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Who Wins, Who Loses With New DOL Rule? $3 Trillion in Play
Morningstar analyst looks at the costs and benefits the financial services industry may face in '16
December 31, 2015--Morningstar analyst Stephen Ellis has taken a close look at the costs the financial-services industry will have to cover and the adjustments it will make if-or most likely when-the proposed Department of Labor fiduciary standard goes into effect in 2016.
Overall, Ellis says in an online article published on Tuesday, the new rules are likely to impact some $3 trillion of client assets and $19 billion of revenue at full-service wealth management firms.
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Source: thinkadvisor.com
High Yield ETFs Hit Record Trading Levels
December 15, 2015--Trading volume in junk bond ETFs has just broken through a new threshold without collapsing, a fact that asset managers are using to tout the safety of their fixed income ETF structures.
The last several trading days has seen huge amounts of junk ETFs trade, with BlackRock's HYG seeing $4.3 bn volume of last Friday, far surpassing the previous record of $2.1 bn last Tuesday.
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Source: worldfinancialdigest.com
BNY Mellon ADR Index Monthly Performance Update
December 15, 2015--The BNY Mellon ADR Index Monthly Performance Update-November 2015 is now available.
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Source: BNY Mellon
Macquarie Securities Group-ETF Trading Commentary
December 15, 2015-Bounce in Crude--Finding the Bottom or Just a Dead Cat? Congress has been talking over the past couple of days about the possibility of lifting the long-standing federal ban on oil exports.
While this sounds like a market friendly move and would, no doubt, make the politicians supporting the move feel warm and fuzzy as we approach the year-end holidays the reality, however, is removal of the ban will have no sustainable near-term impact on the price of crude.
Oil is at levels not seen since 2004. We still have a massive GLOBAL oversupply problem, and shifting inventory around the world isn’t going to help resolve the glut nor will it help U.S. producers fetch higher prices for U.S. oil.
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Source: ETF Trading Commentary-Macquarie Securities Group
Merk White Paper: Active Currency Management in Portfolio Construction
December 14, 2015--Central banks have compressed risk premia, demanding increased risk management of portfolio managers to steer portfolios through what may be more volatile times ahead.
High asset valuations, growing geopolitical risks and the effects of distressed commodities markets are just a few of the current concerns that investors have. A multi-year bull market run in equities has raised return expectations for portfolio managers, who run the risk of losing diversification by chasing higher yielding assets, as alternative asset classes that offer attractive returns may be too correlated with stocks and bonds. Despite their potential portfolio enhancing benefits, currencies as potential alternative are thereby often overlooked.
view the Merk Active Currency Management in Portfolio Construction-Risk-Sentiment as Diversifier and Source of Alpha white paper
Source: Merk Investments LLC
2016 policy outlook: Hedge funds and private equity in the crosshairs
December 14, 2015--As the calendar turns to 2016 and an election cycle looms, politically charged rhetoric is once again pouring down on the capital markets.
Congressional leaders, federal regulators and both major parties' presidential candidates are ramping up their scrutiny of financial institutions and investment managers. But of all the pieces that comprise Wall Street, the alternative asset management sector faces the greatest challenges heading into the New Year.
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Source: The Hill
Hedging EM: No Benefit At A High Cost
December 14, 2015-Popularity of hedging currency risk for U.S. investors. As the U.S. dollar has strengthened over the last four years, hedging currency risk for international investments in Europe and Japan has become a popular strategy for U.S. investors.
Notwithstanding, we do not believe it is a good strategy to hedge currency risk in emerging markets (EM) for two reasons.
First, there has been no return benefit from hedging emerging markets. Over the past 16 years (12/31/1999-11/30/2015) hedging EM equities investments (MSCI EM Index) would have helped in 8 years and hurt in 8 years, with an average benefit of 0.0%.
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Source: Emerging Global Advisors
AdvisorShares Weekly Market Update-Wasn't Cheaper Crude Supposed To Be A Good Thing?
December 14, 2015--For the week of December 7- December 11
Macro
There was market coverage over the weekend blaming equity declines on falling crude prices, it fell 10% for
the week, and other coverage blaming retail sales which, for the tenth month in 12 this year came in short of
expectations, concerns over the FOMC meeting next week are probably not helping and of course it is possible
the market went down for no reason in particular.
But down it did go. The Dow Jones Industrial Average fell 3.27%, the S&P 500 dropped 3.79%, the NASDAQ slid 4.05%
and the Russell 2000 coughed up 5.04%.
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Source: AdvisorShares
Morgan Stanley-US ETF Weekly Update
December 14, 2015--Weekly Flows:
$3.0 Billion Net Inflows
Tenth Consecutive Week of Net Inflows, Totaling $70.6 Billion
High-conviction ETF Recommendations Slide: No Changes
ETF Assets Stand at $2.1 Trillion, up 5% YTD
Two ETF Launches Last Week
US-Listed ETFs: Estimated Flows by Market Segment
ETFs posted net inflows of $3.0 bln last week; tenth consecutive week of net inflows, totaling $70.6 bln
Last week's net inflows were led by International-Developed ETFs at $1.7 bln; conversely, Fixed Income ETFs posted outflows of $1.5 bln, the most of any category we measured
Eleven of the 15 categories we measured posted net inflows last week
ETFs have generated net inflows 37 of 50 weeks YTD-ETF assets stand at $2.1 tln, up 5% YTD
13-week flows remain positive among most asset classes; combined $86.7 bln in net inflows
US Large-Cap ETFs have posted $27.6 bln in net inflows over the last 13 weeks, the most of any segment that we measured and significantly more than the next largest category, International-Developed ETFs, at $15.4 bln in net inflows
Commodity and Leveraged/Inverse ETFs are the two areas of the ETF market to have exhibited net outflows over the last 13 weeks, at a combined $515 mln
US-Listed ETFs: Estimated Largest Flows by Individual ETF
iShares MSCI EAFE ETF (EFA) posted net inflows of $887 mln last week, leading all ETFs
Over the last 13 weeks, EFA has generated $2.5 bln in net inflows as international developed market equity demand, on average, remains strong
The iShares Core S&P 500 ETF (IVV) and the Vanguard S&P 500 ETF (VOO) had a combined $1.1 bln in net inflows last week
Despite a decline in energy prices last week, the Energy Select Sector SPDR (XLE), the largest energy ETF, posted net inflows of $526 mln
Conversely, the SPDR Barclays High Yield Bond ETF (JNK) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) had a combined $1.4 bln in net outflows last week; interestingly, over the last 13 weeks, JNK and HYG have exhibited net inflows of $3.1 bln
The SPDR S&P 500 ETF (SPY) had another difficult week, posting net outflows of $2.9 bln; historically, SPY generates robust net inflows during the fourth quarter of the year, but has exhibited net outflows seven of the last eight weeks totaling $5.4 bln
US-Listed ETFs: ETF Dollar Volume
ETF monthly $ volume as a % of listed trading volume was down in November to 25% relative to October's 26% reading; over the last five years, ETF monthly $ volume as a % of listed trading volume averaged 27%
Over the last five years, ETF monthly $ volume as a % of listed trading volume peaked in August 2011 at 36%
ETF $ volume was up $23 bln last week compared to the prior week and is 17% above its 13-week average amid a spike in equity market volatility
US Large-Cap ETFs accounted for 44% of US-listed trading volume last week and compares to the category's 25% market cap share
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Source: Morgan Stanley
'Cannibal' exchange traded funds embraced by active managers
December 12, 2015--Over the past decade many active fund houses avoided the rapidly expanding exchange traded fund industry due to fears they would cannibalise their own businesses.
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Source: FT.com
