Wed, 05/12/2012 - 10:19
Boost ETP is to launch a platform of leveraged and short exchange-traded products.
Boost will be the first ETP provider in Europe to focus on issuing 3x leveraged and 3x short ETPs; these have been extremely successful in the US market and Boost expects a similar level of success in Europe over time.
Boost expects to list up to 100 different ETPs across all asset classes in the next two years, starting with a broad range of equities and commodities.
Boost is launching the leveraged and short ETP platform due to investor demand for secure, transparent and liquid ETPs. With global leveraged and short ETP assets having grown to approximately USD43bn with over USD8bn in 3x leveraged ETPs, it is clear that investors have widely accepted the ETP structure as a vehicle of choice for leveraged and short exposure to liquid underlying markets. Demand for leveraged and short products has also increased over the past few years as many financial markets have trended sideways, resulting in volatile and poor long term returns. Leveraged and short ETPs make it possible to take advantage of this short term volatility in world financial markets.
Boost ETPs will be suitable for sophisticated and experienced investors and Boost will provide educational support for investors to ensure they can maximise their understanding and use of the products.
With Boost’s leveraged and short ETPs, investors have instant leverage to highly liquid underlying markets in one single trade. Investors can achieve simple exposure to leveraged returns without having to borrow the additional funds to gain the additional long exposure or the need to borrow underlying shares, and then sell those shares in order to short the market.
Boost leveraged and short ETPs are designed to provide short and/or leveraged exposure to the daily changes in the world’s most liquid and widely followed investment and financial indices. For example, if the Nasdaq 100 Index rises by one per cent on a day, then the Boost Nasdaq 100 3x Leverage Daily ETP will rise by three per cent on that day. Conversely, if the benchmark falls by one per cent on a day, then the Boost Nasdaq100 3x Short Daily ETP will fall by three per cent on that day.
Investors will be able to buy and sell the new Boost ETPs on the London Stock Exchange, through regulated brokers or Boost’s network of approved market makers and authorised participants.
Boost has agreed with Getco Europe to be the London Stock Exchange designated market maker for all the ETPs to be listed.
Hector McNeil (pictured), co-chief executive of Boost, says: “We believe that the leveraged and short ETPs are exciting additions to the European ETP market and introduce investment products which investors currently demand, but are not yet available. Given the persistence of low, long term returns and sideways trending financial markets over the past five or more years, Boost’s 3x leveraged ETPs should now give sophisticated investors valuable new tools to potentially enhance their investment returns or hedge market risks.”
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