EWU, the iShares MSCI United Kingdom ETF, enters September with its most dramatic positioning shift in months — short interest has collapsed by nearly a third in a week, even as the fund itself drifted lower.
The most striking development is the pace at which bearish positioning has unwound. Short interest fell 33% over the past week to roughly 1.8% of the free float, continuing a decline that has erased more than 25% of shorts over the past month. The drop is sharp enough to stand out: back in early August, short positions were running near 2.6 million shares — they now sit around 1.1 million. That unwind has not come from a surge in the ETF's price. EWU closed at $48.19 on September 1, down 2.4% on the week and barely moved over the past month. Shorts are covering into weakness, not into strength.
The borrow market tells a broadly relaxed story, though costs have crept up. Availability is exceptionally loose — at over 1,300% of short interest, there are roughly thirteen shares available for every one currently borrowed, well above the 52-week tightest reading of 127%. Cost to borrow has climbed about 22% over the past month to 3.85%, but the absolute level remains modest and far below anything that would pressure existing short positions. ORTEX's short score has drifted to just under 31 over the past two weeks, broadly flat and comfortably in the lower half of the scale — not a reading that signals meaningful short-side conviction.
Options positioning leans more cautious than short interest alone would suggest. The put/call ratio at 1.51 runs slightly above its 20-day average of 1.47, though the z-score of 0.54 indicates the skew is barely outside normal. What's more telling is context: the PCR has fallen steadily from above 1.8 in late July, meaning the options market has actually grown less defensive over the past five weeks even as the ETF gave ground. Elevated puts relative to calls remain the base state for EWU — the 52-week high on the PCR was 5.57 — so the current reading is far from alarming.
The ownership picture adds a notable footnote. BlackRock Portfolio Management, the ETF's own manager, filed an amended Schedule 13G in early August showing its disclosed stake fell from 30.7% to 21.2% of the class — a reduction of roughly 9.5 percentage points. The filing reflects internal portfolio changes and is not an activist signal; BlackRock remains far the largest holder with nearly 37% of shares in aggregate across its entities. RBC Rochdale added over 1.4 million shares through June, one of the larger flows among disclosed holders, while Merrill Lynch trimmed by about 108,000 shares over the same period. As a reminder, Schedule 13D/G disclosures are event-driven around the 5% threshold and reflect positions as last filed rather than in real time.
The ORTEX combined score at 31.4 places EWU in the lower tier of its universe. With no forthcoming earnings catalyst — this is a passive ETF — what to watch is whether the sterling macro backdrop, and any shift in global risk appetite toward UK equities, can reverse a week of quiet selling pressure while shorts continue their orderly exit.
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