Americas ETP News
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Invest n Retire Hires Gus Fleites As CEO
March 22nd 2012--Invest n Retire, LLC, (INR) a record keeper for tax-deferred retirement plans has recently announced the appointed of Agustin J. (Gus) Fleites as Chief Executive Officer.
Mr. Fleites, current Managing Director of Boston-based Beta Capital Advisors, LLC brings over 20 years of leadership experience to INR. He has extensive experience both as an investment manager and business leader helping investors apply passive investment strategies to meet their investment needs. At State Street Global Advisors Mr. Fleites established the asset allocation group where he worked closely with defined contribution and other retirement plans, endowments, and foundations developing and managing their investment plans. He was also a director of CitiStreet, a State Street- Citigroup venture and industry leader in defined contribution benefit plan administration services.
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Source: Invest n Retire
Chairman Ben S. Bernanke The European Economic and Financial Situation
Before the Committee on Government Oversight and Reform, U.S. House of Representatives, Washington, D.C.
March 21, 2012--Thank you, Chairman Issa, Ranking Member Cummings, and other members of the Committee for inviting me to testify about the economic and financial situation in Europe and the actions taken by the Federal Reserve in response.
Developments in Europe and Their Effects on the U.S. Economy
For almost two years, developments in Europe have had an important influence on the tenor of global financial markets and on the global economy more generally. The combination of high debts, large deficits, and poor growth prospects in several countries using the euro has raised concerns about fiscal sustainability and, consequently, led to sharply higher sovereign borrowing costs--initially for Greece, but subsequently for other euro-area countries as well. Pessimism about these countries' fiscal and economic situations, in turn, has undermined confidence in the strength of European financial institutions, increasing the cost and difficulty those institutions have faced in obtaining funding and reducing their willingness to supply credit.
The difficulties in the euro area have affected the U.S. economy. The European Union accounts for roughly one-fifth of U.S. exports of goods and services. Not surprisingly, U.S. exports to Europe over the past two years have underperformed our exports to the rest of the world. In addition, weaker demand from Europe has slowed growth in other economies, which has also lowered foreign demand for our products.
Financial strains in Europe have also shown through to our financial markets. During times when financial conditions in Europe were at their most turbulent, investors around the world retreated from riskier assets. In the United States, these pullbacks decreased stock prices, increased the costs of issuing corporate debt, and reduced consumer and business confidence. In addition, U.S. financial institutions that were thought to have substantial exposures to Europe saw their stock prices fall and their credit spreads widen.
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Source: FBR
US senators press for position limits in oil markets
Bill would require limits in oil markets
Senators say market not reflecting supply/demand
CFTC chairman doesn't understand urgency-Sanders
March 21, 2012--Ramping up pressure on U.S. commodities regulators, a group of U.S. senators on Wednesday unveiled legislation aimed at lowering skyrocketing fuel prices by reining in excessive speculation in oil markets.
The bill would require the Commodity Futures Trading Commission to use its emergency powers to impose position limits in oil futures markets within 14 days of the measure becoming law.
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Source: Reuters
Market Vectors Launches First U.S. Listed Indonesia Small-Cap ETF
Small-Cap Opportunities in World’s Largest Archipelago
March 21, 2012--Market Vectors ETF Trust today announced the launch of Market Vectors Indonesia Small-Cap ETF (nyse arca:IDXJ), the first U.S.-listed exchange-traded fund (ETF) designed to provide investors with pure play exposure to the small capitalization segment of Indonesia’s stock market.
IDXJ is the second ETF introduced by Market Vectors that focuses exclusively on Indonesia, joining Market
Vectors Indonesia Index ETF (NYSE Arca: IDX), which focuses on the large-cap segment of the fast-growing Indonesia
economy. IDX has earned a 5-star Morningstar rating on both a 3-year and overall basis (as of 2/29/12).+
Indonesia, home to roughly 240 million people, has Southeast Asia’s largest economy: $834 billion in 2011.
