Blog Posts — December 14, 2021

New batch of single-stock short and leveraged ETPs tracking STOXX indices launched

A suite of new STOXX indices from Qontigo underlie single-stock short and leveraged exchange-traded products (ETPs) issued by Leverage Shares, which provide an efficient and low-cost way to pursue leveraged strategies.

A total of ten new indices have been introduced, with respective ETPs to be listed on the London Stock Exchange, Euronext Paris and Euronext Amsterdam starting today. The strategies track inverse (-3x) and leveraged (+3x) investments in stocks of five widely traded companies (Table 1). 

Table 1 – Underlying shares for new ETPs

Taiwan Semiconductor
NIO
Moderna
Airbus
Coinbase

Clear, robust methodology 

Each index is calculated in real time and aims to replicate a leveraged return from the net return of the underlying stock, adjusted for margin fees, borrowing costs, and interest earned or paid on the index notional. For example, the iSTOXX® Leveraged 3X TSM Index represents three times the daily return of Taiwan Semiconductor shares. The iSTOXX® Inverse Leveraged -3X COIN Index tracks three times the inverse of the daily return of Coinbase. 

The indices tap strong demand in the market for strategies that express high-conviction investment ideas, and enable investors to do so in a way that is rules-based and transparent, and that bring robustness and neutrality to the final product.

This latest launch brings the total of single-stock short and leveraged products issued by Leverage Shares and tracking STOXX indices to 91, covering 41 stocks. For a full list, click here.  

Competitive advantages of ETPs

Investors and traders have long used short and leveraged strategies with a directional view in mind, but such positions are also common for other tactical purposes such as hedging, managing portfolios or relative value trading. Traditionally, they have been implemented with futures, certificates and over-the-counter instruments such as CFDs. Pursuing the strategies through an ETP, however, brings cost, risk and operational benefits.

Among those benefits, an ETP does not require a margin account nor any margin levels. There are no extra costs for holding a position overnight. Unlike CFDs or futures contracts, the risk in ETPs is limited to the amount invested. Additionally, ETPs can bring tax efficiencies.1 Finally, there is no credit or counterparty risk as all investments are replicated physically, meaning they are backed by the underlying assets, and are cleared through a clearing house. 

Versatility in index investing

For Qontigo, the ETPs showcase the versatility of index-based investing and innovation in index construction. We are excited to continue working with partners in the development of such products that open up new investment possibilities, facilitate trading and assist with portfolio management. 

1 For example, withholding tax on US-source dividends is 15% for Leverage Shares ETPs, vs. 30% generally for non-US persons investing in US shares. Please note that STOXX indices use a 30% tax rate in their calculation.