Fri, 14/12/2012 - 06:09
Deutsche Borse’s ShortDAX x3 and LevDAX x3 indices have been licensed to London-based firm Boost ETP to serve as the basis for exchange-traded products for the first time.
The Boost LevDAX 3x Daily ETP and Boost ShortDAX 3x Daily ETP are now available on the London Stock Exchange.
“The ShortDAX and LevDAX index series are designed for sophisticated market participants with diverse risk profiles who seek access to leveraged instruments in the DAX. In this case, the ShortDAX x3 and LevDAX x3 indices measure triple the performance of the DAX either directly or in an inverse way,” says Hartmut Graf (pictured), chief executive officer of Stoxx.
Stoxx is the marketing agent for the indices of Deutsche Börse and SIX, including the DAX and SMI indices.
Nik Bienkowski, co-chief executive, Boost ETP, says: “We are delighted to be listing two ETPs which will provide 3x short and 3x leveraged returns based on daily changes in the DAX. The DAX is one of Europe’s most liquid and widely followed benchmarks, which suits BOOST’s requirement for liquid, transparent and blue-chip benchmarks for our new ETP platform. BOOST’s 3DES and 3DEL allows investors to take advantage of trading and hedging opportunities using the DAX in a simple, liquid and robust exchange traded security.”
The ShortDAX and LevDAX index families include eight ShortDAX and seven LevDAX indices that use varying leverage factors. As with all ShortDAX indices, the ShortDAX x3 Index allows investors to participate in the performance of falling share prices. The performance is directly inverse to the performance of the DAX depending on its leverage factor, which is reflected by the “x” in the index name. For example, when the DAX falls by five per cent, the ShortDAX x3 rises by 15 per cent, and vice versa (not taking into account positive effects from the financing term).
In addition to inverse DAX performance, the ShortDAX indices contain interest payments resulting from the investment strategy in twice the amount of the overnight rate. Interest accrues in the same amount for the investment volume as well as for the funds received from short-selling. This makes the indices an attractive investment not only in falling but also in sideways markets and periods where market trends are unclear.
The LevDAX x3 Index also follows the methodology of the existing LevDAX indices. Designed for investors with an appetite for risk, the performance of the LevDAX indices are directly linked to the performance of the DAX and proportionate to its leverage factor. For example, the LevDAX x3 gains three times the value of the DAX, and vice versa (not taking into account positive effects from the financing term).
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