Records tumble as Soc Gen issues 74 new ETPs
In what was the UK’s largest ever one-day product launch in the history of the exchange, French banking giant Société Générale (Soc Gen) has listed 74 short and long leveraged exchange traded products (ETPs) on the London Stock Exchange (LSE).
The products enable investors to take short and long positions on a range of asset classes including commodities (oil, silver, gold and copper) currencies (GBP/USD, EUR/USD and JPY/USD) and energy.
Unlike more traditional exchange traded funds (ETFs) which typically track an index, a commodity or basket of assets, ETPs use derivatives and borrowing to deliver leveraged returns; both are listed on the exchange and can be bought and sold like shares.
Soc Gen says its suite of products was launched in response to investor demand for liquid products with a broad choice of leverage.
In addition to commodities, currencies and energy there are products covering four of the world’s most prominent indexes – S&P 500, FTSE 100, DAX, and Euro Stoxx 50; each ETP can deliver leveraged returns of between two, three and five times over on a day-to-day basis.
Because leverage can amplify losses as well as gains, ETPs are higher risk than typically long-only index trackers and are aimed at experienced or ‘sophisticated’ investors looking to implement short-term trades on the stock market.
According to Soc Gen: ‘These are for the frequent trader who need a little more certainty. You know what you stand to gain because it is fixed at two, three or five times the daily performance of the underlying asset.’
‘for the frequent trader who need a little more certainty’
Zak de Mariveles, managing director at Soc Gen, said the range had been launched in response to investor demand for products that are easy to trade, which also offer the opportunity to use leverage: ‘With over £2.8bn traded over the LSE last year, leveraged ETPs are a popular way to gain leverage to a wide range of popular underlyers.
‘Société Générale benefits from a solid expertise in providing ETPs across Europe. By broadening our offering in the UK, we look forward to provide sophisticated retail and professional investors that seek to gain leverage within their portfolios with an even greater choice and flexibility.’
The costs incurred depend upon the underlying asset or market and the amount of borrowing, or leverage, employed.
For example, Soc Gen estimates that on average, using two times leverage equates to total costs of 0.0024% per day; 0.86% per annum.
Three times leverage rises to 0.003% per day – 1.15% per annum; costs then jump to 0.006% per day for five times leverage – 2.26% per annum.
The full product range can be viewed here www.sgetp.co.uk. Societe Generale is planning to roll out further products with other underlying assets.
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