Global ETF News Older than One Year
Ground-breaking research shows that large private equity firms underperform small firms
January 17, 2011--Newly-released research by Florencio Lopez-de-Silanes of EDHEC Business School with co-authors Ludovic Phalippou and Oliver Gottschalg, entitled “Giants at the Gate: On the Cross-Section of Private Equity Investment Returns,” examines the determinants of private equity (PE) returns using a newly constructed database of 7,500 investments worldwide over forty years. The dataset is, to the best of the authors’ knowledge, the largest panel of worldwide PE (buyout) investment performance.
Among the many key and previously undocumented findings of the study:
The scale of private equity firms is a significant and consistent driver of returns. Diseconomies of scale are linked to firm structure: independent firms, less hierarchical firms, and those with managers of similar professional backgrounds exhibit smaller diseconomies of scale. More globally, small investments outperform large ones.
Source: EDHEC-Risk Institute
Credit Suisse introduces the Emerging Consumer Survey
January 17, 2011--Credit Suisse today announced the release of the inaugural Emerging Consumer Survey – a detailed study exploring the spending profile of consumers within Brazil, Russia, India and China (BRIC) markets plus Egypt, Indonesia and Saudi Arabia. Taken together, these consumers represent over 3 billion of the world’s population, residing in countries that make up a combined GDP of over USD 10 trillion.
The survey produced by the Credit Suisse Research Institute seeks to establish a unique profile of the spending patterns and preferences of consumers who are at the heart of a structural shift in global demand.
To undertake this project, Credit Suisse engaged the leading global market research firm AC Nielsen to conduct primary research on its behalf. 120 questions, over a range of 11 different subjects, were included in the survey and put to some 13,000 respondents of varying location, gender and income levels.
Fawzi Kyriakos-Saad, CEO of Europe, Middle East and Africa at Credit Suisse, said: “Credit Suisse’s overall commitment to emerging markets was a key driver of conducting this study. We are committed to developing thought leadership to provide our developed and emerging markets clients with insights on future trends and their implications for the global economy and financial markets.”
read the Emerging Consumer Survey
Source: Credit Suisse
NYSE Euronext Leads ETP Listing Globally In 2010
NYSE Arca U.S. listed a record 220 New ETPs in 2010 – new high compared to 2009
A total of 112 new ETPs launched on NYSE Euronext European Markets
January 14, 2011--NYSE Euronext (NYX) today announced that NYSE Arca, its fully electronic U.S. market, and its combined European markets in Paris, Amsterdam, Brussels and Lisbon continued to show strong growth in Exchange Traded Products (ETPs) listings in 2010.
In the U.S., NYSE Arca listed 220 new ETPs, which included 144 ETFs, 9 ETVs, 43 ETNs and 24 certificates. That brought the total number of ETPs on NYSE Arca to 1,124 ETPs comprised of 837 Exchange Traded Funds (ETFs), 57 Exchange Traded Vehicles (ETVs), 132 Exchange Traded Notes (ETNs) and 98 certificates. New issuers of ETPs in 2010 included: Pax World Management, RBS, Sprott Asset Management, Teucrium, U.S. One and Velocity Shares. The total combined assets of NYSE Arca-listed ETPs reached $980 billion (as of Dec. 31, 2010), an increase of approximately 27% over 2009.
During 2010, NYSE Euronext’s European ETP segment listed 112 new ETPs, an increase of 9% over 2009. Two new issuers joined NYSE Euronext’s European market in 2010 with ETFs based on NYX indices: Comstage ETF listed five ETFs based on CAC 40, CAC 40 Short, CAC 40 Leverage, PSI 20 and PSI 20 Leverage, while ESAF ETF listed one ETF based on the NYSE Euronext Iberian Index. ETP issues are eligible to be listed across all NYSE Euronext’s European markets. At the end of 2010, NYSE Euronext ETP segment consisted of 491 ETFs from 16 issuers covering 329 indices, 43 ETVs, 5 ETNs and 18,661 warrants and certificates. The total combined assets of all ETPs listed on NYSE Euronext’s European markets reached €147.6 billion (as of Dec. 31, 2010), an increase of 26.7% over 2009.
Source: NYSE Euronext
Oil prices test $100-a-barrel
January 14, 2011--Oil prices ended the week closing in on the key psychological $100-a-barrel level amid mounting optimism that global economic growth will boost energy demand.
The oil surge also comes on the back of supply disruptions such as this week’s outage in a pipeline in Alaska and strong investor inflows in commodities.
