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State Street-Whitepaper: Leveraging the Best of Passive and Active
November 21, 2013--The active versus passive debate is often emotional and polarizing. However, when you push
beyond the black and white divides, it becomes clear that combining passive and active investment strategies is actually the most beneficial approach for portfolios, especially when
considering the growth of advanced indexes. That is, while certain efficient asset classes may
be best accessed with low cost passive investments, others may have greater potential for excess returns and, therefore, are best suited for active management.
At the same time, active
and passive solutions can complement each other within asset classes and allows investors to tilt portfolios to the best opportunities within and across markets. This approach harnesses
the best of passive and active and can help build the most cost effective, resilient and robust portfolios possible
THE EVOLUTION OF PASSIVE INVESTING
The debate over the merits of active management ignited in 1965
with the publication of Michael Jensen's "The Performance of
Mutual Funds in the Period 1945-1965". Proponents of passive
investing, also known as index investing, typically view markets
as efficient. Accordingly, rather than seek to outperform a
benchmark, passive investors seek to track the performance of a
market index by owning the same assets, in similar proportions,
as the underlying index. In contrast, active investors tend to
believe that markets are inefficient. Therefore, active managers
tend to over and underweight securities, sectors or countries in
order to generate excess returns relative to an index.
Although actively managed funds account for nearly three quarters of the overall market, passive funds have gained significant market share over the past few years. Interestingly, passive investing only became a reality in 1971 with the launch of the first fund seeking to track a rules-based index. Thus, in the grand scheme of the investing world, passive remains a relative newcomer.
Much of passive's asset growth was sparked by recent prolonged periods of market volatility starting in the early 2000s when many active managers failed to live up to expectations. The Global Financial Crisis exacerbated this trend and caused investors to reassess the role of active investment approaches, especially when many managers experienced liquidity difficulties and marked underperformance during the worst of the crisis. Accordingly, passive assets, as a percentage of total mutual fund industry assets, have risen from approximately 10% in 2001 to 26% today. At the same time, investors of all shapes and sizes have become more cost conscious and are highly scrutinizing management fees.
to view white paper visit www.statestreetspdrs.com
Source: SPDR(R) University Research
Minutes of the Federal Open Market Committee, October 29-30, 2013
November 20, 2013--The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on October 29-30, 2013 and of the conference call held on October 16, 2013.
The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board’s Annual Report. The descriptions of economic and financial conditions contained in these minutes are based solely on the information that was available to the Committee at the time of the meeting.
view the Minutes of the Federal Open Market Committee, October 29-30, 2013
Source: FRB
CFTC Announces Weekly Swaps Report
Transparency initiative will give the public a new window into the formerly opaque swaps market
November 20, 2013--Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler today announced the initiation of the CFTC Weekly Swaps Report.
The weekly report will provide the public with a detailed view of the swaps marketplace that before the Dodd-Frank Act was an opaque market. Today's report currently covers the interest rate and credit asset classes that comprise about 90% of the approximately $400 trillion swaps market. The report provides three views of the swaps market: the gross notional outstanding value, the weekly transactions measured by dollar volume, and the weekly transactions measured by ticket volume. For each asset class, the report provides detailed breakdowns of the swaps market by product type, currency (six major currencies), tenor, participant type, and whether swaps are cleared or uncleared. The Weekly Swaps Report is available at http://www.cftc.gov/MarketReports/SwapsReports.
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Source: CFTC.gov
Federal Debt and the Statutory Limit, November 2013
November 20, 2013--The debt limit-commonly referred to as the debt ceiling-is the maximum amount of debt that the Department of the Treasury can issue to the public and to other federal agencies. That amount is set by law and has been increased over the years in order to finance the government's operations.
The debt ceiling was suspended earlier this year-from February 4 through May 18-so that the Department of the Treasury had the authority to borrow any amounts necessary to meet the government's operating needs during that period. The debt limit has again been suspended, this time through February 7, 2014.
What Is the Current Situation?
