DIY Investor Magazine
/
December 2015
59
DAILY RETURN OF INDEX
CUMULATIVE RETURN
Index
3x LeverageDaily
3x ShortDaily
TRENDING MARKET
24.3%
89.8%
49.4%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
0 1 2 3 4 5 6 7 8 9 10 11
DAY
2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2%
0%
1%
1%
2%
2%
3%
0 1 2 3 4 5 6 7 8 9 10 11
DAY
(Source: Boost ETP LLP)
INTRA-DAY CRASH PROTECTION
Boost ETPs are designed to prevent the ETP from
falling to $0 in one day. If a market move is extreme,
e.g the FTSE 100 falls by 20% (60% including leverage)
then 3UKL rebalances intra-day to ensure that the ETP
does not go to $0.
The intra-day rebalancing reduces the sensitivity
of further falls below 20% while maintaining some
exposure to a rebound. Similarly, if the FTSE 100 rises
by 20%, then 3UKS would rebalance intra-day.
USES AND TRADING STRATEGIES
SL ETPs can be used by a wide range of investors for
many different trading strategies:
•
Treble daily returns, positive or negative
(excluding fees and adjustments).
•
Hedge existing positions in one simple trade
•
Use in a long-short strategy using both a
leverage ETP and a short ETP
•
Use in a pair trade to take advantage of
undervalued assets
•
Short the market/asset class quickly, efficiently
and cost-effectively
•
Short ETPs allows the investor to profit in a
falling market
•
Use tactically within a broad portfolio where
an investor holds strong short term convictions
LEVERAGE ETPS AND POSSIBLE RISKS
Leverage ETPs have been fiercely debated in investor
circles as to whether they are risky and/or complex
investments. Leverage has been around for many
centuries and a multitude of financial products exist
to enable investors to gain leverage and/or short
exposure. An investor should understand the benefits
and risks of each leverage product and see which one
suits their goals and circumstances for the specific
trade being considered. SL ETPs increase the tools
available to investors, and used in the right way, can
enhance returns.
BOOST ETP
STRUCTURED PRODUCTS ETFS
CFDS/ SPREADBET
FUTURES/ OPTIONS
Underlyings / asset classes Equities, Commodities Many
Single commodities
not possible
Many
Many
Leverage
Yes
Yes
Yes (only up to 2x)
Yes
Yes
Lose more than your invest-
ed capital
No
No
No
Yes
Yes
Exchange Traded
Yes
No
Yes
No
Yes
Multiple Market Makers
Yes
No
Yes
No
Yes
Arbitrageable
Yes
No
Yes
No
Yes
Unsecured credit risk
No
Yes
No
Yes
(MF Global & World Spreads)
No
Over Collateralised
Yes
No
Usually
No
No
High fees
No
Yes
No
Yes
No
Transparent
Yes
No
Mostly
No
Yes
Highly liquid and trade in
large size
Yes
No
Yes
No
Yes
Margin calls & close out
No
Yes
No
Yes
Yes
Short term dated
No
Yes
No
Yes
Yes (rolls & exercise
dates)
N.B The information contained in this article is not intended to represent all the risks associated with Leverage and Short ETPs, nor does it list all the important factors one should consider
when reviewing whether a Boost ETP is appropriate. Investors should review and understand the Prospectus including the “Risk Factors” section before any investment into Boost ETPs.
This communication has been provided by Boost ETP LLP which is an appointed representative of Mirabella Financial Services LLP which is authorised and regulated by the Financial
Conduct Authority. Please read our full disclaimer at
before considering an investment in Boost