Source: FT.com
DB Global Equity Index & ETF Research : Part fund, part stock: ETFs in a path to unlock global asset liquidity
January 13, 2011--Capital market advances, supported by technological innovations over the past two decades, have redefined capital market mechanics. ETFs are a brainchild of this evolution. Currently, the global ETF market is close to €1 trillion, with the European market accounting for 22% of this figure. The sector’s impressive growth over the past decade demonstrates that ETFs are here to address a key market need: dependable secured fund instruments that do away mutual fund trading inefficiencies and derivatives risk considerations.
Possessing fund and stock characteristics, an ETF combines the best features of both instruments: security [funded] – mutual funds - and trading flexibility – stocks. The amalgamation of these features translates to liquidity levers that can prove paramount when looking to unlock an investment portfolio’s full liquidity potential.
As the global markets continue to evolve and investor instrument needs expand, asset liquidity considerations will only become more important and shall increasingly determine how an investor chooses a tracker instrument. ETFs are developing to become the pre-eminent global index instrument. Today, an impressive 50%+ (in terms of AUM) of ETFs assets trade on a global level across the major three regions (US, Europe, Asia). ETF trading globalization has thus put these instruments on a global market bridging path. This makes all the more important for a portfolio manager to use ETF liquidity levers to their advantage in order to help optimize and better achieve investment objectives.
ETF liquidity is composite in nature. To understand it, both its fund and stock trading characteristics need to be understood. Similar to a traditional mutual fund, an ETF is not an asset per se, it is an asset wrapper. Irrespective of the replication method that an ETF utilizes in order to achieve its investment objectives, it needs to access its underlying benchmark’s physical market to achieve investment exposure. Due to this dependence, the link with ETF underlying benchmark market plays the biggest role in determining an ETF’s liquidity standing.
ETFs, however, are also equity instruments whose shares trade like stocks. In this respect their intra-day pricing is subject to supply and demand forces as well as other trading market dynamics (such as market depth, trading restrictions, intermediaries’ pricing etc). Despite the trading similarities of an ETF and a common stock, using stock liquidity measures such as turnover, has generated confusion, in measuring ETF liquidity.
Three main areas relating to ETF liquidity have attracted attention as the ETF market has gained prominence next to established index instruments such as futures, total return swaps and mutual funds.
Trading: How can an ETF be traded and what are the implications of different trading possibilities on its liquidity?
Creation: How is ETF wrapper liquidity created? What is the impact of the ETF wrapper on the underlying benchmark’s index liquidity?
Measurement: What are the appropriate ETF liquidity measurement indicators?
Using these three pillars, we have performed an analysis of ten popular ETF benchmarks and the associated ETF listings across sixteen exchanges in all of the three major global regions (Europe, US, Asia).
To request a copy of the report
Source: Deutsche Bank Global Equity Index & ETF Research
Thomson Reuters Monthly Market Share Reports For December 2010
January 13, 2011--Trading is fragmenting between exchanges and competing venues. But by how much and which venues? Find out in the summarised monthly reports.
Monthly Data at a Glance
The charts show the traded value of all MTF operated Dark Pools and six of the leading broker crossing services equities (in Euro € millions) recorded over the last 13 months. For the most recent month the break down for the main venues is provided. The data for the MTFs has been sourced from the Thomson Reuters Equity Market Share Reporter whilst the Broker Crossing System data, available since June 2010 has been sourced from Markit BCS Daily reporting (http://www.markit.com/).
Source: Thomson Reuters
2011 Index of Economic Freedom
January 13, 2011--Executive Highlights
Economic freedom advanced this year, regaining much of the momentum lost during the fiscal crisis and global recession. Many governments around the world have rededicated themselves to fiscal soundness, openness and reform, and the majority of countries are once again on a positive path to greater freedom.
The 2011 Index of Economic Freedom reports on economic policy developments since the second half of 2009 in 183 economies. Based on 10 measures that evaluate openness, the rule of law, and competitiveness, the Index ranks economies according to their economic freedom. The principles of economic freedom emphasized in the Index are individual empowerment, non-discimination, and the promotion of competition.
HIGHLIGHTS FROM THE 2011 INDEX OF ECONOMIC FREEDOM
The global average economic freedom score for the 2011 Index is 59.7, a 0.3 point increase from last year. (See Chart 1.) Despite the challenging global economic environment, the forces of economic freedom around the world have been resilient and even increasing. In fact, economic freedom has taken an upturn in the majority of the economies that are assessed in the 2011 Index.
Highlights of the Index of Economic Freedom Report
Source: Heritage org
Growth hopes push oil to within reach of $100
January 12, 2011--Oil has risen to within reach of $100 a barrel for the first time since the 2008 price spike amid mounting optimism that global economic growth will boost demand.
But the sharp rise has also heightened concerns about the impact of soaring commodity prices on the global economy, particularly in emerging countries, as it comes on top of high costs for agricultural commodities and metals.