Beginning in 1999, the country embarked on a path of sounder fiscal and monetary policies that allowed it to improve its financial condition dramatically.1 As a result, the country has attracted substantial foreign direct investments and its
sovereign debt rating has been upgraded to investment grade by both Fitch Ratings (as of December 15, 2011) and
Moody’s Investors Services (as of January 18, 2012).
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Source: Market Vectors ETFs
UBS Launches ETN with High Monthly Income Potential and Leveraged Exposure to International Real Estate Securities
ETRACS Monthly Pay 2xLeveraged Dow Jones International Real Estate ETN
March 21, 2012--UBS Investment Bank announced that today is the first day of trading on the NYSE Arca for the ETRACS Monthly Pay 2xLeveraged Dow Jones International Real Estate ETN (ticker:RWXL).
RWXL is linked to the monthly compounded 2x leveraged performance of the Dow Jones Global ex-U.S. Select Real Estate Securities Index (the “Index”), reduced by investor fees.
RWXL offers investors:
Monthly compounded 2x leveraged exposure to the Index, less fees, making it the only exchange-traded product with leveraged exposure to this index.
Significant income potential in the form of a variable monthly coupon linked to 2 times the cash distributions, if any, on the Index constituents, less any withholding taxes.
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Source: ETRACS
Direxion Launches NASDAQ-100 Equal Weighted ETF
Equally Weighted Fund Increases Diversification as Compared to Cap-weighted Strategy
March 21, 2012-- Direxion, a leader in alternative investment solutions, has expanded their lineup of ETFs with the launch of the Direxion NASDAQ-100® Equal Weighted Index Shares (Ticker: QQQE).
The Fund provides investors with broader diversification and exposure to the holdings that comprise the NASDAQ-100 index.
The traditional cap-weighted NASDAQ-100 index currently has a significant overweighting to a select number of companies, and a heavy bias toward the technology sector, based on the market capitalization of these few companies. Larger companies in the index receive a higher weight than small companies, which can lead to a portfolio with an over concentration in a limited number of companies and industries. The Direxion NASDAQ-100 Equal Weighted Index Shares Fund utilizes a methodology that weights the holdings of the index equally, regardless of market capitalization or industry. This provides investors with a cost-effective approach to an equal-weighted investment strategy, with performance less reliant on the largest companies.
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Source: Direxion
Statement in Support of OMB Memorandum: Cumulative Effects of Regulations
Commissioner Scott D. O’Malia
March 20, 2012--I am pleased that the Administrator of the Office of Information and Regulatory Affairs released a memorandum today providing guidance to all executive agencies on the appropriate manner in which to conduct rigorous cost-benefit analyses and to consider the cumulative impacts of their regulatory actions in light of new and existing regulations.
I believe this directive is responsive to my letter of February 23, 2012 to the Office of Management and Budget requesting a review of the Commodity Futures Trading Commission’s conduct of cost-benefit analysis.
Specifically, the Administrator’s memorandum clarifies that, among other things, executive agencies should: (1) avoid unnecessary and inconsistent requirements; (2) improve regulatory outcomes by engaging in early and close consultation with affected stakeholders; and (3) coordinate the timing, content and requirements of multiple rulemakings that are contemplated for a particular industry or sector, so as to increase the net benefits.
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Source: CFTC.gov
S&P Indices, ISDA Launch Two New CDS Indices Measuring the Credit Quality of U.S. and European Finance Sectors
Indices Track the Most Liquid, Relevant Issues within Each Sector
March 20, 2012--S&P Indices and the International Swaps and Derivatives
Association, Inc. (ISDA) announced today the launch of the S&P/ISDA CDS U.S. Financials Select 10 Index and the S&P/ISDA CDS European Banks Select 15 Index.
The Indices provide a day-to-day measure of the credit quality of the U.S. and European banking sectors.
The S&P/ISDA CDS Sector Index family seeks to reflect the credit default swap market for corporate credits, increasing transparency for market participants. Today’s launch coincides
with the scheduled role for the existing indices in the S&P/ISDA CDS Index family.
