Leveraged and short ETPs and ETNs enjoy increased attention in volatile markets
Leveraged and short ETPs have seen growth over the period of market volatility. REX Shares’ US Big Oil Index 3x Leveraged ETN (NRGU) has had its principal amount increased by USD250 million, to a new total of USD975 million and 19.5 million notes, respectively, its eighth upsize in 2020, so far.
NRGU offers daily resetting with exposure to the US Oil and Energy equity sector, based on the Solactive MicroSectors US Big Oil Index, which includes the 10 largest US listed energy companies.
Scott Acheychek, REX Shares president, says: “Oil has been hit by a supply-demand storm in 2020. On the one hand, Saudi Arabia and Russia increased production in a well-supplied market and, on the other hand, COVID-19 and the stay-at-home orders mandated by many countries helped reduce demand.”
“We’re glad that NRGU has provided investors with an opportunity to trade the largest US energy companies with leverage during this period of heightened volatility in the energy sector.”
In addition to NRGU, Bank of Montreal has also issued a -3x Inverse Leveraged Oil/Energy ETN.
Meanwhile, GraniteShares, which offers a UK-based leveraged single stock platform, offering 22 ETPs with 3x leverage (long and short) of large-cap UK companies, has announced that it has gone over USD1 billion in assets in the first three years since its launch.
GraniteShares’ founder, etfLIVE panellist Will Rhind, explains that its ETF suite includes five total investment strategies: The GraniteShares Gold Trust (BAR); The GraniteShares Bloomberg Commodity Broad Strategy No K-1 ETF (COMB); The GraniteShares Platinum Trust (PLTM); The GraniteShares HIPS US High Income ETF (HIPS); and The GraniteShares XOUT US Large Cap ETF (XOUT).
GraniteShares’ recent growth has been fuelled by its flagship gold ETF, BAR, which has swelled to over USD917 million in AUM as investors seek safe-haven assets amid coronavirus-inflicted market volatility.
“During these challenging economic times, we are fortunate to be able to offer ETF strategies that are timely and relevant for investors,” says Rhind, CEO of GraniteShares. “As we enter our fourth operating year, we remain committed to the firm’s founding tenets of offering unique or differentiated investment strategies with lower costs.”
Acheychek says that buyers of his long and short indices are either using them for trading or hedging.
“These are powerful trading tools for sophisticated investors who know how to use them and are comfortable with the risks associated with leverage.” he says.
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