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ETF Securities launches Europe’s first complete platform of double leveraged (2x) and double short (-2x) ETFs tracking Europe’s main equity indices
22/06/09
- 8 new ETFs tracking 2x short and 2x leveraged versions of Europe’s main equity indices: Dow Jones EURO STOXX 50®, FTSE 100®, CAC 40® and DAX®
- 6 new ETF listings on the London Stock Exchange
- All ETFs issued as 3rd generation ETF model, with enhanced liquidity and reduced counterparty risk
ETF Securities (ETFS), the global pioneer in Exchange Traded Commodities (ETCs) and 3rd generation Exchange Traded Funds (ETFs) is launching Europe’s first complete platform of ETFs tracking double leveraged (2x) and double short (-2x) benchmarks based off Europe’s main equity indices: the Dow Jones EURO STOXX 50®, the FTSE 100®, the CAC 40® and the DAX®.
The eight new ETFs further enhance ETFS’ position as the leading global issuer of leveraged and short ETFs and ETCs. ETFS is already operating Europe’s largest platform of short (-1x) and double leveraged (2x) ETCs, with up to 66 of these ETCs listed on three European exchanges (the London Stock Exchange, Deutsche Borse and the Borsa Italiana). Short and leveraged ETCs have been highly successful with ETFS Short Crude Oil (SOIL) and ETFS Leveraged Crude Oil (LOIL) among the most traded ETFs/ETCs listed on the LSE, with the platform having already attracted over US$450m in Assets Under Management (AUM) since listing in March 2008.
The new ETFs track double leveraged (2x) and double short (-2x) equity indices, which provide 2x long or 2x short exposure to the daily % return of various benchmarks through a simple ETF, allowing investors to express directional views on major European equities. These ETFs are intended for investors who do not wish to use derivatives to set up short-term leveraged directional strategies. They can also be used to hedge a portfolio or to implement market neutral, long-short and pairs trading strategies. The products also allow traditional long managers, including UCITS funds, to use leveraged long and leveraged inverse strategies without the need to enter into complex and costly stock loan arrangements. In today’s market where it is increasingly difficult to obtain credit and margin, ETFs tracking short and leveraged equity indices free up additional capital for investor’s to gain additional portfolio diversification.
The new double leveraged (2x) and double short (-2x) ETFs complement the existing platform of 13 equity ETFs providing exposure to global and European themes such as Alternative Energy, Water, Agribusiness, Coal, Steel, Shipping and Nuclear Power. These ETFs were launched last year and have seen strong performance and growth as the economic cycle improves. ETC investors are using these commodity-equity ETFs to enhance their direct commodity strategies. The ETFs are now listed on five major European stock exchanges in dedicated ETF trading segments and available in three currencies (USD, EUR and GBP).
ETFs tracking double leveraged (2x) equity indices allow investors to earn a positive return when the index is rising with 50% less capital. ETFs tracking double leveraged equity indices seek to deliver a leveraged return which corresponds to twice the daily percentage change in the level of the underlying index (excluding fees and other costs). For example, if the underlying index rises by 2% in a day, an ETF tracking the 2x leveraged version of this underlying index will increase by 4% and vice versa.
ETFs tracking double short (-2x) equity indices allow investors to earn a leveraged positive return when the index is falling with 50% less capital. ETFs tracking leveraged inverse equity indices seek to deliver the inverse of twice the daily percentage change in the level of the underlying index (excluding fees and other costs). For example, if the underlying index falls by 2% in a day, an ETF tracking the 2x short version of this underlying index will fall by 4% and vice versa.
Leveraged and short exposure ETFs and ETCs have been highly popular for investors in Europe, and particularly in the US, where trading volumes and AUM have grown dramatically over the last few years as investors seek efficient investment and trading tools. These products have arguably been the most recent major innovation in ETF development.
The eight new ETFs tracking double leveraged (2x) and double short (-2x) European equity indices are:
| |
LSE |
LSE (GBP) |
TER |
UCITS III |
| ETFS FTSE 100 Leveraged (2x) Fund |
LUK2 |
- |
0.50% |
Yes |
| ETFS Dow Jones EURO STOXX 50 Leveraged (2x) Fund |
LEU2 |
LE2P |
0.40% |
Yes |
| ETFS CAC 40 2x Long Fund |
FRL2 |
FL2P |
0.50% |
Yes |
| ETFS DAX 2x Long Fund |
DEL2 |
DL2P |
0.40% |
Yes |
| ETFS FTSE 100 Super Short Strategy (2x) Fund |
SUK2 |
|
0.60% |
Yes |
| ETFS Dow Jones EURO STOXX 50 Double Short (2x) Fund |
SEU2 |
SE2P |
0.60% |
Yes |
| ETFS CAC 40 2x Short Fund |
FRS2 |
FS2P |
0.60% |
Yes |
| ETFS DAX 2x Short Fund |
DES2 |
DS2P |
0.60% |
Yes |
Risk warning: Due to the compounding of daily returns, returns measured over periods longer than one day may differ from twice the underlying index return over that longer period. ETFs tracking double short & leveraged equity indices are only suitable for sophisticated investors who understand leverage, compounded daily returns and are willing to magnify potential losses. Please see the Prospectus for a more detailed explanation and a more complete list of risks, available at www.etfsecurities.com
The vision for 3rd generation ETFs was pioneered by ETF Securities. The idea was inspired by investor demands for increased levels of transparency, liquidity and counterparty risk management. ETF Securities identified that the current ETF issuance model by single financial institutions could be strengthened by diversifying index replication across a consortium of the strongest financial players and concentrating liquidity within a single platform. Under the current ETF issuance model, if the sponsoring / issuing financial institution fails, it is highly likely that their respective ETFs would be greatly disrupted and potentially liquidated.
