Leverage Shares launches 15 IncomeShares on LSE

Leverage Shares listed 15 new IncomeShares exchange-traded products on the London Stock Exchange, expanding its options-based income range to include commodities such as gold, silver and copper miners. The listings add to a suite of derivative-backed ETPs designed to deliver regular cash distributions without using leverage.

The ETPs hold the underlying commodity exposure and generate income by selling options on those holdings. Oktay Kavrak, Head of Communications & Strategy at Leverage Shares, explained the firm “buys the underlying asset and sells options on that.” He said the approach can allow investors to capture part of an upward move while providing some cushion if prices fall, and that the strategy is intended to reduce volatility and support monthly or quarterly payouts.

Leverage Shares launched in late 2017 with a focus on 2x single-stock leveraged ETPs on names such as Nike and McDonald’s. The firm later added higher-leverage products for indices and commodities and developed a white-label platform to scale product issuance for third parties. The company currently hosts nine clients on its white-label platform and expects a tenth client to join.

IncomeShares is one of the firm’s three core offerings alongside leveraged products and its white-label service. Leverage Shares now operates 54 IncomeShares products and reports the income range is approaching $200 million in assets, with the new commodity ETPs broadening the line-up.

Leverage Shares pointed to rapid growth in the options-based income category in the United States, where assets have risen from near zero five years ago to about $250 billion. The firm is working with the London Stock Exchange on a report assessing the development of income ETPs in Europe and comparing that trajectory with the U.S. market.

On trading activity, Leverage Shares noted that three of the five most traded ETF/ETPs on the London Stock Exchange last year were its products, and that volume reflects participation from a mix of individual traders, hedge funds and money managers.

Kavrak said the income products target investors who want exposure to non-dividend assets while receiving yield. He added: “Gold is an asset that finds its way into all kinds of portfolios, but it doesn’t pay dividends. By running these derivative-based strategies, we aim to provide gold exposure with around 1 per cent distribution a month.” The firm also publishes monthly investment theses and strategy explainers and plans to expand its investor education materials.