Monthly Market Report - June 2016

25th May 2016

With commentary from David Stevenson

As we slowly drift into the summer the markets are in a fickle mood, closely watching the direction of the oil price - and awaiting the outcome of the Brexit vote in the UK. The sense of unease is palpable although that hasn't stopped more speculative investors from taking lots of very big directional plays.

I'm always fascinated to see the flow of ETFs, especially as traded on the IG Index platform - its new stockbroking service is making a big play for the speculative passive investor and ETFs are a great way of tracking market sentiment.

A couple of weeks back the dealing released data on the most traded ISA-eligible ETFs on its stockbroking platform during the period of 1 March 2016 30 April 2016.

It's a fascinating snapshot of what retail 'punters' are speculating on. The top ten are as follows:

  1. Boost WTI Oil 3x Short Daily ETP (USD)
  2. ETFS Brent Crude
  3. ETFS WTI Crude Oil
  4. Boost WTI Oil 3x Leverage Daily ETP (USD)
  5. Boost US S&P500 3x Short Daily ETP
  6. Boost FTSE 100 3x Leverage Daily ETP
  7. Boost WTI Oil 3x Short Daily ETP (GBP)
  8. Boost FTSE 100 3x Short Daily ETP
  9. Boost WTI Oil 3x Leverage Daily ETP (GBP)
  10. ETFX DAX 2x Short Fund
    (*Based on the notional value of trades in pounds)

So, lets take this in. Out of the ten most traded funds on this particular platform, an astonishing six are bets on the price of oil, and just four on mainstream equities. I've long had fairly strong views about the direction of oil prices, but I wouldn't be so sure of my opinions to trade on them. Evidently many investors are much more certain!

For those investors with a slightly longer term view - especially those interested in structured products - the most news worthy item this month came from Ian Lowes and Chris Taylor up in the North East. Lowes Financial Management has been closely monitoring the success - or otherwise - of structured product plans over the last few years. According to the website StructuredProductReview - run by Lowes - all the IFA distributed products "linked solely to the FTSE 100 maturing in the first quarter of this year made a gain or returned capital for investors".

To be precise 60 of the IFA-distributed structured products linked solely to this index of the UKs largest companies made a gain for investors, while two returned capital only. None gave rise to a loss. The FTSE 100 linked maturities on average made annualised gains of 4.92% over an average term of five years. The analysis also reports that "looking beyond just the FTSE 100 linked products to all 82 products maturing in the quarter, 68 delivered a gain for investors, 10 returned capital only and 4 made a loss. Three of these were impacted by the weakness in commodities and the fourth by falls in emerging markets."

In all across all the 82 products maturing in the first quarter of this year the annualised gain was 3.67% over an average term of five years with the top 25% making average annualised gains of 7.49% over an average term of 4.66 years.

Download the full Monthly Market Report here.
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