Boost finds ETP investors bullish on Japan

Nik Bienkowski, co-chief executive of Boost ETP, says he has seen increased demand for short and leveraged (S&L) exchange traded products (ETPs), particularly from those investors accessing Japan.

The group reports global assets under management for S&L ETPs have reached $51 billion (£31.9 billion), up $6.8 billion in the first eight months of 2013.

In July, Boost ETP listed Europe's first S&L Japanese equity ETPs on the London Stock Exchange. The new launches were Boost Topix 1x Short Daily ETP and Boost Topix 2x Leverage Daily ETP. Topix is short for Tokyo Stock Price Index.

Japan has been popular with investors due to a loose monetary policy as the country's "Abenomics" initiative aims to get rid of deflation. Abenomics is the name given to the measures Japanese Prime Minister Shinzo Abe is taking to increase the economy's competitiveness through the "three arrows": fiscal stimulus, aggressive monetary easing from the Bank of Japan and structural reforms.

Boost ETP recently saw a single investor trade $19 million of Boost Euro Stoxx 50 3x Short Daily ETP, which Bienkowski says is equivalent to a total notional exposure value of $57 million. The trade highlights the liquidity of ETPs, he adds.

However, the executive says flows into S&L equity ETPs in August were mixed. ETP investors were bearish on Europe and emerging markets, and continued to be bullish on Japan.

Bienkowski believes investors are using S&L ETPs for various reasons. He explains: "There is wider product availability, greater product knowledge from improved educational resources and increased demand for hedging tools and leveraged instruments available.

"There is also a move towards independent, transparent and exchange traded instruments such as exchange traded funds and ETPs."