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Morningstar Reports U.S. Mutual Fund and ETF Asset Flows Through November 2010.
December 15, 2010--Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today reported estimated U.S. mutual fund and exchange-traded fund asset flows through November 2010. After contributing $26.8 billion to long-term mutual funds in October, investors added just $5.0 billion in November. While the pattern of outflows for U.S. stock funds continued, investors also lost enthusiasm for fixed-income funds. Money market funds were the direct beneficiaries with inflows of $24.7 billion, their best month since January 2009. U.S. ETFs saw inflows of $7.4 billion in November, pushing year-to-date inflows to $93.8 billion and total industry assets to $951.4 billion.
Additional highlights from Morningstar’s report on mutual fund flows:
Inflows for taxable-bond funds reached just $6.0 billion in November versus $21.0 billion in October, the smallest monthly inflow for the asset class since May. After 22 consecutive months of net inflows, municipal-bond funds saw net outflows of $7.6 billion in November. This reversal comes after investors added nearly $105.6 billion to the asset class from January 2009 through October 2010 and marks the worst month for municipal-bond funds in terms of net outflows except for the $8.0 billion redeemed in October 2008 during the credit crisis.
Rising rates and currency swings contributed to a tough month for emerging-markets bond and world-bond funds, some of the more aggressive areas of the bond market. Nevertheless, money continued to flow to emerging-markets bond funds. These offerings have collected more than $13.7 billion in 2010, and total assets have nearly doubled over the last 12 months to $36.8 billion.
Large-growth funds had the biggest outflows of any Morningstar category this year, losing $43.5 billion.
Equity-oriented families including American, Fidelity, and Columbia continued to suffer outflows. Despite redemptions of $1.9 billion from PIMCO Total Return, the fund’s first month of net outflows in two years, PIMCO still took in $1.1 billion during November.
Additional highlights from Morningstar’s report on ETF flows:
U.S. stock ETFs, with inflows of $7.9 billion, topped all ETF asset classes in November, followed by international-stock ETFs with weaker, yet positive flows of $2.8 billion as a result of renewed sovereign credit fears in Europe and a stronger U.S. dollar.
Vanguard collected $3.3 billion of the $7.4 billion assets added industry-wide in November. The firm’s ETF assets rose more than 62% over the last 12 months, allowing it to capture nearly 15% of the market share.
Silver ETFs continued to see healthy inflows. Investors looking to increase their commodities allocations may see silver, which has seen price appreciation of 65% year to date, as a good alternative to gold, which has gained 26% over the same period.
For more information about Morningstar Fund Flows, please visit http://global.morningstar.com/fundflows
Source: Morningstar
ISE Launches Sweep and Cross Functionality in PrecISE Trade®
December 14, 2010--The International Securities Exchange (ISE) announced today that it has launched Sweep and Cross functionality for its proprietary front-end trading system, PrecISE Trade.
With the efficiency of a single click, traders who enter large crossing orders are now able to sweep the entire options market to execute against the top of book liquidity at other exchanges and then cross the
remainder of the order at ISE. The sweep orders will be sent to ISE’s Away Market Routing partner and
when sweep executions are completed, a cross will be submitted at ISE for the remaining contracts.
We are very excited to enhance our best-in-class front-end trading system with this new trading tool,”
said Boris Ilyevsky, Managing Director of ISE’s options exchange. “This powerful new functionality gives
our members an efficient mechanism to benefit from ISE’s deep liquidity and to cross large options orders
at the best available price for their customers.”
The new PrecISE Sweep and Cross functionality adheres to all inter-market linkage rules related to execution of large crosses. PrecISE users must be enabled for Away Market Routing (AMR) to take advantage of this new tool.
ISE is currently offering a two month fee waiver for new users of PrecISE Trade. The robust front-end trading system supports all exchange order types and functionality, including complex orders, tied-tostock options orders, crossing orders, and sweep functionality to access other exchanges. PrecISE Trade users have access to real time market data as well as ISE’s Depth of Market Feed, the ISE Spread Book Feed and real time options Greeks. In addition, PrecISE offers order management tools and flexible posttrade clearing and allocation functions.
For more information about Sweep and Cross functionality or PrecISE, please contact ISE Business Development at bizdev@ise.com.
Source: International Securities Exchange (ISE)
Standard & Poor's confirms Canadian Derivatives Clearing Corporation's AA Credit Rating
December 14, 2010--TMX Group Inc. today announced that the Standard & Poor's Rating Services (S&P) has confirmed Canadian Derivatives Clearing Corporation's (CDCC) AA rating, with a stable outlook. CDCC is the issuer, clearinghouse and guarantor of the Montréal Exchange's exchange-traded derivatives in Canada.