ETF Securities will now offer a total of 21 equity ETFs comprising Europe’s first complete platforms of resource-equity ETFs and double leveraged (2x) and double short (-2x) ETFs. These ETFs are listed on 5 European exchanges (the London Stock Exchange, Deutsche Borse, Euronext Paris, Euronext Amsterdam and the Borsa Italiana) and traded in 3 currencies (USD, EUR and GBP). They are part of the ETF Exchange initiative driven by client demand for increased liquidity, innovative products and reduced credit risks and counter-party exposure. The ETFs are all swap-backed ETFs using multiple counterparties, allowing more efficient tracking, with collateral being held in excess of UCITS guidelines. This issuance model is arguably the most efficient and risk averse available today.
Mark Weeks, Chief Executive of the ETF Exchange, said:
“I am very excited by this offering ETF Securities is bringing to the market. It is a very valuable additional tool set that all investors will be able to access. Many investors are looking for safe and secure products that provide very liquid market exposure and these products do just that.”
Hector McNeil, Head of Sales & Marketing at ETF Securities, said:
“We are issuing these products to add value to the market and respond to investor demand after the success of short and leveraged ETCs. ETF Securities constantly strives to innovate and add value to the ETF market and these products are clearly highly innovative and fill a very exciting gap in the market. It is clear that the continued issuance of ‘third generation’ ETFs give investors peace of mind during these turbulent times.”
For further information, please contact:
Laura Stevens
Tel: +44 (0) 20 7448 4351
Email: laura.stevens@etfsecurities.com
ETF Securities continues its series of conference calls for finance professionals:
A launch presentation on long & short trading strategies using Exchange Traded Funds (ETFs) and Exchange Traded Commodities (ETCs)
Date: Wednesday 8th July 2009
Time: 5.30pm - 8.00pm
Location: London Stock Exchange, Paternoster Square, London EC4M 7LS
Agenda:
5.30pm - registration and refreshments
6.00pm - introduction and overview from London Stock Exchange
6.05pm - ETFS Introduction presentation of Europe's first complete platform of ETFs tracking 2x short & 2x leveraged indices from Scott Thompson, Head of Sales for UK and Ireland
- ETF Structures - Evolution
- Introducing ETF Exchange
- 3rd Generation ETFs - Added Benefits
- Introducing ETFs on Short & Leveraged Indices
- Investment Strategies using ETFs & ETCs
- ETF Structure - Credit exposure on the swaps
- Summary and conclusions
- Question and answer session
7.20pm - summary, conclusion Q and A's
7.30pm - networking with refreshments and canapes
Register today To reserve a place for yourself or a colleague at the seminar
http://www.etfsecurities.com/en/events/etfs_events_conferences.asp
Notes to Editors:
ETF Securities is a provider of Exchange Traded Commodities (ETCs) and 3rd generation Exchange Traded Funds (ETFs). The management of ETF Securities pioneered the development of ETCs, with the world's first listing of an ETC, Gold Bullion Securities in Australia and London in 2003 and then the world's first entire ETC platform which was listed on the London Stock Exchange in September 2006.
ETF Securities now offers more than 140 Exchange Traded Products (ETPs) with $12 billion in assets. The ETPs provide investors with a wide variety of investment strategies, with ETPs offering resource equities, physical, long, forward, leveraged and short exposure to all commodity sectors. ETPs are simple to access as they are traded in four currencies (EUR, USD, GBP and AUD) and listed on seven major exchanges globally including the London Stock Exchange, NYSE-Euronext Paris, NYSE-Euronext Amsterdam, Deutsche Börse, Borsa Italiana, the Australian Securities Exchange and the Irish Stock Exchange.
