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ICI-ETFs Don’t Move the Market-Information Does
March 11, 2014--There they go again.
After last week's turmoil in the bond market, some commentators sought to link net redemptions from bond ETFs to heightened volatility in the U.S. Treasury market on Tuesday, March 4. But as we have written before when examining the relationship between equity ETFs and stock market volatility, such assertions break down under a careful examination of the data, because they downplay the primary driver of volatility-news that affects investors' investment decisions.
A Small Slice of the Pie
The net issuance of Treasury bond ETFs represents a tiny share of trading in the $12 trillion U.S. Treasury market, which is widely considered one of the deepest, most liquid markets in the world. Hundreds of billions of dollars worth of Treasury securities change hands every day, so it is highly unlikely that the $6.6 billion in net redemptions of Treasury bond ETFs that occurred on March 4 applied much pressure to this market.
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Source: ICI
Specialist ETF managers attract strong inflows
March 11, 2014--Highly sophisticated investment portfolios constructed cheaply with exchange traded funds are winning more attention from cost conscious investors and financial advisers.
A growing band of US specialists are tapping into this interest and seeing a rapid growth in assets.
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Source: FT.com
JP Morgan unveils plans to increase its share in Chile, region
March 11, 2014--A new country head will soon take over in Santiago; replacing recently separated employees.
In the medium term, the manager plans to register ETFs in Chile, based on a new line of these instruments under development in the United States, while human capital will also be allocated to the Argentine-Uruguayan market.
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Source: FundPro Latin America
Global X Funds Launches Guru Small Cap And Guru International ETFs
March 11, 2014--Global X Funds, the New York-based provider of exchange-traded funds (ETFs, today launched the Global X Guru(SM) Small Cap Index ETF (NYSE Arca: GURX) and the Global X Guru(SM)International Index ETF (NYSE Arca: GURI).
The introduction of the two funds establishes a suite of "Guru"-themed ETFs, which seek participation in the ideas of some of the world's most sophisticated investors. The flagship Global X Guru(SM) Index ETF launched in June 2012 and is currently ranked among the top 1% U.S. Large-Cap Core Equity funds, according to Lipper, Inc.
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Source: Global X
FINRA Issues New Investor Alert, Bitcoin: More than a Bit Risky
March 11, 2014--FINRA's Investor Alert adds to a growing chorus of Bitcoin-related warnings from other regulators.
The Financial Industry Regulatory Authority (FINRA) issued a new investor alert called Bitcoin: More than a Bit Risky to caution investors that buying and using digital currency such as Bitcoin carry risks.
While speculative trading in bitcoins carries significant risk, there is also the risk of fraud related to companies claiming to offer Bitcoin payment platforms and other Bitcoin-related products and services.
The threat of Bitcoin-related fraud is a real danger for investors looking to make a quick profit from Bitcoin. For example, on February 19, 2014, the SEC suspended trading in the securities of Imogo Mobile Technologies Corp, which had announced testing of a new mobile platform for Bitcoin a few weeks earlier.
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Source: FINRA
CBO-Monthly Budget Review for February 2014
March 10, 2014--The federal government ran a budget deficit of $379 billion for the first five months of fiscal year 2014, CBO estimates, $115 billion less than the shortfall recorded in the same span last year. Revenues are higher and outlays are lower than they were at this time a year ago.
Without shifts in the timing of certain payments (which otherwise would have fallen on a weekend), the deficit for the five-month period would have been $148 billion less this year than it was in fiscal year 2013.
