The new ETPs come on the back of increasing demand for Boost’s Short & Leveraged ETPs. As of 10 March 2016, ETPs issued by Boost reached almost $500 million in AUM[1] and these new ETPs add more breadth and depth to Boost ETP’s already comprehensive product list. At the beginning of March 2016[2], Boost ETPs had some 55% market share with respect to all ETC contracts traded on the Borsa Italiana. Boost has the most actively traded product and four products in the top ten most actively traded products on the Borsa Italiana’s ETFPlus segment[3].
Boost is listing the first product offering leveraged exposure to the benchmark VIX volatility index in Italy. The Index measures the return from a daily rolling long position in the first and second month VIX futures contract. The S&P 500 VIX Short-Term Futures Index ER is considered a useful tool for hedging against potential large and sudden drops in the US equity market and, historically, has had a negative correlation to the S&P 500.[4] The Boost S&P 500 VIX Short-Term Futures 2.25x Leverage Daily ETP provides 2.25 times the daily performance of the Index, adjusted to reflect fees and costs inherent to maintaining and rolling a leveraged position in the futures, plus interest revenue earned on the collateralised amount.
The Boost Emerging Markets ETPs provide 3x long and 3x short exposure to the Emerging Equities Rolling Futures Index, which tracks Front Quarter and Second Quarter MSCI Emerging Markets Index futures. The MSCI Emerging Markets Index futures provide exposure to the MSCI Emerging Markets Index, a free float-adjusted market capitalisation index designed to measure the equity market performance of the following 23 emerging markets countries: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Russia, Qatar, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates. With 835 constituents, this index covers approximately 85% of the free float-adjusted market capitalisation in each country covered.
The Boost Emerging Markets 3x Leverage Daily ETP and the Boost Emerging Markets 3x Short Daily ETP provide three (3) times long and (3) times short (respectively) the daily performance of the Index, in both cases adjusted to reflect fees and costs inherent to maintaining and rolling a leveraged position in the futures, plus interest revenue earned on the collateralised amount.
Boost’s S&L ETP platform now covers the world’s major asset classes, which include equities, volatility, fixed income, currencies, and commodities. This brings BOOST ETP’s product range to a total of 128 listings on Borsa Italiana, the London Stock Exchange, and Germany’s Xetra.
Viktor Nossek, Director of Research at WisdomTree Europe, commented:
“This years’ volatility underpinned by China’s slowdown and slumping commodities has soured sentiment in risk assets, forcing global growth expectations down and creating opportunities to position bearishly in equities. US equity markets’ relative high exposure to tech stocks suffering from recent disappointing financial results and downgraded growth expectations has added to the rise volatility in the US equity markets. With a leveraged S&P 500 VIX futures ETP, investors can short term efficiently position around rising risks in equity markets by using less capital to obtain the same (unlevered) exposure or amplify their exposure with the same capital.
“The geared long and short ETPs tracking Emerging Markets are a way to position tactically around the uncertainty in the region, as 2016 begins with a stark divergence in the outlook on growth within the region: Russia and Brazil are in recession, China’s politically orchestrated rebalancing is enforcing an economic slowdown, even while India still sustains a boom. However, much of these expectations remain driven by volatile commodity prices, and the recent rebound of crude oil is giving EM commodity exporter stocks another boost. Until the dust settles and the economic picture for the region stabilises, investors may look for short-term opportunities to trade in and out, or hedge their EM exposure which, using leverage, requires less capital to achieve. These new products provide investors with a new set of momentum and hedging opportunities within the Boost S&L ETP range”.
Nik Bienkowski, Co-CEO of WisdomTree Europe commented:
“Boost, as an issuer, is delighted to be at the forefront of meeting demand from clients to extend our already market leading range of ETPs in the Italian market. These new products provide additional diversification opportunities and solutions to allow our clients to manage their portfolio exposures. These exciting new listings help build out our coverage across all the key asset classes including a unique exposure to equity volatility.”
[1] Source: WisdomTree Europe, as at 10/03/2016.
[2] Source: Borsa Italiana, data for the week 29/02/2016 -04/03/2016.
[3] Source: Borsa Italianasd
[4] Source: S&P Dow Jones Indices LLC
