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Vanguard Finds Investors Not Trading ETFs Excessively
July 17, 2012--Do exchange-traded funds (ETFs) turn long-term investors into speculative day traders, as some critics claim? Not according to a new Vanguard research paper, ETFs: For the better or bettor?, which found that most Vanguard investors exhibit buy-and-hold behavior whether investing in a traditional index fund or ETF.
According to the new research, critics' presumptions about ETF trading are typically based on macro-level share turnover data that is dominated by large institutional investors at the fund level--not built on data at the individual investor level. Using a unique data set of transactions conducted by individual investors, Vanguard researchers analyzed more than 3.2 million transactions in more than 500,000 positions held in traditional mutual fund and ETF share classes of four different Vanguard index funds from 2007 through 2011.
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Source: MarketWatch
DB-Equity Research-US ETF Market Weekly Review:Fixed Income ETPs dominated the weekly flows with +$1.0b
July 17, 2012--Net Cash Flows Review
Markets were mixed during last week. The US (S&P 500) edged higher by 0.16%. While, outside the US, the MSCI EAFE (in USD) and the MSCI EM (USD) fell by 0.75% and 2.01%, respectively.
Moving on to other asset classes, the 10Y US Treasury Yield declined by 5bps last week; while the DB Liquid Commodity Index was up by 2.81%. Similarly, the Agriculture sector (DB Diversified Agriculture Index), the WTI Crude Oil, the Gold, and the Silver prices advanced by 1.56%, 3.14%, 0.37%, and 0.78%, respectively. Last but not least, Volatility (VIX) rose by 2.1% during the same period.
The total US ETP flows from all products registered $0.9bn of inflows during last week vs $6.7bn of inflows the previous week, setting the YTD weekly flows average at +$2.9bn (+$79.9bn YTD in total cash flows).
Equity, Fixed Income, and Commodity ETPs experienced flows of +$0.3bn, +$1.0bn, and -$0.5bn last week vs. +$8.7bn, -$2.2bn, and +$0.2bn the previous week, respectively.
Within Equity ETPs, small cap products experienced the largest inflows (+$1.3bn); while US sector ETPs had the largest outflows (-$1.1bn). Within Fixed Income ETPs, Corporates products had the largest inflows (+$0.6bn); while Sovereign ETPs experienced the only outflows (-$0.4bn), respectively. Within Commodity ETPs, precious metals products experienced the largest outflows (-$0.4bn), followed by Energy ETPs with outflows of $0.2bn.
Top 3 ETPs & ETNs by inflows: IWM (+$1.2bn), OEF (+$0.7bn), DIA (+$0.5bn)
Top 3 ETPs & ETNs by outflows: SPY (-$1.5bn), XLI (-$0.7bn), QQQ (-$0.5bn)
New Launch Calendar: asset allocation and leverage financial exposure
There were 3 new ETFs listed during last week. The new products offer exposure to an active asset allocation strategy and leverage exposure to the US financial sector.
Turnover Review: floor activity rose by 32%
Total weekly turnover rose by 32% to $254bn vs. $192bn in the previous week. Last week’s turnover level was 32% below last year’s weekly average. Equity ETPs experienced an increase of $62.3bn or 37.8% to $227bn, along with Commodity ETPs which rose by 33.5% (+$2.9bn). In the meantime, Fixed Income ETP turnover dropped by 24% (-$4.0bn).
Assets Under Management (AUM) Review: assets remained nearly flat
ETP assets remained practically flat on a week over week basis. ETP assets dropped by 0.1% during last week and ended the week at $1.17 trillion. As of last Friday, US ETPs have accumulated an asset growth of 11.7% YTD. Assets for equity, fixed income and commodity ETPs moved -$3.2bn, +$2.0bn, and +$0.3bn during last week, respectively.
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Source: Deutsche Bank-Equity Research-North America
Morgan Stanley-US ETF Weekly Update
July 16, 2012--US ETF Weekly Update
Weekly Flows: $854 Million Net Inflows
ETF Assets Stand at $1.2 Trillion, up 12% YTD
Three ETF Launches Last Week
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US-Listed ETFs: Estimated Flows by Market Segment
ETFs posted net inflows of $854 mln last week, second straight week of net inflows
Last week’s net inflows were led by US Small- & Micro-Cap ETFs ($1.3 bln in net inflows)
ETF assets stand at $1.2 tln, up 12% YTD; ETFs have posted net inflows 21 out of 28 weeks YTD ($79.1 bln in net inflows YTD)
13-week flows were mostly positive among asset classes; combined $32.6 bln net inflows
Fixed Income ETFs have generated net inflows 47 out of the past 48 weeks ($14.7 bln net inflows over the last 13 weeks)
Emerging Market Equity ETFs exhibited net outflows of $2.7 bln the past 13 weeks, the most of any ETF category
US-Listed ETFs: Estimated Largest Flows by Individual ETF
iShares Russell 2000 Index Fund (IWM) generated net inflows of $1.2 bln last week, the most of any ETF
IWM has posted net inflows five out the past six weeks (combined $2.3 bln over the six-week period); YTD net flows have been a less impressive +$939 mln
Despite exhibiting net outflows of $1.5 bln last week, the SPDR S&P 500 ETF (SPY) has posted net inflows of $7.2 bln over the past 13 weeks, the most of any ETF
US-Listed ETFs: Short Interest
Data Updated: Based on data as of 6/29/12
Industrial Select Sector SPDR (XLI) posted the largest increase in USD short interest at $447 mln
Aggregate ETF USD short interest declined $8.7 bln over the past two weeks ended 6/29/12
For the second consecutive period, SPDR S&P 500 ETF (SPY) short interest declined; SPY’s 228.1 mln shares short is its lowest level since 1/15/10
The average shares short/shares outstanding for ETFs is currently 5%
Interestingly, two ETFs out of the top 10 to exhibit the highest level of shares short as a % of shares outstanding are 3x leveraged
and 3x leveraged inverse ETFs; by shorting them, investors may be trying to take advantage of the daily compounding issues
Based on multiple borrowings and the ability to continuously create new shares, shares short as a % of shares outstanding can exceed 100% (only six ETFs exhibited shares short as a % of shares outstanding greater than 100%)
US-Listed ETFs: Most Successful Recent Launches by Assets
Source: Bloomberg, Morgan Stanley Smith Barney Research. Data estimated as of 7/13/12 based on daily change in share counts and daily NAVs.
