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Morgan Stanley-US ETF Weekly Update
February 24, 2014--US ETF Weekly Update
Weekly Flows: $6.4 Billion Net Inflows
Second Consecutive Week of Net Inflows
ETF Assets Stand at $1.7 Trillion, Flat YTD
No ETF Launches Last Week
PowerShares Renames 10 ETFs and Liquidates Four Others
US
Listed ETFs: Estimated Flows by Market Segment
ETFs posted net inflows of $6.4 bln last week, second consecutive week of net inflows
Over the last two weeks, ETFs have generated net inflows of $22.4 bln
Last week's net inflows were led by US Large-Cap ETFs at $2.4 bln; conversely, International - Emerging ETFs posted net outflows of $412 mln, the most of any category we measured
Eleven of the 15 categories we measured posted net inflows last week
ETF assets stand at $1.7 tln, flat YTD
13-week flows remain positive among asset classes; combined $19.9 bln in net inflows
International - Developed ETFs have generated $18.7 bln in net inflows over the last 13 weeks; the category has 13% market share, up from 10% at the beginning of 2013; much of the market share gain has come at the cost of International - Emerging ETFs, which has seen its market share decline from 12% to 7% over this time period
Despite exhibiting net outflows of $246 mln la
US-Listed ETFs: Estimated Largest Flows by Individual ETF
PowerShares QQQ (QQQ) posted net inflows of $1.3 bln this past week, the most of any ETF
The technology-heavy QQQ has generated net inflows of $2.8 bln over the last 13 weeks, the most of any equity ETF
Notably, the Vanguard Total Bond Market ETF (BND) exhibited net outflows of $332 mln last week, the most of any ETF; despite the difficult week, BND has generated $1.2 bln in net inflows over the last 13 weeks
Despite a surge in natural gas prices last week, the United States Natural Gas Fund (UNG) posted net outflows of $251 mln, bringing its market cap to $653 mln
Over the last 13 weeks, the iShares 3-7 Year Treasury Bond ETF (IEI) has exhibited net inflows of $3.7 bln, the most of any ETF; investors have flocked to high-quality Fixed Income ETFs amid a volatile start to 2014
US-Listed ETFs: ETF Dollar Volume
ETF monthly $ volume as a % of listed trading volume declined to 25% in January, which is below the five-year average of 28%
Over the last five years, ETF monthly $ volume as a % of listed trading volume peaked in August 2011 at 36%
ETF $ volume was $260 bln during a holiday shortened week, 14% below its 13-week average
Commodity ETFs accounted for 4% of ETF $ volume last week compared to their 13-week average of 3%
US-Listed ETFs: Short Interest Data Unchanged: Based on data as of 1/31/14
The SPDR S&P 500 ETF (SPY) had the largest increase in USD short interest at $2.4 bln
The iShares MSCI Emerging Markets ETF (EEM) also had a big jump in short interest ($1.1 bln increase); EEM's shares short are at their highest level since 6/14/13 as investors continue to flee emerging markets
598 ETFs exhibited short interest increases while 640 experienced short interest declines over the last period
Aggregate ETF USD short interest increased by $3.0 bln over the period ended 1/31/14
The average shares short/shares outstanding for ETFs is currently 4.2%, down from 4.4% last period
Six of the 10 most heavily shorted ETFs as a % of shares outstanding are sector/industry related
For the third consecutive period, the SPDR Oil & Gas Exploration & Production ETF (XOP) was the most heavily shorted ETF with shares short as a % of shares outstanding of 366%
Based on multiple borrowings and the ability to continuously create new shares, shares short as a % of shares outstanding can exceed 100% (only seven ETFs exhibited shares short as a % of shares outstanding greater than 100%)
US-Listed ETFs: Most Successful Recent Launches by Assets
$8.2 bln in total market cap of ETFs less than 1-year old - Active ETFs account for 24% of the market capitalization of ETFs launched over the past year, the most of any category, followed closely by newly launched Fixed Income ETFs with 23% of market capitalization
Over the last 13 weeks, International - Developed ETFs have attracted $632 mln in net inflows, the most of any group
35 new ETF listings and six closures YTD (11 additional closures announced)
The top 10 most successful launches make up 46% of the market cap of ETFs launched over the past year
Six ETF sponsors and two asset classes (equities and fixed income) represented in top 10 most successful launches; we note that the representation of funds with an income orientation is currently six
Despite not cracking the top 10 most successful launches over the past year, the FlexShares STOXX Global Broad Infrastructure Index Fund (NFRA) generated net inflows of $55 mln last week, the most of any recently launched ETF; NFRA is a global equity ETF that owns infrastructure companies
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Source: Morgan Stanley
Structure Matters: David Blitzer-How decisions like Facebook(FB) are made to an index like the S&P 500
February 24, 2014--Interview series:
How "Structure Matters" in investing in ETFs David Blitzer-How decisions like Facebook(FB) are made to an index like the S&P 500.
