Americas ETP News
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Treasury International Capital Data for May
July 17, 2012--The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for May 2012. The next release, which will report on data for June 2012, is scheduled for August 15, 2012.
The sum total in May of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC inflow of $101.7 billion.
Of this, net foreign private inflows were $60.3 billion, and net foreign official inflows were $41.4 billion.
Foreign residents increased their holdings of long-term U.S. securities in May – net purchases were $50.1 billion. Net purchases by private foreign investors were $19.9 billion, and net purchases by foreign official institutions were $30.2 billion.
At the same time, U.S. residents decreased their holdings of long-term foreign securities, with net sales of $4.9 billion.
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Source: US Department of the Treasury
Chairman Ben S. Bernanke Semiannual Monetary Policy Report to the Congress
U.S. Senate, Washington, D.C.
July 17, 2012-Chairman Bernanke presented identical remarks before the Committee on Financial Services, U.S. House of Representatives on July 18, 2012
Chairman Johnson, Ranking Member Shelby, and other members of the Committee, I am pleased to present the Federal Reserve's semiannual Monetary Policy Report to the Congress. I will begin with a discussion of current economic conditions and the outlook before turning to monetary policy.
The Economic Outlook
The U.S. economy has continued to recover, but economic activity appears to have decelerated somewhat during the first half of this year. After rising at an annual rate of 2-1/2 percent in the second half of 2011, real gross domestic product (GDP) increased at a 2 percent pace in the first quarter of 2012, and available indicators point to a still-smaller gain in the second quarter.
view the Semiannual Monetary Policy Report to the Congress
Source: Federal Reserve
Vanguard strikes back against ..Bogle?
A new study refutes founder's concerns that exchange-traded funds encourage excessive trading
July 17, 2012--The Vanguard Group Inc. released a study today that refutes the concerns of founder John Bogle and others that exchange-traded funds encourage excessive trading, which is bad for long-term investors.
Vanguard looked at more than 36,000 ETF positions and more than 500,000 mutual fund positions in its Vanguard Total Stock Market Index Fund (VTI), Vanguard Total Bond Market Index Fund (BND), Vanguard Emerging Markets Index Fund (VWO) and Vanguard REIT Index Fund (VNQ) from 2007 through 2011. Vanguard's ETFs are share classes of its mutual funds, which is unique.
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Source: Investment News
US senator opposes JPM's copper ETF plan
July 17, 2012--U.S. regulators should block JPMorgan Chase & Co's plan for an exchange-traded fund (ETF) physically backed by copper because it would create a boom and bust cycle in the market, according to U.S. Senator Carl Levin.
Levin outlined his opposition in a letter to the Securities and Exchange Commission, arguing the proposed product would disrupt supply and inflate prices by removing a significant chunk of material from the market.
"There is ample evidence that if the ETF shares are listed and traded on the NYSE exchange, the trust will disrupt the global supply of copper," the Democrat from Michigan said in his letter dated July 16.
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Source: Bloomberg
Bernanke: Gloomy on economy, few hints of QE3
July 17, 2012--Federal Reserve Chairman Ben Bernanke gave senators a rather gloomy outlook for the economy Tuesday.
Europe's debt crisis and fiscal cliff in the United States are threatening the recovery, he told the Senate Banking Committee in his semi-annual report to Congress. Meanwhile, economic growth has probably already slowed, and the unemployment rate is unlikely to fall below 7% for at least another year.
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Source: CNN
ShariahShares Serves Muslims' Investment Needs
July 17, 2012--About two in seven people on the planet are Muslim. At about 6.5 million people, Muslims account for about 2% of the U.S. population.
Saied Hamedanchi believes they're an underserved niche market in the investment industry.
As founder and CEO of Irvine, Calif.-based ShariahShares, Hamedanchi is developing ETFs that invest according to Shariah law or the moral codes of Islam. The $77 billion in Shariah mutual funds currently are merely a speck among the trillions invested in the market.
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Source: newsinvestors.com
BlackRock's iShares bets cheap isn't better for ETFs
July 17, 2012--BlackRock Inc, the largest global exchange-traded fund provider, has been aggressive in its efforts to maintain U.S. market share but has still found itself losing ground to a cheaper, smaller rival.
Since January, its San Francisco-based iShares ETF unit has started 42 ETFs and has at least 20 more planned this year. Its executives have been out front on regulatory issues and calls for more transparency in ETF labeling and the increasingly popular ETF managed portfolio space.
But, one thing iShares has refused to do is cut costs to compete with rivals like Vanguard, whose ETFs, in some cases cost as little as a third of their iShares equivalents.
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Source: Reuters
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
