ETF Securities list 33 Leveraged ETCs
London, Mar 17 2008
... and 4 new commodities on the London Stock Exchange today
Leverage ETCs providing 2x exposure to 33 commodity indices 4 new DJ-AIG commodity indices added to ETC platform: cocoa, lead, tin, platinum
ETF Securities, the global pioneer of exchange traded commodities (ETCs) has added to its ETC platform with the introduction of 33 Leveraged ETCs. And DJ-AIG have added four new commodity indices: Cocoa, Lead, Tin and Platinum. The new ETCS will be available as of today on the London Stock Exchange. A total of 110 ETCs will have been created by ETF Securities. The new ETCs will complement ETF Securities' existing Physical, Classic, Forward and the recently launched Short ETCs which provide investors long and short exposure to the commodities market.
Leveraged ETCs allow investors to earn a positive return when the index is rising with 50% less capital. Leveraged ETCs earn two times (+2x) the daily percent change in the index (before fees and interest). For example, if the underlying index rises by 2% in a day, a Leveraged ETC will increase by 4% and vice versa. In today's market where it is increasingly difficult to obtain credit and margin, Leveraged ETCs free up additional capital for investor's to gain additional portfolio diversification.
The ETC platform offered by ETF Securities has experienced massive growth in the past thirteen weeks with assets growing by 150% to over $5.1 billion and daily trading volumes doubling to over $120 million per day across five European exchanges. The increase in assets has occurred as a result of increased awareness of commodities and ETCs, volatile equity markets creating demand for non-correlated assets, positive commodity fundamentals, inflation fears and annual portfolio rebalancings made at the start of the new year.
In addition to their obvious benefits, Short and Leveraged ETCs provide investors with a wider range of investment strategies including: pairs trades when an investor has a view that one commodity will rise or fall in price relative to another commodity; reducing or increasing commodity price risk where a portfolio owns commodity companies; and investment strategies which exploit the shape of a commodity futures curve allowing investors to "short" the part of the curve in contango and to go "long" the part of the curve in backwardation.
Commenting on the listing of another world first, Graham Tuckwell, Chairman of ETF Securities, said: "We have seen unrivalled support and demand for ETCs. Since we listed the Short ETCs two weeks ago, we have been inundated with calls for these new Leveraged ETCs. Investors are now realising that commodities can offer benefits to a portfolio due to their low correlation to equities. In times like these where liquidity is tight, Leveraged ETCs can provide these diversification benefits with 50% less capital. In times of economic or financial upheaval, many independent studies have shown that commodities can benefit a portfolio by lowering volatility and/or increasing returns.
"Over the past thirteen weeks there has been a huge surge in global demand for ETCs and we recently passed the landmark of $5.1 billion invested in our existing offering. Over this period, assets and trading volumes are up approximately 150%. With listings on five of Europe's major exchanges ETF Securities has successfully delivered simple, cost-efficient and accessible products for all investors."
Ends --
Commodities Now