Currently, there is no statutory limit on the issuance of new federal debt because the Continuing Appropriations Act, 2014 (Public Law 113-46) suspended the debt ceiling from October 17, 2013, through February 7, 2014. The act also specified that the amount of borrowing that occurred during that period be added to the previous debt limit of $16.699 trillion. Therefore, on February 8, the limit will be reset to reflect cumulative borrowing through February 7. The amount of outstanding debt subject to limit is now around $17.1 trillion.
view the Federal Debt and the Statutory Limit, November 2013
Source: Congressional Budget Office (CBO)
Deutsche Asset & Wealth Management: db X-trackers Harvest CSI 300 China A-Shares Fund Trades More Than 1 Million Shares
November 19, 2013--Deutsche Asset & Wealth Management (DeAWM) announced that the db X-trackers Harvest CSI 300 China A-Shares Fund (NYSE Arca: ASHR) (the "ETF") traded more than 1 million shares yesterday for the first time since the ETF launched on November 6, 2013.
"The recent rise in ASHR's trading volume continues to demonstrate the strong investor demand for this game-changing ETF," said Martin Kremenstein, head of Passive Asset Management for Deutsche Asset & Wealth Management Americas. "As reforms that favor foreign investment continue to be announced in China, we expect to see increased daily trading volume in ASHR, given its status as the first ETF to offer direct equity access to China A-shares."
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Source: Deutsche Asset & Wealth Management
NASDAQ to Begin Listing VelocityShares ETNs on Monday, December 2, 2013
November 19, 2013--On Monday, December 2, 2013, NASDAQ will list 12 new VelocityShares ETNs.
The ETNs will list on The NASDAQ Global Market.
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Source: NASDAQ OMX
Barclays Bank PLC Seeks Consent To Amend Select iPath(R) Commodities ETNs
November 19, 2013--Barclays Bank PLC ("Barclays") announced today that it has commenced a consent solicitation (the "Consent Solicitation") for select issues of iPath(R) Commodities Exchange-Traded Notes with the ticker symbols listed below (each, an "issue" and collectively, the "ETNs").
Subject to the terms and conditions set forth in the Consent Solicitation Statement, dated November 19, 2013 (the "Consent Solicitation Statement"), and the accompanying Voter Instruction Form (the "VIF"), Barclays is soliciting consents (the "Consents") to the proposed amendments described below (collectively, the "Proposed Amendment") separately for each issue of ETNs bearing the ticker symbols set out in the list below.
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Source: Business Wire
ISE Gemini (TM) Trades 20 Millionth Options Contract
November 19, 2013--The International Securities Exchange (ISE) today announced that ISE Gemini(TM) traded its 20 millionth contract, continuing the exchange's consistent growth in volume and industry market share since launching on August 5, 2013. ISE Gemini has averaged 2.8 percent equity options market share during the month of November, with average daily volume nearing half a million contracts.
"ISE Gemini's unique customer priority, pro-rata market structure, innovative technology, and competitive fee model have played key roles in this notable milestone," said Boris Ilyevsky, Managing Director of ISE's options exchanges. "We are very pleased with how well received ISE Gemini has been by our customers, and we look forward to the continued development and growth of our second exchange."
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Source: ISE (International Securities Exchange)
Maria Bartiromo leaving CNBC for Fox Business: source
November 19, 203--Business television presenter Maria Bartiromo is leaving broadcaster CNBC after 20 years to take a job at rival Fox Business Network, according to a source familiar with the matter.
CNBC President and Chief Executive Mark Hoffman announced Bartiromo's departure in a memo to employees on Monday and said she will leave the company when her contract expires on November 24.
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Source: Reutres
Northern Trust Focused Portfolios Added to FDx Advisors UMA Program
November 18, 2013--Northern Trust announced today that Northern Focused Portfolios (NFP) model portfolios have been added to FDx Advisors Unified Overlay Management Program platform.
The NFP portfolios are a series of active, passive and blended models created through tactically-weighted asset allocation of proprietary and non-proprietary mutual funds and ETFs which seek to emphasize consistent and competitive performance while managing volatility and risk.
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Source: Northern Trust Corporation
