |
VXZ | iPath S'P 500 VIX Mid-Term Futures ETN | 178.64 | 83.84 | 115.10 |
IFGL | iShares FTSE EPRA/NAREIT Developed Real Estate ex-US. | 118.62 | 8,689.00 | 840.19 |
SMH | Market Vectors Semiconductor | 104.79 | -16.15 | 269.39 |
USO | United States Oil | 102.11 | 7.95 | 869.01 |
VXX | iPath S'P 500 VIX Short-Term Futures ETN | 99.34 | 18.01 | 1,177.88 |
FXY | CurrencyShares Japanese Yen Trust | 97.48 | -30.36 | 153.82 |
Data is believed to be accurate; however, transient market data is often subject to subsequent revision and correction by the exchanges.
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