According to the S&P report, the rating confirmation reflects CDCC's prudent risk management policies and procedures, comprehensive suite of financial safeguards, mutualization of risk, high-quality, liquid collateral, and its continual surveillance and assessment of members' financial condition.
"We are very pleased that S&P has recognized CDCC's strength, as well as the sound management of this vitally important service," said Alain Miquelon, President, Montréal Exchange and Group Head of Derivatives.
CDCC is currently working in partnership with the dealer and user community to develop the infrastructure for central-counterparty services for the Canadian fixed income market. In addition, CDCC has proposed a domestic clearing solution for other over-the-counter derivatives that is linked to other global derivatives clearinghouses.
SOURCE: Toronto Stock Exchange
Federal Open Market Committee Statement
December 14, 2010--Information received since the Federal Open Market Committee met in November confirms that the economic recovery is continuing, though at a rate that has been insufficient to bring down unemployment. Household spending is increasing at a moderate pace, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. The housing sector continues to be depressed. Longer-term inflation expectations have remained stable, but measures of underlying inflation have continued to trend downward.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, the unemployment rate is elevated, and measures of underlying inflation are somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. Although the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, progress toward its objectives has been disappointingly slow.
To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. The Committee will maintain its existing policy of reinvesting principal payments from its securities holdings. In addition, the Committee intends to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month. The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.
The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Sandra Pianalto; Sarah Bloom Raskin; Eric S. Rosengren; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.
Voting against the policy was Thomas M. Hoenig. In light of the improving economy, Mr. Hoenig was concerned that a continued high level of monetary accommodation would increase the risks of future economic and financial imbalances and, over time, would cause an increase in long-term inflation expectations that could destabilize the economy.
Source: FRB
Van Eck files with the SEC
December 14, 2010--Van Eck has filed a post effective amendment, registration with the SEC for
Market Vectors High Yield Floating Rate ETF.
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Source: SEC.gov
Van Eck files with the SEC
December 14, 2010--Van Eck has filed a post registration statement, registration statement with the SEC for
Market Vectors Fixed Income II ETF.
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Source: SEC.gov
US munis face ‘growing credit risk’
December 14, 2010--US cities, hospitals, schools and other public groups struggling with financial problems after the recession could face fresh difficulties as bank loans start to expire.
Rating agencies and industry analysts are warning that a complex part of the $2,900bn municipal bond market, floating rate debt which relies heavily on bank support, may be the next source of pain...
Source: FT.com
Greater hedge fund exposure forecast
December 14, 2010--Institutional investors’ hunt for higher returns will lead them to increase their exposure to hedge funds, commodities and private equity, according to a survey.
The research, conducted by Bank of America with Quinnipiac university and the Connecticut Hedge Fund Association, found almost two-thirds of investors intended to increase allocations to alternative assets in the next 12 to 24 months.
Fewer than a quarter of the 107 US and international investors polled, representing about $2,100bn in assets under management, said they would increase portfolio allocations to fixed income or equities.
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Source: FT.com
UBS Allows Daily Redemption for Five of its Exchange Traded Access Securities (E-TRACS)
December 14, 2010--UBS Investment Bank announced today that it will allow daily, instead of weekly, redemption for any holder of the following UBS E-TRACS (the "Securities") that wishes to exercise its right of early redemption: E-TRACS Linked to the Alerian MLP Infrastructure Index due April 2,- 902641646- MLPI -2040 E-TRACS Linked to Alerian Natural Gas MLP Index due July 9, 2040- 902641620 -MLPG
2xMonthly Leveraged Long E-TRACS Linked to the Alerian MLP -902664200- MLPL- Infrastructure Index due July 9, 2040- 1xMonthly Short E-TRACS Linked to the Alerian MLP Infrastructure- 902641612- MLPS Total Return Index due October 1, 2040 E-TRACS Linked to the Wells Fargo MLP Index due October 29, 2040 -902664408 MLPW.
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Source: UBS
“In-Laws and Outlaws”-Remarks of Commissioner Bart Chilton of the Commodity Futures Trading Commission to the Americans for Financial Reform
December 14, 2010--Thanks for the opportunity to be with you today to talk about something I know has been on your minds for a long time—and mine too—speculative position limits in commodities.
In the last decade, we saw the U.S. futures industry grow five-fold when the rest of the world grew three-fold. In several years we saw over $200 billion come into regulated U.S. futures markets. This new money was primarily from speculators, much of which was held by speculators I call "massive passives," those with a known, fairly price-insensitive trading strategy. Then, in 2008, we saw a huge commodity bubble. Wheat was at $24. Today it is around $8. Crude oil spiked to $147.27 and gas was at $4 per gallon. Then the economy and commodity prices all fell off a cliff. Did the new speculators, including the massive passives, contribute to that price volatility—volatility that had large and small businesses alike all paying higher prices than they should?
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Source: CFTC.gov
