Institutions are turning to exchange-traded products (ETPs) to hedge their portfolios or make directional bets quickly to gain from market instability, Investment News reports. Investors are adopting ETPs to position against what they think might be a downward movement of assets, and they want to hedge part of that exposure, said Russ Koesterich, managing director and global chief investment strategist for iShares.
The short ETFs are used along with several risk management tools, such as increasing cash, Treasuries and gold holdings, said Nainesh Shah, senior securities analyst and portfolio specialist at Roosevelt Investment Group. Some of the largest leveraged and inverse ETPs are currently being used by banks and money managers, including hedge funds and mutual funds.
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