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What’s New In Investments, Funds? – Wisdom Tree, Nomura Asset Management

Editorial Staff

16 August 2023

, a global financial innovator, has just launched three short and leveraged (S&L) ETPs, covering French equities and European banks. The launches build on WisdomTree’s range of tactical trading tools available to European investors.

The WisdomTree CAC* 40 3x Daily Leveraged (3CAC) and WisdomTree CAC 40 3x Daily Short (3CAS) have listed on Börse Xetra and Euronext Paris with management expense ratios (MER) of 0.75 and 0.80 per cent, respectively. WisdomTree says that it is the only ETP provider in Europe to provide 3x daily short and leveraged CAC 40 exposures.

The WisdomTree EURO STOXX Banks 3x Daily Short (3BAS) has listed on the London Stock Exchange, Börse Xetra and Borsa Italiana with an MER of 0.89 per cent. The ETP complements the existing WisdomTree EURO STOXX Banks 3x Daily Leveraged ETP, the firm said in a statement.

“In the current economic landscape, investors need an extensive range of tools to navigate financial markets, whether that is to magnify daily returns, hedge positions or to deploy more sophisticated strategies. Tactical exposures through short and leveraged ETPs can play a complementary role to long-term strategic holdings, allowing investors to express high conviction views and take advantage of market dislocations quickly and efficiently,” Pierre Debru, head of Quantitative Research & Multi Asset Solutions, Europe, said.

S&L ETPs amplify both the positive and negative returns of an investment. The potential returns and losses from a leveraged position will be greater than from the equivalent unleveraged position. Due to the daily leverage and effects of compounding, short and leveraged ETPs are not suitable for passive investors employing a traditional buy and hold strategy and are designed for tactical and short-term trading with a recommended holding period of one day. Consequently, investors need to understand the product attributes and all the associated risks before investing in S&L ETPs, the firm added.

WisdomTree’s short and leveraged ETP range, which has $1.8 billion in assets under management, consists of 112 S&L ETPs, covering major asset classes, such as equities, commodities, fixed income, alternatives, and currencies. The ETPs are registered for sale in Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Spain, Sweden and the UK.

WisdomTree currently has approximately $96.6 billion in assets under management globally.

Nomura Asset Management
(NAM) has launched its first mutual fund which offers European investors access to the corporate hybrid bond asset class. The Nomura Funds Ireland – Corporate Hybrid Bond Fund (ISIN: IE000PY311L1), which provides investors with a portfolio of bonds offers yield levels comparable with those of high yield bonds.

The fund will be managed by Julian Marks, head of corporate hybrid bonds, who recently joined NAM in January after 15 years at Neuberger Berman where he was the lead portfolio manager for the corporate hybrid bond strategy. He was also a portfolio manager on broader investment grade credit mandates.

Marks and his 12-member investment team of analysts and portfolio managers are responsible for analysing issuers and individual bonds on a fundamental and ESG basis. The result of their multi-layered process is a concentrated portfolio of 30 to 40 issuers, about half of which are substantially overweighted.

The fund was launched in-line with NAM’s commitment to providing the best opportunities for clients. The corporate hybrid bond market is continuing to grow, reaching €194 billion ($212 billion) in recent years, as issuers continue to optimise their capital structures, support their credit ratings and minimise their weighted average cost of capital by issuing these bonds.

For investors, these bonds are attractive, with an average yield of in excess of 8 per cent per annum in euros. Additionally, these bonds are mostly issued by stable companies with robust balance sheets and credit ratings in the investment grade range, predominantly from Europe.

"We believe this is a particularly favourable time to invest in corporate hybrid bonds, because the risk premiums are, on average, over 100 basis points above what we consider to be fair value. This means that there is considerable potential for price gains and furthermore, certain issuers are, in our view, significantly mispriced, creating good opportunities for active managers to generate added value for investors," Marks said.

"In hybrid bonds, we see some of the best investment opportunities in the entire bond market. Only a few market participants can take advantage of them because it requires a high level of specialised expertise and experience. Having brought in Julian, who has an in-depth knowledge of the market, we can now offer our clients a hybrid bond investment solution that can help to effectively diversify their portfolio and open up new sources of return," Peter Ball, global head of distribution at NAM, added.