$7.5 billion in total market cap of ETFs less than 1-year old
Over the past 13 weeks, newly launched Active ETFs generated most net inflows at $1.6 bln (specifically the PIMCO Total
Return ETF-BOND)
113 new ETF listings and 17 closures YTD
Over the past year, many of the successful launches have an income/dividend orientation
Five different ETF sponsors and three asset classes represented in top 10 most successful launches
BlackRock’s recently launched minimum volatility suite (four ETFs) has a combined market cap of $1.0 bln; some of the more impressive launches over the past year
Top 10 most successful launches account for 66% of market cap of ETFs launched over the past year
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Source: Morgan Stanley
Invesco PowerShares to Expand Suite of DWA Technical Leader ETFs
DWAS-The First US SmallCap ETF Based on Relative Strength Ranking
July 16, 2012--Invesco PowerShares Capital Management LLC, a leading global provider of exchange-traded funds (ETFs), announced today the anticipated listing of the PowerShares DWA SmallCap Technical Leaders(TM) Portfolio on July 19, 2012 on the NYSE Arca.
The new Fund is expected to trade under the ticker DWAS and represents the first US small-cap ETF based on the concept of relative strength ranking.
The PowerShares DWA SmallCap Technical Leaders Portfolio (DWAS) will be the fourth ETF that Invesco PowerShares has listed based on the DWA Technical Leaders strategy since 2007. Technical Leaders are companies identified by the DWA selection methodology that possess strong relative strength characteristics compared to their peers and industry benchmarks. The existing products have attracted $750 million in assets under management as of June 30, 2012.
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Source: Invesco PowerShares
iShares files with the SEC
July 16, 2012--iShares files with the SEC.
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Source: SEC.gov
HSBC Exposed U.S. Financial System to Money Laundering, Drug, Terrorist Financing Risks
Senate Subcommittee Holds Hearing and Releases Report
July 16, 2012 --Global banking giant HSBC and its U.S. affiliate exposed the U.S. financial system to a wide array of money laundering, drug trafficking, and terrorist financing risks due to poor anti-money laundering (AML) controls, a Senate Permanent Subcommittee on Investigations probe has found.
“In an age of international terrorism, drug violence in our streets and on our borders, and organized crime, stopping illicit money flows that support those atrocities is a national security imperative,” said Sen. Carl Levin, D-Mich., subcommittee Chairman. “HSBC used its U.S. bank as a gateway into the U.S. financial system for some HSBC affiliates around the world to provide U.S. dollar services to clients while playing fast and loose with U.S. banking rules.
view the report-U.S. Vulnerabilities to Money Laundering,
Drugs, and Terrorist Financing:
HSBC Case History
Source: U.S. Senate Committee on Homeland Security & Governmental Affairs
Market Vectors Changing Underlying Indexes of Its Coal ETF (KOL) And Gaming ETF (BJK)
Largest U.S. Coal-Focused ETF and the Only U.S.-Listed Global Gaming Equity ETF Will Track Benchmarks Providing Pure-Play Approach to Indexing and Sophisticated Liquidity Screens
July 16, 2012--Effective on or about September 21, 2012, the Market Vectors Coal ETF (NYSE Arca: KOL) will begin tracking a new benchmark, the Market Vectors Global Coal Index (MVKOL).
At the same time, the Market Vectors Gaming ETF (NYSE Arca: BJK) will also begin tracking a new benchmark, the Market Vectors Global Gaming Index (MVBJK). Both indexes employ the Market Vectors index methodology that focuses on investability. This methodology is shared by the benchmark indexes of several other Market Vector ETFs, including Brazil Small-Cap (BRF), Indonesia (IDX), Junior Gold Miners (GDXJ), Oil Services (OIH), Russia (RSX), Semiconductor (SMH), and Vietnam (VNM).
“We expect that KOL and BJK will become more diversified as a result of these changes,” said Ed Lopez, Marketing Director at Van Eck Global. “They will continue, however, to offer pure play global exposure. Consistent with the Market Vectors index methodology, these indexes have limits on individual holdings which help to avoid overconcentration in a few large holdings.”
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Source: Market Vectors
ETF War of the Goliaths
July 13, 2012--The battles of the Goliaths that is playing out in the ETF Industry and the impact that they will have on the overall trillion dollar asset management industry certainly has the potential to keep many Business Schools busy writing case studies.
Future growth of the ETF market place within the next 3 years is clearly dependent upon many uncontrollable variables so it should not surprise to anyone that the range of growth estimates is so broad (13-25%), but that does not mean that strategic business decisions will not be made.
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Source: Global Economic Intersection
CFTC.gov Commitments of Traders Reports Update
July 13, 2012--The current reports for the week of July 10, 2012 are now available.
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Source: CFTC.gov
Haywire ETN pricing draws regulatory red flag
July 13, 2012--The self-regulatory body for US brokers has issued an investor alert for exchange traded notes, warning of trading imbalances that have warped prices for the products recently.
The alarm from the Financial Industry Regulatory Authority seems to stem from deviations between ETNs’ market price and their indicative, or calculated, value.
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Source: FT.com
