Investors are increasingly using ETFs to capitalise on movements in the UK blue-chip FTSE 100 Index, according to analysis of client transaction data by Barclays Stockbrokers.
Investors are increasingly using ETFs to capture short-term market movements, as well as in longer-term portfolio construction, noted Paul Inkster, Head of Product, Barclays Stockbrokers.
Barclays, the UK’s largest execution-only retail broker, revealed that, across May and June 2012, investments made in FTSE-related ETFs accounted for 40% of total client ETF trades for each month.
Across May and June, investors capitalised on a full range of FTSE ETFs; the iShares FTSE 100 ETF (ISF), which has £3.42 billion in assets, represented 14% of all trades in May 2012.
Meanwhile, the double-leveraged inverse ETFX FTSE 100 Super Short Strategy (2x) ETF (SUK2) and the double-leveraged long ETFX FTSE 100 Leveraged (2x) ETF (LUK2), both from ETF Securities, when combined, accounted for 26% of trades in the same month.
This trend continued into July, and week commencing 2nd July saw that for the first time this year seven out of the top ten ETFs were all FTSE related.
Data also showed that client appetite for ETFs as an investment tool has increased over time. Indeed, Barclays found that, since September 2008, the number of client accounts holding ETFs has increased by 159%, and by 71.5% comparing May 2012 to May 2009.
In the same period, the value of ETF assets held by Barclays Stockbrokers clients has nearly trebled (+188%). Analysis also found the average client trade size has increased by 24% between April 2012 and April 2010.
Paul Inkster, Head of Product at Barclays Stockbrokers, commented: “In May we saw significant volatility in the FTSE, so it is no surprise our clients have been making the most of investment opportunities through a range of FTSE ETFs.
“Barclays Stockbrokers investors have consistently used ETFs as effective and accessible investment vehicles and are increasingly using them to capture short-term market movements, as well as in longer-term portfolio construction.”
Other widely-bought ETFs by the broker’s clients included the iShares FTSE UK Dividend Plus ETF (IUKD), reflecting investors’ search for income, the iShares FTSE UK All Stocks Gilt ETF (IGLT), showing that investors are still seeking the perceived sanctuary of “safe haven” assets, and the DB X-Trackers S&P 500 Inverse Daily ETF (XSPS), perhaps suggesting that many think the June/July rally has gone too far given the US’s impending “fiscal cliff”.
In a further sign of increasing ETF usage, Barclays Stockbrokers recently re-launched its borking service for the intermediary market, citing growing demand from IFAs for access to a broad spectrum of investments, notably ETFs, in light of the changing regulatory landscape. [See Barclays Stockbrokers targets UK IFA market with easy ETF access]