The products cover the S&P 500, FTSE 100, DAX, and Euro Stoxx 50 indices, hard commodities (oil, silver, gold, copper and natural gas) and currencies (GBP/USD, EUR/USD and JPY/USD).
The ETPs can leverage returns between two, three and five times using either long or short positions.
Annually, fees on the five-timed leveraged ETPs can be equivalent to 2.26%, but the products are designed to be traded daily with a 0.006% per-day charge.
Total costs include commission, collateral and gap risk. Society Generale said its current bid-offer spreads range from 0.08% to 0.30%, with an average 0.23% spread.
Societe Generale leveraged ETP charges
| Leverage | Daily fee | Equivalent annual fee |
| 2x | 0.0024% | 0.86% |
| 3x | 0.003% | 1.15% |
| 5x | 0.006% | 2.26% |
The French bank said it is trying to meet growing investor demand for liquid products with varying amounts of leverage.
Societe Generale head of UK adviser sales Zak de Mariveles said there were over £2.8bn traded on the London Stock Exchange last year. Mariveles said they were for sophisticated retail and professional investors seeking to gain leverage on a range of popular underliers.
Last year, UK equity manager Neil Woodford listed triple-leveraged ETP inflows as a “flashing red light” that global stock markets are in a bubble. Woodford listed the inflows alongside soaring bitcoin prices, European junk bonds yielding less than US Treasuries and historic low levels of volatility as areas of concern.
7IM senior portfolio manager Peter Sleep said Woodford’s statement was overblown, noting trading in the leveraged products represented just 0.2% of the total flows into ETFs.
However, Sleep said leveraged ETPs were not the type of product 7IM would invest in and that the products are more popular in continental Europe.
“Levered products are very popular with issuers because they are derivative based and very high margin. They can behave in very non-intuitive ways because of the daily reset mechanism and frankly I think they are more akin to gambling products than investment products,” Sleep said.
Societe Generale is the parent company of Lyxor Asset Management, which launched a very different type of exchange product in April, offering investors core exposure to US and UK equities at 0.04%, the cheapest price in Europe.
