Source says the use of sector exchange-traded funds by hedge funds now represents a meaningful slice of overall sector investing in Europe.
The London based ETF provider says total turnover on its European sector ETFs reached EUR5.9bn in April, according to Cascade, Clearstream’s German settlement system.
This represented 76 per cent of Cascade’s reported European sector activity, dwarfing the turnover on competing products.
The Optimised Supersector ETFs created by Source combine ETFs with Stoxx Europe 600 Optimised Supersector indices. Source’s ETFs offer a cash instrument through which hedge funds can invest in and short European sectors.
In the US ETF markets, hedge funds can represent over 30 per cent of daily trading volumes while in the European ETF market they have historically been virtually non-existent.
Michael John Lytle, director of marketing at Source, says: “The trend is crystal clear and shows significant growth in the use of Source ETFs by the hedge fund community. Flows in sector ETFs now represent a meaningful slice of overall sector investing in Europe and one major reason is because the hedge funds can go long or short of our sector ETFs.”
