Global ETF News Older than One Year
Bassanese Bites: Double dip?
July 27, 2020--Global markets
Global equities tried hard to break higher early last week on the back of more hopeful vaccine news and Europe's long-awaited stimulus package, though ended the week on the back foot due to renewed U.S.-China tensions and higher than expected U.S. weekly jobless claims.
America's ongoing COVID-19 battle and Congressional wrangling over the next U.S. stimulus bill also kept markets on edge. Somewhat surprisingly, however, America's long feared Q2 earnings reporting season is so far proving better than expected, with an above average 80% of the 128 companies that have so far reported beating (heavily reduced) estimates. Key indices of U.S. service and manufacturing activity also both pushed higher in July, though by slightly less than expected.
Source: betashares.com.au
Why 'tracking difference' is a vital metric for passive ETFs
July 27, 2020--In theory, the overwhelming majority of ETFs are very simple creatures. They are passive vehicles, designed to replicate the return of a diversified index of securities, whether that be equities, bonds or something more outlandish.
Why 'tracking difference' is a vital metric for passive ETFs The total expense ratio is the ‘price tag’ of a fund-but it does not tell the full story.
Source: FT.com
ETFGI reports assets invested in actively managed ETFs and ETPs reached a new record high of 182.72 billion US Dollars at the end of June 2020
July 24, 2020--ETFGI, a leading independent research and consultancy firm covering trends in the global ETF/ETP ecosystem, reported today that actively managed ETFs and ETPs saw net inflows of US$7.04 billion during June, bringing year-to-date net inflows to US$26.69 billion which is significantly more than the US$16.41 billion gathered at this point in 2019.
Assets invested in actively managed ETFs/ETPs finished the month up to 8.1%, from US$168.98 billion at the end of May to US$182.72 billion a new record, according to ETFGI''s June 2020 Active ETF and ETP industry landscape insights report, an annual paid-for research subscription service. (All dollar values in USD unless otherwise noted.)
Highlights
Assets in actively managed ETFs/ETPs reached a new record high of $182.72 Bn at the end of June.
YTD net inflows of $26.69 Bn are significantly more than the $16.41 Bn gathered at this point in 2019
Actively managed fixed Income ETFs/ETPs account for 67.4% of overall assets followed by 27.1% in equity products.
Source: ETFGI
Unemployment in Today's Recession Compared to the Global Financial Crisis
July 23, 2020--There has been much discussion in recent months about how workers who transitioned to working from home-and those who were deemed "essential"-are less affected by the layoffs and job losses brought on by lockdowns than are workers in "social" jobs that require closer human interaction, like restaurant workers. However, our new IMF staff research suggests that this does not tell the full story.
In particular, we find that while teleworkable jobs are indeed more secure than non-teleworkable occupations during the current pandemic-related recession, this pattern has also been observed during the global financial crisis of 2007-09-meaning that something more than pandemic-related restrictions is at play.
Source: IMF
Inflation at risk from Covid-19
July 23, 2020--Key takeaways
The pandemic has increased downside tail risks in advanced economies (AEs), while it has increased both downside and upside tail risks in emerging market economies (EMEs).
The collapse in output and oil prices, on balance, increases downside inflation risks.
Recent exchange rate depreciations increase upside risks to inflation in EMEs.
Tighter financial conditions raise both downside and upside risks. In AEs, the increase in downside risks is more prominent.
Source: BIS
BIS: Effects Of Fed Policy Rate Forecasts On Real Yields And Inflation Expectations At The Zero Lower Bound
July 21, 2020--Focus
Long-term real interest rates play an important part in the transmission of monetary policy measures to aggregate demand. But there are concerns that the unconventional monetary policy tool of forward guidance may not be effective when policy rates fall to zero, ie reach their zero lower bound (ZLB). A further concern is that the publication of policy rate forecasts at the ZLB may be perceived as an unconditional commitment, thus undermining the credibility of monetary policy.
We investigate both these concerns for the policy rate forecasts made by the Federal Reserve in its Summary of Economic Projections (SEP).
Contribution
We study how surprises in the Fed's SEP policy rate forecasts made at the ZLB affect real yields and breakeven inflation rates across the yield curve. We use forward rates with horizons from two to 10 years ahead derived from nominal and index-linked US government bonds.
Findings
We find that surprises in the SEP policy rate forecasts significantly affect real yields in the expected direction across the yield curve. By contrast, breakeven inflation rates are little affected, including five-year breakeven inflation rates five years ahead, a common measure of monetary policy credibility. This suggests that policy rate forecasts by the Fed at the ZLB managed to affect real yields without adversely affecting monetary policy credibility.
Source: BIS
Dominant Currencies and the Limits of Exchange Rate Flexibility
July 20, 2020--Faced with an unprecedented shock of collapsing global demand and commodity prices, capital outflows, major supply chain disruptions and a generalized drop in global trade, many emerging markets and developing economies' (EMDEs) currencies have weakened sharply. Will these currency movements support the recovery of these economies?
Building on a new dataset, research laid out in a new IMF Staff Discussion Note indicates that the short-term gains from weaker currencies may be limited. This is especially true for EMDEs where firms price their international sales and finance themselves in a few foreign currencies, notably the US dollar-so-called Dominant Currency Pricing and Dominant Currency Financing.
Source: IMF
Big banks look to the cloud to accelerate digital shift
July 20, 2020--Goldman Sachs, Deutsche Bank and HSBC sign partnership deals in tech awakening
As their booming share prices testify, technology companies have been brimming over with new business during the coronavirus pandemic.For banks, there has been a special tech awakening: to the merits of cloud computing.
After years of foot-dragging, many have been abandoning their cautious approach to cloud-based services and signing up with gusto to outsource their storage of data and other activities that demand high-intensity computing power.
Source: FT.com
IMF Working Paper-COVID-19 and Emerging Markets: An Epidemiological Model with International Production Networks and Capital Flows
July 17, 2020--Summary:
We quantify the macroeconomic effects of COVID-19 for a small open economy by calibrating a SIR-multi-sector-macro model. We measure sectoral supply shocks utilizing teleworking and physical job proximity, and demand shocks with credit card purchases.
Both shocks are also affected from changing infection rates under different lockdown scenarios. Being an open economy amplifies the economic costs through two main channels. First, the demand shock has domestic and external components. Second, the initial shock is magnified due to domestic and international input-output linkages.
Source: IMF
Fixed-income ETFs AUM surged to US$1.3tn in June
July 16, 2020--During the worst fits of coronavirus-driven turbulence that hit financial markets earlier this year, critics were quick to lambast fixed-income ETFs, seizing on the large differentials between the funds and their underlying holdings as evidence of their failure.
But according to new figures from BlackRock, the ETFs have emerged from the crisis with more appeal than ever.
In its latest global survey of fixed-income ETFs, the global asset manager found that global fixed income ETFs grew 30% in the past 12 months ended in June, with a final AUM record of US$1.3 trillion. More than four fifths of the growth (84%) came from inflows, with record amounts of investor capital flowing in during the most recent quarter.
Source: wealthprofessional.ca