Source: FT.com
World moves closer to food price shock
January 12,, 2011--The world has moved a step closer to a food price shock after the US government surprised traders by cutting stock forecasts for key crops, sending corn and soyabean prices to their highest level in 30 months.
The price jump comes after the UN’s Food and Agriculture Organisation warned last week that the world could see repetition of the 2008 food crisis if prices rose further. The trend is becoming a major concern in developing countries.
Source: FT.com
BlackRock * New Report * ETF Landscape: Industry Highlights - Year End 2010
January 12, 2012--Key points from the highlights, as at year end 2010, are as follows:
United States ETF and ETP Industry
The United States ETF industry had 896 ETFs and assets of US$891.0 Bn, from 28 providers on two exchanges. This compares to 772 ETFs and assets of US$705.5 Bn, from 29 providers on two exchanges, at year end 2009.
US$19.0 Bn of net new assets went into United States listed ETFs/ETPs in December 2010. US$18.7 Bn net inflows went into equity ETFs/ETPs, of which US$16.0 Bn went into ETFs/ETPs tracking North American indices and US$0.8 Bn into ETFs/ETPs tracking international indices. Fixed income ETFs/ETPs saw net outflows of US$1.7 Bn, where corporate bond ETFs/ETPs saw net outflows of US$0.9 Bn and aggregate fixed income ETFs/ETPs saw net outflows of US$0.9 Bn. Commodity ETFs/ETPs experienced US$1.9 Bn net inflows, of which precious metals ETFs/ETPs saw net inflows of US$1.0 Bn and US$0.5 Bn went into agricultural commodity ETFs/ETPs in December 2010.
Of the US$17.7 Bn of net new assets in United States listed ETFs in December 2010, State Street Global Advisors gathered the largest net inflows with US$10.9 Bn, followed by iShares with US$3.9 Bn net inflows, while PowerShares saw US$1.0 Bn net outflows in December 2010.
Global ETF and ETP Industry
The industry grew on all major dimensions during 2010 and we expect this to continue in 2011. With products and assets both growing by 26.6%, the global ETF industry had 2,459 ETFs with 5,554 listings and assets of US$1,311.3 Bn, from 136 providers on 46 exchanges around the world, at year end 2010. This is up significantly on 2009's year end of 1,943 ETFs with 3,827 listings and assets of US$1,036.1 Bn, from 108 providers on 41 exchanges.
The global ETF and ETP industry combined had 3,503 products with 7,311 listings and assets of US$1,482.0 Bn, from 168 providers on 50 exchanges around the world. This compares to 2,672 products with 4,856 listings, assets of US$1,155.8 Bn from 132 providers on 45 exchanges at year end 2009.
European ETF and ETP Industry
The European ETF industry had 1,071 ETFs with 3,699 listings and assets of US$284.0 Bn, from 39 providers on 22 exchanges. This compares to 827 ETFs with 2,438 listings and assets of US$226.9 Bn, from 34 providers and 19 exchanges, at year end 2009.
US$4.9 Bn of net new assets went into European listed ETFs/ETPs in December 2010. US$3.8 Bn net inflows went into equity ETFs/ETPs, of which US$1.5 Bn went into ETFs/ETPs tracking emerging market indices and US$1.4 Bn into ETFs/ETPs tracking European indices. Fixed income ETFs/ETPs saw net outflows of US$0.1 Bn, of which corporate bond ETFs/ETPs saw net outflows of US$0.4 Bn, while US$0.3 Bn went into government bond ETFs/ETPs. Commodity ETFs/ETPs saw net inflows of US$1.1 Bn, of which US$0.6 Bn went into precious metals exposure and US$0.4 Bn into broad commodity exposure.
Of the US$4.5 Bn of net new assets in European listed ETFs in December 2010, Lyxor Asset Management gathered the largest net inflows with US$1.8 Bn, followed by iShares with US$1.3 Bn net inflows, while Source Markets had the largest net outflows with US$0.7 Bn.
Asia Pacific (ex-Japan) ETF and ETP Industry
The Asia Pacific (ex-Japan) ETF industry had 200 ETFs with 307 listings and assets of US$53.3 Bn, from 59 providers on 13 exchanges.
Japan ETF and ETP Industry
The Japanese ETF Industry had 80 ETFs with 83 listings and assets of US$32.2 Bn, from seven providers on two exchanges.
Latin America ETF and ETP Industry
The Latin American ETF industry had 26 ETFs with 355 listings and assets of US$10.1 Bn, from four providers on three exchanges.
Canada ETF and ETP Industry
The Canadian ETF industry had 157 ETFs and assets of US$38.4 Bn, from four providers on one exchange.
Source: Global ETF Research & Implementation Strategy Team, BlackRock
