Retail Base For Levered ETFs Seen Narrowing (TBT, EEM, UYG, GLD, SPY, SDS)
Daisy Maxey from the WSJ reports “It’s difficult to tell how many unsophisticated investors own leveraged exchange-traded funds, but with these complex funds under scrutiny and some brokers backing away from sales, that ownership seems certain to diminish. ”The message is starting to get across that these are not as suitable for some people as some might have thought,” said Tom Graves, a director with Standard & Poor’s Equity Research Group. “My expectation is that we’re going to see a narrowing base of investors for this type of ETF going forward.”
“The universe of such funds contained $32 billion in assets at the end of June, up from $11 billion at the beginning of 2008, according to a recent report by State Street Global Advisors. There was an 86% increase in the number of the products in the same period, it said. State Street sells ETFs but not inverse or leveraged ETFs. Its report showed institutional ownership of the three top inverse and leveraged products to be significantly lower than that of some of the largest ETFs, based on regulatory filings made by institutional investment managers who control $100 million or more,” Maxey Reports.
“As of March 31, those filings show that just over 24% of ProShares UltraShort 20+ Year Treasury (TBT), 11% of ProShares UltraShort S&P 500 (SDS) and about 9.7% of ProShares Ultra Financials (UYG) were owned by institutions, according to SSgA Strategy & Research. In contrast, filings show institutional ownership at 87.7% of the very popular non-leveraged SPDR S&P 500 ETF (SPY), about 45.1% for SPDR Gold Shares ETF (GLD) and 66.2% of iShares MSCI Emerging Markets ETF (EEM),” Maxey Reports.