Leverage Shares is launching new products for UK and European traders The latest in a line of innovative tracking, geared and inverse single name ETFs from the provider.
What are the new products from Leverage Shares?
Leverage shares are introducing ETPs that will track the performance of thematic funds and strategies Including three ARK Invest funds.
ARK Invest is led by high profile fund manager Cathie Wood who is famous for her bold bets on technology and growth stocks such as Tesla.
The three funds that Leveraged Shares new products will track are ARKK, the ARK Innovation Trust, ARKW, ARK Next Generation Internet and ARKG, ARK Genomic Revolution.
All three of which are ETFs in their own right.
There are also new ETPs that will track Warren Buffet’s Berkshire Hathaway, though as yet there is not an inverse ETP on the Sage of Ohama’s investment vehicle.
Traders will also be able to take a view on a host of sector-specific baskets, for example, China Tech, Airlines, or Semiconductors and BioTech
In total Leveraged Shares will introduce 42 new ETPs with leverage of up to 5 times the underlying, on the upside, and up to three times on the short or inverse ETPs.
The new products will take the total number of ETPs in the Leverage Shares stable to 145, which the firm says represents 8.0% of all LSE listed ETPs.
How can you trade in these ETPs?
The new ETPs are LSE listed and will trade in the same way as other stocks and shares, and are available through a wide range of UK stockbrokers.
Leveraged Shares make markets in the ETPs and it trades them in three separate currencies, with quotes in US dollars, British Pounds and Euros.
If you believe the financials sector is due for a correction you might choose to buy the Leverage Shares Short Financials ETP, which provides you with downside exposure to the sector.
The price of the ETP moves inversely to the performance of the sector index it tracks.
Such that if the financials index falls in value then the price of the Short Financials ETP will rise in value, and in fact, it will rise by a multiple of the sectors downside move, because this particular ETP is three times leveraged.
Of course, leverage works both ways and if the financial sector rises in value, then, the price of the 3 times levered Short Financials ETP will fall in line with that move, multiplied by 3.0.
So a +or – 1.0% move in the sector index will result in a +or- 3.0% move in the price of the ETP.
What are the risks in trading these new ETPs?
Trading in these ETPs will expose an investor to the usual market risks associated with equity trading. However, there are additional risks from the leveraged and inverse nature of the products.
Leverage can magnify gains and losses and exposure to the short side creates a theoretical open-ended risk.
It’s also worth bearing in mind that leveraged and leveraged inverse ETPs are primarily designed to be short term speculative instruments and not something for long term buy and hold strategies.
As with any geared products, it’s important to do your own research and understand exactly how these ETPs work, before you trade them.
With over 35 years of finance experience, Darren is a highly respected and knowledgeable industry expert. With an extensive career covering trading, sales, analytics and research, he has a vast knowledge covering every aspect of the financial markets.
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