Global ETF News Older than One Year
BlackRock predicts rapid ETF growth in Europe
January 14, 2013--BlackRock, which emphasised its determination to dominate the exchange traded funds (ETF) market with the acquisition last week of Credit Suisse's ETF arm, says European listed ETF assets will double over the next three years to some $700bn.
Joe Linhares, European head of iShares, BlackRock’s ETF unit, said ETFs only represented a tiny fraction of the assets held by mutual funds in Europe but that share would increase rapidly because growing numbers of retail investors were becoming aware of the benefits of ETFs.
Source: FT.com
Nasdaq Offers Deep Discounts on Co-Locating Order Engines
January 14, 20133--Competition to have trading firms locate their order engines under the same roofs as exchanges' matching engines has ratcheted up with Nasdaq OMX's announcement that it is offering a discounts of up to 50 percent for new "co-located" cabinets ordered in the first quarter of this year.
Price cuts for co-location services at the Nasdaq OMX Carteret, N.J., data center will range from 38% on monthly recurring costs for Super Cabs to 50 percent monthly recurring savings for low- and medium-density cabinets. Nasdaq defines density as the amount of power needed to power and cool cabinets.
Source: Traders
ETF Securities-Precious Metals Weekly: Global recovery supporting cyclical precious metals
January 14, 2013--Further signs of economic recovery benefit 'cyclical' precious metals. There were a number of positive data releases last week.
Chinese export numbers added to evidence that China's economy is recovering; the ECB was cautiously optimistic about an economic recovery in the euro area in 2013 and a range of significant new stimulus measures were announced by Japan. Cyclical precious metals such as silver, platinum and palladium benefiting from the improved macro backdrop. The gold price also rose as the US dollar weakened and investor sentiment improved.
Improving China data help drive cyclical precious metals higher. Chinese exports are reported to have risen by 14% in December 2012, surpassing consensus expectations of only a 5% rise. This data release added to evidence that China's economy may be rebounding and lifted the outlook for China's demand for cyclical precious metals. Silver, platinum and palladium ended the week 5%, 4% and 1% higher respectively.
Rate cuts less likely as the ECB expects an economic recovery in 2013. The ECB's Governing Council unanimously decided to hold rates at last week's policy meeting. The ECB expects the current low interest rates, improving financial market confidence and strengthening global demand to drive a recovery, but cautioned that to sustain the improvement in confidence governments must stay the course on structural reform and fiscal consolidation. The euro strengthened on the news, driving dollar lower and pushed precious metal prices higher.
Visit www.etfsecurities.com for more info.
Source: ETF Securities
Vanguard Transitions Two Funds to CRSP Indexes
January 14, 2013--In October 2012, Vanguard announced that 22 stock and balanced index funds would begin tracking new indexes in 2013.
Effective with the opening of trading at 9:30 a.m. Eastern time on January 15, 2013, Vanguard Institutional Total Stock Market Index Fund and the equity portion of Vanguard Balanced Index Fund will seek to track the CRSP US Total Market Index.
The Institutional Total Stock Market Index Fund previously had sought to track the MSCI US Broad Market Index. For the equity portion (60%) of the Balanced Index Fund, the CRSP US Total Market Index replaces the MSCI US Broad Market Index. The fixed income portion (40%) of the Balanced Index Fund remains with Barclays U.S. Aggregate Float Adjusted Index.
The CRSP US Total Market Index represents nearly 100% of the investable U.S. stock market, covering mega-, large-, mid-, small-, and micro-cap stocks regularly traded on NYSE, NYSE MKT, NASDAQ and ARCA.
Source: Vanguard
The impact of Asia on the changing global energy map
As demand shifts eastward, IEA advises countries in region on key reforms
January 14, 2013--Asia is a major focus of IEA activity amid the vast international reordering of energy supply and demand patterns. The region is at the centre of the changes that will alter the global map of energy trade over the next five years, particularly as Asia's economic surge alters regional gas and power sectors.
To adapt securely and sustainably, as IEA Executive Director Maria van der Hoeven explained during a visit to Singapore this autumn, Asia must pursue further reforms to liberalise its markets and mobilise capital for sufficient investment. “That is why the IEA is stepping up cooperation with IEA partner countries in Asia,” she told the Singapore International Energy Week forum in October.
Demand is shifting to the East while production is rising in the West. Increasing output of oil and gas in the Americas from the use of unconventional methods is freeing up supply for Asia, where rising demand comes not just from economic growth but also from increased refining in the region. But the shift in trade also highlights potential problems for Asia, particularly in terms of distribution and pricing.
Source: IEA
Beware the dangers of overinflated egos
January 13, 2013--The verdict is out. Again. Another round of academic research from UK professors suggests that for US fund managers, overconfidence is like a ghastly virus.
Those who catch it, risk making poor investment calls and reporting some shrinkage in their investment returns in the year following the publication of a fund’s annual report.
Indeed, Arman Eshraghi, a researcher at the University of Edinburgh’s Business School, and Richard Taffler, a professor working at Warwick Business School, argue that over-optimism among fund managers based across the Atlantic Ocean is rife. And as a result, investors are seeing a slowdown in returns on active funds run by overconfident fund managers.
