Defensive and short equity ETFs rallied over the last week, amid renewed risk aversion on Dubai credit concerns, says ETF Securities (ETFS).
Trading flows on the issuer's ETFX platform increased last week, bolstered by a near doubling of two-times leveraged short equity ETF trading. Turnover in these ETFS funds reached $44m, accounting for 41% of total turnover on the ETFX platform last week.
In terms of returns, the ETFX Cac 40 2x Short fund was the issuer's best performing two-times short equity ETF, gaining 3% over last week.
ETFS says the continuing rebound of returns in these funds stems from increasing risk aversion and concerns the rally in equity markets may be ending.
The large cap funds have also gained amid the increased uncertainty, with the ETFX Russell 1000 large Cap ETF up 2%.
The issuer says this fund has historically tended to outperform during times of weak and uncertain economic growth, as investors seek large, liquid blue chip companies.
In terms of defensive ETFs, thematic funds with lower cyclical exposure outperformed last week. ETFS says demand for gold as a safe-haven asset has remained strong this year, while investment in gold miners provides leveraged exposure to underlying gold prices.
The ETFX S-Net ITG Global Agri Business fund has been the issuer's top performing defensive ETF in 2009, seeing a 1% gain last week, bringing year-to-date growth to 50%. ETFS says agriculture's low correlation to the business cycle and strong, long term supply-demand fundamentals has been the basis for the fund's high returns.
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