The 10 Most Shorted ETFs: Which Sectors Saw Short Interest Increase?

Investors often short stocks to hedge positions against long positions or as a way to bet against a particular company. Benzinga provides a look at the most shorted stocks here.

Exchange traded funds offer investors a way to get exposure to the overall market, certain sectors or countries by providing an investment of a basket of stocks.

A new report from S3 Partners and managing director of predictive analytics Ihor Dusaniwsky shows the most shorted ETFs, which ETFs have the highest short interest and which ETFs saw the biggest inflows of new shorts in the last 30 days.

Top Shorted ETFs: The report dives into the most shorted ETFs, and many of them are familiar names that cover the overall broader market. Other names are related to certain sectors.

Overall, there is $214.3 billion in short interest in 3,350 ETFs tracked by S3, down from $215 billion 30 days ago.

ETFs have an average of 16.4% short interest and cost to borrow of $1.02%. This compares to average short interest of 4.86% for U.S. stocks and a cost to borrow of 0.65%.

1. SPDR S&P 500 ETF Trust SPY: $53.7 billion short, 14.28% short float, 0.3% cost to borrow

2. Invesco QQQ Trust QQQ: $20.2 billion short, 12.47% short float, 0.3% cost to borrow

3. iShares Russell 2000 IWM: $18.4 billion short, 33.22% short float, 0.94% cost to borrow

4. iShares iBoxx High Yield Corporate Bond ETF HYG: $6.8 billion short, 38.8% short float, 2.82% cost to borrow

5. iShares MSCI Emerging Markets EM: $5.1 billion short, 22.96% short float, 0.3% cost to borrow

6. SPDR Energy Select Sector ETF XLE: $4.4 billion short, 9.82% short float, 0.3% cost to borrow

7. iShares MSCI EAFE ETF EFA: $3.7 billion short, 8.22% short float, 0.3% cost to borrow

8. iShares iBoxx Investment Grade Corporate Bond LQD: $3.6 billion short, 8.88% short float, 0.3% cost to borrow

9. SPDR Financial Select Sector XLF: $2.9 billion short, 8.85% short float, 0.3% cost to borrow

10. SPDR S&P Biotech XBI: $2.8 billion short, 34.86% short float, 0.94% cost to borrow

Related Link: Paxmedica, Getty Images And 3 Short Squeeze Candidates That Could Soar This Week 

ETFs With Short Interest Rising: The report from S3 shows that investors are increasing their short bets in the ETF space in sectors like semiconductors and fixed income. Investors are also increasing short positions in ETFs covering specific countries.

The 5 ETFs that saw the biggest increase in short positions in the last 30 days are:

1. iShares iBoxx High Yield Corporate Bond ETF: $994.8 million added

2. VanEck Semiconductor ETF SMH: $462 million added

3. iShares Core MSCI Total International Stock ETF IXUS $379.8 million added

4. SPDR Dow Jones Industrial Average ETF DIA: $378.9 million added

5. iShares Core U.S. Aggregate Bond ETF AGG: $284.5 million added

Outside of the top five ETFs with increased short interest, two regional ETFs were among the 10 with the largest increases.

The iShares MSCI South Korea ETF EWY saw an increase of $229.5 million in short interest in the last 30 days. The ETF now has $713.2 million in short interest, or around 22.75% of the float.

The iShares MSCI Brazil ETF EWZ saw an increase in $225.5 million in short interest in the last 30 days. The ETF now has $1.3 billion in short interest, or around 25.35% of the float.

Highest Short Interest By Percentage: Outside of the large dollar amounts that are short particular ETFs, an indication of a high short percentage of the float could also indicate sectors and countries that are being bet against.

Here are the ETFs with the highest short interest by percentage:

1. SPDR S&P Retail ETF XRT: 193.88% short float, $1.1 billion total short

2. SPDR Series Trust SPDR Homebuilders ETF XHB: 57.75% short float, $610.4 million total short

3. SPDR S&P Oil & Gas Explorer & Product XOP: 52.90% short float, $2.8 billion total short

4. iShares U.S. Home Construction ETF ITB: 46.39% short float, $557.5 million total short

5. iShares iBoxx High Yield Corporate Bond ETF: 38.8% short float, $6.8 billion total short

Most Crowded Short ETFs: Another indicator of bets against an ETF covering a particular sector or region could be combining the short interest by dollars, short float percent and cost to borrow. S3 ranks the five most crowded ETFs for short interest using a scoring system.

1. SPDR S&P Retail ETF
EWCO

2. iShares iBoxx High Yield Corporate Bond ETF

3. SPDR S&P Oil & Gas Explorer & Product

4. SPDR S&P Biotech

5. Invesco S&P 500 Equal Weight Communication Services

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