To learn more about ETF Securities go to: www.etfsecurities.com
This press release does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities (together the "Securities")of ETFS Commodity Securities Limited, ETFS Metal Securities Limited or ETFS Oil Securities Limited or any shares (the "Shares") of ETFS Fund Company public limited company (the "Fund") or any other shares or securities, nor shall it or any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto. Any offer, invitation or solicitation shall be made solely by means of the relevant prospectus (plus any supplements thereto) in the case of the Securities or the prospectus together with the relevant sub-fund supplement in the case of the Shares (in each case the "Prospectus") and recipients of this advertisement who are considering a purchase of Securities or Shares following distribution of the Prospectus are reminded that any such purchase should be made solely on the basis of the information contained in such Prospectus. This advertisement does not constitute any recommendation regarding the Securities or the Shares.
The communication of this press release is not being made by, and this press release has not been approved by, an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000 (the "FSMA"). Accordingly this press release is not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of this press release or any other document issued in connection with the offer and sale of the Shares or Securities is only being made to and directed at those persons in the United Kingdom falling within the definition of Investment Professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), or high net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(1) of the Order or any person to whom it may otherwise lawfully be made (all such persons together being referred to as "relevant persons"). The communication of this press release (or any other document issued in connection with the offer and sale of the Shares or Securities) must not be acted upon or relied upon by persons who are not relevant persons. The Fund is a collective investment scheme for the purposes of the FSMA and is a recognised scheme for the purposes of the FSMA. Persons distributing this press release must satisfy themselves that it is lawful to do so. All applicable provisions of the FSMA must be complied with in respect of anything done in relation to the Shares or Securities in, from or otherwise involving the United Kingdom.
This is not an offer of securities for sale in the United States. The Shares and Securities have not been and will not be registered under the US Securities Act or any other applicable law of the United States. The Shares and Securities are being offered and sold only outside the United States to non-US persons in reliance on the exemption from registration provided by Regulation S of the US Securities Act. None of ETFS Commodity Securities Limited, ETFS Metal Securities Limited, ETFS Oil Securities Limited and ETFS Fund Company public limited company (each an "Issuer") has been or intends to become registered as an investment company under the United States Investment Company Act of 1940 (as amended) (the "Investment Company Act") and related rules. Neither the Shares nor the Securities or any beneficial interest therein may be reoffered, resold, pledged or otherwise transferred in the United States or to US persons. If an Issuer determines that any holder of shares is a US Person or any holder of Securities is a Prohibited US Person (being a US Person who is not a "qualified purchaser" as defined in the Investment Company Act), the Issuer may redeem the Shares or Securities (as the case may be) held by that Security Holder in accordance with the provisions described in the Prospectus. Neither the Shares nor the Securities may be purchased with plan assets of any "employee benefit plan" within the meaning of section 3(3) of the United States Employee Retirement Income Security Act of 1974, as amended ("ERISA"), any "plan" described in section 4975(e)(1) of the United States Internal Revenue Code of 1986, as amended (the "Code") or any entity whose underlying assets include "plan assets" of any of the foregoing by reason of an employee benefit plan's or other plan's investment in such entity, which employee benefit plan, plan or entity is subject to Title I of ERISA or section 4975 of the Code or any United States Federal, state, or local law or non-United States law that is substantially similar to the prohibited transaction provisions of section 406 of ERISA or section 4975 of the Code (any such employee benefit plan, plan or entity, a "Prohibited Benefit Plan Investor"). If the Issuer determines that any Security Holder is a Prohibited Benefit Plan Investor, the Issuer may redeem the Securities or Shares held by that person in accordance with the provisions described in the relevant Prospectus.
“None of the index providers of the relevant ETFs referred to herein nor their licensors make any warranty or representation whatsoever either as to the results obtained from use of the relevant indices and/or the figures at which such indices stand at any particular day or otherwise. None of the index providers shall be liable to any person for any errors or significant delays in the relevant indices nor shall be under any obligation to advise any person of any error or significant delay therein.”
"Dow Jones," "AIG®" "Dow Jones-AIG Commodity IndexSM," "DJ-AIGCISM", "Dow Jones-AIG Commodity 3-Month Forward Index" are service marks of Dow Jones & Company, Inc. and American International Group, Inc. ("American International Group"), as the case may be, and are licensed for use for certain purposes by ETF Securities Ltd. ETCs based on the DJ-AIGCISM or related sub-indices (including single commodity sub-indices) or 3-Month Forward Indexes are not sponsored, endorsed, sold or promoted by Dow Jones, AIG Financial Products Corp. ("AIG-FP"), American International Group, or any of their respective subsidiaries or affiliates, and none of Dow Jones, AIG-FP, American International Group, or any of their respective subsidiaries or affiliates, makes any representation regarding the advisability of investing in such product(s).
ETF Securities Limited, ETFS Commodity Securities Limited, ETFS Metal Securities Limited, ETFS Oil Securities Limited, Gold Bullion Securities Limited and ETFS Fund Company PLC are each regulated by the Jersey Financial Services Commission.
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