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Source: ISDA
New Study Evaluates BXM and Other Indexes: Returns, Standard Deviations and Risk-Adjusted Returns Since Mid-1986
March 20, 2012--A new study, "The CBOE S&P 500 BuyWrite Index (BXM) — A Review of Performance," was released last week by investment-advisory firm Hewitt EnnisKnupp.
The study, commissioned by Chicago Board Options Exchange (CBOE), compares the performance of "traditional" indexes and CBOE S&P 500 BuyWrite Index (BXM(SM)) since mid-1986.
Summary of Results of the Study:
From June 1986 through January 2012, the BXM Index produced a:
Similar return, but lower volatility, relative to the S&P 500 Index
Return in excess of all other comparative indexes
Standard deviation lower than all other equity and commodity indexes covered in the study
Standard deviation lower than the 30-Year Treasury Index
Sharpe ratio (a measure of risk-adjusted returns) that was superior to that of other equity and commodity indexes evaluated.
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Source: CBOE
DB Equity Research Equity Research-North America-US ETF Holder Demographics Understanding ETF Usage
March 20, 2012--A CAGR of 27.3% in assets and inflows of $816bn underpin ETF’s 10Y growth
The US ETF industry has experienced a meteoric growth over the last 10 years. Assets grew at a CAGR of 27.3%, net inflows were $816bn, and the number of products increased almost 11 times.
In contrast, Long Term Mutual Funds grew at a CAGR of 6.7% with inflows of $1,606bn. On a relative basis, ETFs grew from 1.8% to 10.5% of LTMF assets in the 10Y period; and ETFs also represented 29% of all US cash equity $ volume in the past 3 years. At the end of 2011, there were 1,093 ETFs with assets of $939bn and $1,222bn traded during December 2011.
ETF Ownership was 53.0% Institutional vs. 47.0% Retail at the end of 2011
As of the end of Q4 2011, the ETF investor type ownership breakdown was 53.0% for Institutional Investor and 47.0% for Retail Investor. Investment advisers and brokers were the main ETF institutional users holding 47.7% and 38.0% of all institutional ETF assets, respectively; while mutual fund managers and hedge fund companies were the other significant duo with 5.2% and 4.1% of the institutional ETF assets, respectively.
ETF Institutional Ownership has increased steadily over the last decade
ETF Institutional Ownership has increased steadily from below 30% in the early 2000s to above 50% in the last couple of years, overtaking retail investors as the main product users. The number of institutions using ETFs has also surged from 405 back in the year 2000 to 2,545 at the end of 2011.
Institutional investors use some ETFs more than others
Although the breakdown between institutional and retail ownership is not significantly uneven at an aggregated level, there can be significant differences at an individual ETF level. Overall, we found that institutional participation was higher in ETFs offering exposure to equity or fixed income with no leverage, large AUM, abundant turnover, high flows activity, low TER, tight B/A spread, and high short interest-related figures.
Most ETFs are good for asset allocation, but only some are good for other portfolio functions such as cash and risk management
The high ETF ownership percentage and product usage exhibited by investment advisers (25.3%, 960 ETFs) and retail investors (47.0%, 1,068 ETFs) suggest that most ETFs are used for their primary function i.e. asset allocation, either strategic or tactical. Meanwhile, the more limited product usage, displayed by mutual fund managers (521 ETFs) and hedge fund companies (376 ETFs), suggests that the list of ETFs suitable for additional non-primary portfolio functions is more limited.
Multi-purpose ETFs can be identified by measuring ETF usage
ETFs used for additional non-primary activities such as cash management and risk management have most or all of the following characteristics: widely used benchmark as underlying, higher turnover, higher abs. flows activity, higher days to cover, higher SI as % of SO, higher institutional ownership, tighter B/A spread, and larger AUM Size; in addition to having brokers representing the highest institutional ownership, and hedge funds among the institutional holders. From these findings we elaborated a simple framework to measure the level of ETF usability, according to which about 50 ETFs can be considered "multi-purpose".
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Source: Deutsche Bank-Equity Research-North America
