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DB Equity Research Equity Research-North America-US ETF Holder Demographics Understanding ETF Usage
March 20, 2012--A CAGR of 27.3% in assets and inflows of $816bn underpin ETF’s 10Y growth
The US ETF industry has experienced a meteoric growth over the last 10 years. Assets grew at a CAGR of 27.3%, net inflows were $816bn, and the number of products increased almost 11 times.
In contrast, Long Term Mutual Funds grew at a CAGR of 6.7% with inflows of $1,606bn. On a relative basis, ETFs grew from 1.8% to 10.5% of LTMF assets in the 10Y period; and ETFs also represented 29% of all US cash equity $ volume in the past 3 years. At the end of 2011, there were 1,093 ETFs with assets of $939bn and $1,222bn traded during December 2011.
ETF Ownership was 53.0% Institutional vs. 47.0% Retail at the end of 2011
As of the end of Q4 2011, the ETF investor type ownership breakdown was 53.0% for Institutional Investor and 47.0% for Retail Investor. Investment advisers and brokers were the main ETF institutional users holding 47.7% and 38.0% of all institutional ETF assets, respectively; while mutual fund managers and hedge fund companies were the other significant duo with 5.2% and 4.1% of the institutional ETF assets, respectively.
ETF Institutional Ownership has increased steadily over the last decade
ETF Institutional Ownership has increased steadily from below 30% in the early 2000s to above 50% in the last couple of years, overtaking retail investors as the main product users. The number of institutions using ETFs has also surged from 405 back in the year 2000 to 2,545 at the end of 2011.
Institutional investors use some ETFs more than others
Although the breakdown between institutional and retail ownership is not significantly uneven at an aggregated level, there can be significant differences at an individual ETF level. Overall, we found that institutional participation was higher in ETFs offering exposure to equity or fixed income with no leverage, large AUM, abundant turnover, high flows activity, low TER, tight B/A spread, and high short interest-related figures.
Most ETFs are good for asset allocation, but only some are good for other portfolio functions such as cash and risk management
The high ETF ownership percentage and product usage exhibited by investment advisers (25.3%, 960 ETFs) and retail investors (47.0%, 1,068 ETFs) suggest that most ETFs are used for their primary function i.e. asset allocation, either strategic or tactical. Meanwhile, the more limited product usage, displayed by mutual fund managers (521 ETFs) and hedge fund companies (376 ETFs), suggests that the list of ETFs suitable for additional non-primary portfolio functions is more limited.
Multi-purpose ETFs can be identified by measuring ETF usage
ETFs used for additional non-primary activities such as cash management and risk management have most or all of the following characteristics: widely used benchmark as underlying, higher turnover, higher abs. flows activity, higher days to cover, higher SI as % of SO, higher institutional ownership, tighter B/A spread, and larger AUM Size; in addition to having brokers representing the highest institutional ownership, and hedge funds among the institutional holders. From these findings we elaborated a simple framework to measure the level of ETF usability, according to which about 50 ETFs can be considered "multi-purpose".
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Source: Deutsche Bank-Equity Research-North America
FocusShares broadens its low-cost sales pitch
MArch 20, 2012--A year after launching its initial suite of US equity exchange traded funds, FocusShares is embarking on its first marketing campaign to raise assets and awareness among advisers of its low-cost products.
Since its inception FocusShares has looked to position itself as the price leader in the heavily commoditised world of domestic equity ETFs. Its large-cap ETF, for example, has an expense ratio of 5 basis points.
And he reiterated his pledge that Brazil will take tough action to combat the ill effects of such policies.
read more CFTC Releases Staff Analysis of Market Data Related to Single-Name and Index Credit Default Swaps
Analysis of this data may supplement other information considered in connection with the final rules defining the terms noted above, and it is made available to allow the public to consider this supplemental information. The CFTC and SEC staffs expect that the Commissions will consider the adoption of the final rules in the next several weeks.
view the Comments for Proposed Rule 75 FR 80174 view the SEC Memorandum-Information regarding activities and positions of participants in the single-
name credit default swap market
CFTC.gov Commitments of Traders Reports Update Standard & Poor's Announces Changes In The S&P/TSX Canadian Indices Company additions to and deletions from an S&P equity index do not in any way reflect an opinion on the investment merits of the company.
Finance minister pledges bold action to safeguard economic competitiveness
March 17, 2012--Brazil’s finance minister Guido Mantega has stepped up his attack on rich country economic policies that he says have opened the flood-gates to harmful capital flows to the developing world.
Writing exclusively in today’s Emerging Markets, Mantega says the economic competitiveness of emerging nations must not fall victim to ultra-loose monetary policies being pursued by the US, Europe and Japan in response to the global crisis.
Source: Emerging Markets
March 16, 2012--The staffs of the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) have released analyses of market data related to single-name and index credit default swap (CDS) transactions.
The analyses, which were conducted by the staff of the SEC’s Division of Risk, Strategy and Financial Innovation and shared with the CFTC’s Office of Chief Economist, are available for review as part of the comment files for rules the Commissions jointly proposed to further define the terms “swap dealer,” “security-based swap dealer,” “major swap participant,” “major security-based swap participant” and “eligible contract participant.” The rules were proposed in December 2010 as one part of the implementation of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). For access to the information, please see the Related Links.
Source: CFTC.gov
March 16, 2012--The current reports for the week of March 13, 2012 are now available.
view updates
Source: CFTC.gov
March 16, 2012--Standard & Poor's will make the following changes in the S&P/TSX Canadian Indices:
The shareholders of RuggedCom Inc. (TSX:RCM) have accepted the $CDN33.00 cash per share offer from Siemens Canada Limited.
RuggedCom will be removed from the S&P/TSX SmallCap, Equity SmallCap and Clean Technology Indices effective after the close of Wednesday, March 21, 2012.
Source: Standard & Poor's