Source: FT.com
EPFR Global Fund Data News Release-Equity fund flows soar as retail investors jump in; EM and Global Funds enjoy record inflows
January 11, 2013--Whatever its flaws, the recent deal to stop the US going over the so-called fiscal cliff in early January lit a fire under investors already primed by central bank easing and China's economic recovery.
Flows into EPFR Global-tracked Equity Funds hit a five year high during the first full week of January as retail commitments hit their highest level since late 3Q09 and actively managed funds recorded their biggest inflow --- in US dollar terms – since they were first tracked weekly in 1Q00. Emerging Markets and Global Equity Funds also posted weekly inflow records as investors continued the rotation towards equities that started in mid-December.Visit http://www.epfr.com for more info
Source: EPFR
IMF Working paper-Banks' Foreign Credit Exposures and Borrowers' Rollover Risks Measurement, Evolution and Determinants
January 11, 2013--Summary: The recent crises highlighted the role of cross-border banking linkages. This paper proposes two new measures for better capturing creditor banking systems' foreign credit exposures and borrower countries' reliance on foreign bank credit, by combining BIS data with bank-level data.
The results indicate that the proposed refinements matter, especially when foreign bank affiliates’ funding relies heavily on local deposits. In addition, after developing novel and necessary break-in-series and exchange rate variation adjustments, estimations looking at the driving factors of both measures during 2006-2012 highlight: (i) the role of systemic banking crises and global financial conditions in the evolution of banks’ foreign credit exposures; (ii) the role of a larger set of factors in the case of the evolution of borrower countries’ reliance on foreign bank credit—how countries borrowed, from whom they borrowed, and global financial and domestic demand conditions.
Source: IMF
CS deal to boost iShares' Asia insto, private bank biz
January 11, 2013--BlackRock's agreement to buy Credit Suisse's exchange-traded funds arm may be a Europe-centred deal, but the international nature of the ETF industry gives the move global implications.
The deal was announced yesterday, is subject to regulatory approvals and is expected to complete within the first half of 2013. The terms were not disclosed.
Source: Kalikajaros.com
DB-Synthetic Equity & Index Strategy-Global-2012 ETF Review & 2013 Outlook-Record inflows drive global ETP assets to near $2 trillion
January 11, 2013--Global ETFs cross $1.7 trillion mark and ETC/Vs reach $157bn in assets
Global ETF assets up by 30% and beyond the $1.7 trillion mark in 2012
Global ETF assets grew to $1.76 trillion during 2012 registering close to 30% YoY growth.
About 18% of it came from new cash flows (+$249bn), while the remaining 11% came from asset price increases. Global growth was led by the US ETF market that saw record inflows of $174bn in 2012. The US, Europe, Asia-Pac, and RoW regional ETF assets closed the year at $1.21 trillion (+29%), $333bn (+24%), $136bn (+50%), and $72bn (+29%), respectively. Global ETP assets grew by 28% to $1.91 trillion in the same period.
ETP Investors ventured back into riskier asset classes during 2012
The main flow trends among long only global ETP flows suggest that investors embarked on a cautious quest for growth and yield last year, in an environment that has been characterized by sluggish growth, low rates, and the threat of market shocks. Among equity products, the US (+$64.9bn), China (+$24.9bn), EM Broad (+$28.0bn), and Dividend (+$14.3bn) were the favorite ones; within the fixed income space Investment Grade (+$42.7bn, mostly Corporates) and High Yield (+$16.6bn) were the chosen ones; while in the commodity space investors sought hard currency alternatives in Precious Metals (+$11.6bn, mostly Gold)
2012 saw a very fluid competitive landscape in all regions
In the US, ETFs continue to take market share away from mutual funds, especially in equities. Since 2006, mutual funds have seen over $400bn outflows while ETFs have seen over $500bn inflows in the equity space. Among ETF providers, fierce competition has ignited a price war and multiple actions are being taken; in some cases with success, but in others not really.
In Europe the securities market regulator published long-awaited updated guidelines for ETF issuers. The regulatory playing field is level between different replication methods, however ongoing investor preference for physical replication, as evidenced by market share, is prompting issuers of synthetic ETFs to convert or issue physically replicated ETFs alongside existing issues.
Asia Pac is a more benign environment for ETF start-ups and new products, evidenced by the fact that inflows into new products in Asia represented about 62% of the cash flows compared to only 5% and 22% in the US and Europe, respectively. We believe that China has the largest growth potential in the ETF space given its opportunities for new providers and products.
We target a 23% growth for Global ETF/P assets in 2013 driven by the US
We project 23% asset growth for the Global ETF industry during 2013. This breaks down into 14% or $260bn growth from new cash flows, and 9% from price appreciation. This growth should put the industry well into the $2 trillion land at about $2.16 trillion by the end of 2013. We expect the US ETF market to be the major contributor with similar asset (23%) growth and inflows in the vicinity of $185bn. We also expect ETPs to experience a similar growth than ETFs and reach about $2.35 trillion by the end of the year.
Source: Deutsche Bank - Synthetic Equity & Index Strategy - Global
