Industry Updates

Leveraged ETP investors turn bearish on US and Japan equities

George Geddes

a bear laying on a log

Investors were bullish towards the global equity market as leveraged global ETPs saw net flows of $923m in October, according to a recent report by ETF issuer WisdomTree.

However, despite a positive attitude to global equities, investors shifted from long positions in US and Japan equity ETPs to short positions.

US equity long ETPs suffered outflows of $2.2bn and short ETPs saw inflows of £1.3bn. Similarly for Japanese equities, long ETPs lost $1.5bn assets but short ETPs gained $938m.

This would prove to be a regretful investment decision for many investors as the S&P 500 and the Nikkei 225 experienced a price rally in October, climbing 2% and 5%, respectively.

Malaysia green lights leveraged and inverse ETPs

In commodities, investors were optimistic in a price rally for oil and natural gas as the two respective long ETPs gained $1.2bn and $1.3bn, respectively. Their short counterparts had negative net flows for the month as oil suffered $239m of outflows and natural gas lost $131m.

Over the course of October, the price of crude oil rebounded, climbing 4.6% from $52.64 a barrel to $55.06 as well as natural gas rising 19.6% from $2.25 to $2.69.

US fixed income investors reduced their risk exposure as both long and short US debt ETPs had negative net flows. Long ETPs lost $264m in tandem with short ETPs losing $115m.

Elsewhere, short and leveraged ETP investors reduced their bearish position in short German bond ETPs by $141m as the US indicated that it would impose tariffs on the European Union.

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