view the CBO Monthly Budget Review for February 2014
Source: Congressional Budget Office (CBO)
Morgan Stanley-US ETF Weekly Update
March 10, 2014--US ETF Weekly Update
Weekly Flows: $1.9 Billion Net Inflows
Fourth Consecutive Week of Net Inflows Totaling $29.9 Billion
ETF Assets Stand at $1.7 Trillion, Up 2% YTD
Four ETF Launches Last Week
US-Listed ETFs: Estimated Flows by Market Segment
ETFs posted net inflows of $1.9 bln last week, the fourth consecutive week of net inflows - Over the last four weeks, ETFs have generated net inflows of $29.9 bln
Last week's net inflows were led by US Large-Cap ETFs at $3.3 bln; conversely, Fixed Income ETFs posted net outflows of $6.3 bln, the most of any category we measured and the largest Fixed Income weekly net outflow since we began tracking weekly flows
Eleven of the 15 categories we measured posted net inflows last week
ETF assets stand at $1.7 tln, up 2% YTD
13-week flows remain positive among asset classes; combined $23.4 bln in net inflows
International - Developed ETFs have generated $17.4 bln in net inflows over the last 13 weeks; the category has 13% market share, up from 10% at the beginning of 2013; much of the market share gain may have come at the cost of International - Emerging ETFs, which has seen its market share decline from 12% to 7% over this time period
US Sector & Industry ETFs posted net inflows of $9.6 bln over the last 13 weeks, trailing only International - Developed ETFs; notably, Financials, Health Care, and Information Technology sector ETFs were some of the largest new money gatherers
US-Listed ETFs: Estimated Largest Flows by Individual ETF
iShares Core S&P 500 ETF (IVV) posted net inflows of $3.2 bln this past week, the most of any ETF
Nine of the 10 ETFs to generate the largest net inflows last week were US equity based, with the one exception being the iShares TIPS Bond ETF (TIP)
The Vanguard REIT ETF (VNQ) has posted net inflows for nine consecutive weeks totaling $1.9 bln
Notably, the iShares 1-3 Year Treasury Bond ETF (SHY) exhibited net outflows of $3.8 bln last week, the most of any ETF; four of the 10 ETFs to post the largest net outflows last week had US Treasury exposure
Emerging market equity ETFs continue to experience net outflows; specifically, the iShares MSCI Emerging Markets ETF (EEM) exhibited net outflows of $372 mln last week and over the last 13 weeks, posted net outflows of $8.9 bln
US-Listed ETFs: ETF Dollar Volume
ETF monthly $ volume as a % of listed trading volume remained flat in February at 25%, which is below the five-year average of 28%
Over the last five years, ETF monthly $ volume as a % of listed trading volume peaked in August 2011 at 36%
ETF $ volume last week was $393 bln, up from $337 bln the prior week and 23% above its 13-week average
Fixed Income ETFs accounted for 8% of ETF $ volume last week compared to their 13-week average of 6%; we note that the yield on the 10-year US Treasury was up 14 bps last week
US-Listed ETFs: Short Interest Data Unchanged: Based on data as of 2/14/14
The SPDR S&P 500 ETF (SPY) had the largest increase in USD short interest at $3.5 bln
The iShares US Real Estate ETF (IYR) also had a big jump in short interest ($643 mln increase); IYR's shares short are 47% above their 52- week average
672 ETFs exhibited short interest increases while 580 experienced short interest declines over the last period
Aggregate ETF USD short interest increased by $4.1 bln over the period ended 2/14/14
The average shares short/shares outstanding for ETFs is currently 4.1%, down from 4.2% last period
Six of the 10 most heavily shorted ETFs as a % of shares outstanding are sector/industry related
For the fourth consecutive period, the SPDR Oil & Gas Exploration & Production ETF (XOP) was the most heavily shorted ETF with shares short as a % of shares outstanding of 282%
Based on multiple borrowings and the ability to continuously create new shares, shares short as a % of shares outstanding can exceed 100% (only nine ETFs exhibited shares short as a % of shares outstanding greater than 100%)
US-Listed ETFs: Most Successful Recent Launches by Assets
$8.4 bln in total market cap of ETFs less than 1-year old
Fixed Income ETFs account for 24% of the market capitalization of ETFs launched over the past year, the most of any category; 38 Fixed Income ETFs were brought to market over the last year as ETF issuers expand the breadth of fixed income offerings
Over the last 13 weeks, International - Developed ETFs have attracted $517 mln in net inflows, the most of any group
44 new ETF listings and seven closures YTD (11 additional closures announced)
The top 10 most successful launches make up 45% of the market cap of ETFs launched over the past year
Six ETF sponsors and two asset classes (equities and fixed income) represented in top 10 most successful launches
Over the last year, BlackRock has issued 28 ETFs that have a combined current market capitalization of $1.7 bln; notably, not every new issue gains immediate traction as the median market capitalization of a newly issued BlackRock ETF is only $25 mln
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Source: Morgan Stanley
Investors pull $18bn from biggest US ETF
March 10, 2014--Investors have pulled nearly $18bn out of the biggest and best known S&P 500 exchange traded fund so far this year even as the US stock market has set new highs, raising questions in a bull market that is charging into its sixth year.
The outflows from the Spider S&P 500 ETF (SPY) eclipse the $16bn that poured into the $159bn fund in 2013. While the US market has recovered from a dip earlier this year, investors have continued to pull money from SPY.
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Source: FT.com
Rapid Currency Trades May Kill Arbitrage, N.Y. Fed Paper Says
March 10, 2014--Growth in high-frequency and algorithmic trading may promote efficiency in the spot-trading foreign exchange market, according to a research paper published by the Federal Reserve Bank of New York.
Arbitrage opportunities, or market price differences, occurred in about 1 in every 20 seconds between the euro-dollar, dollar-yen and euro-yen currency pairs during the active part of the trading day during early 2000s, Ernst Schaumburg, a research officer at the New York Fed wrote in a report published today, citing EBS data.
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Source: Bloomberg
SEC Said to Probe Whether Forex Rigging Distorted Options
March 10, 2014--The U.S. Securities and Exchange Commission is investigating whether currency traders at the world's biggest banks distorted prices for options and exchange-traded funds by rigging benchmark foreign-exchange rates,
according to two people with knowledge of the matter.
