ETF Securities is launching the first leveraged and short exchange traded commodities (ETCs) on the London Stock Exchange. Of the 66 new ETCs, half are leveraged, while the other half are short, or inverse, ETCs.
Most of the new ETCs track single commodities such as coffee, cotton, gold and wheat, while the other 20 are linked to indices.
They will begin listing on the London Stock Exchange in the next few weeks, with the short ETCs listing first.
Short ETCs allow investors to earn a positive return when the index is falling. However, if an underlying index rises, a short ETC loses value.
Until now it was difficult for investors to short ETCs, according to Hector McNeil, head of sales and marketing at ETF Securities. “You have had to find someone to loan you the stock,” he explains.
“With this product you can just buy a share and sell it within minutes if you want to. It makes it much more transparent.”[It’s about] transparency and liquidity.”
Meanwhile, leveraged ETCs allow investors to earn a positive return when the index is rising, but with half the capital. Again, this can go the other way.
Once the new range is launched, ETF Securities will have a total of 110 ETCs.
The group’s assets have already doubled in the past eight weeks owing to both the increased popularity of commodities and the ease of trading exchange traded securities.