read the interview
Source: Access ETF Solutions Portfolios
Markit and Virtu race for New York IPOs
February 24, 2014--Two unique financial technology companies are preparing multibillion dollar initial public offerings, with both Markit and Virtu Financial seeking New York listings in the coming months.
Markit, the UK-based data provider, is aiming to raise at least $500m and seek a valuation of more than $5bn as early as the second quarter of this year, people familiar with its plans said.
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Source: FT.com
SEC Approves New Rule On 529 Plan Disclosures
February 24, 2014--The Securities and Exchange Commission has approved a new rule that will require underwriters of 529 college savings plans to submit more in-depth financial information to the Municipal Securities Rulemaking Board twice a year.
New Rule G-45 on reporting of information on municipal fund securities will require primary distributors or underwriters of 529 plans to submit information including assets, contributions, distributions, fees and expenses, and performance data to the board within 60 days of June 30 and December 31 each year.
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Source: The Bond Buyer
DB-Synthetic Equity & Index Strategy -North America-Equity ETPs gathered $6.5bn in new cash
February 24, 2014--Data in this report is as of Friday, Feb 21
Market and Net Cash Flows Review
The US (S&P 500) fell by 0.13%; while, outside the US, the MSCI EAFE (in USD) and the MSCI EM (USD) rose by 1.57% and 0.24%, respectively. In the meantime, performance was mixed across US sectors. The Healthcare (+0.96%) and Utilities (+0.68%) sectors recorded the biggest weekly gains; while, Financials (-0.86%) and Consumer Staples (-0.58%) were the worst performing sectors. The DB Liquid Commodity Index rose by 1.49%; similarly, the Agriculture sector (DB Diversified Agriculture Index), the WTI Crude Oil, Gold and Silver prices rose by 4.09%, 1.89%, 0.42% and 1.72%, respectively. Moving into other asset classes, the 10Y US Treasury Yield dropped 2bps ending at 2.73%. Last but not least, Volatility (VIX) rose by 8.18% during the same period.
The total US ETP flows from all products registered $6.3bn (+0.4% of AUM) of inflows during last week vs. $16.0bn (+1.0%) of inflows the previous week, setting the YTD weekly flows average at -$0.2bn (-$2.0bn YTD in total cash flows).
Equity, Fixed Income and Commodity ETPs experienced flows of +$6.5bn (+0.5%), -$0.2bn (-0.1%) and -$14mn (-0.0%) last week vs. +$14.5bn (+1.1%), +$1.4bn (+0.5%) and +$45mn (+0.1%) in the previous week, respectively.
Among US sectors, Energy (+$1.0bn, +3.8%) and Healthcare (+$0.8bn, +2.5%) received the top inflows, while Industrials (-$0.2bn, -1.7%) and Consumer Discretionary (-$0.2bn, -2.3%) experienced the largest outflows.
Top 3 ETPs & ETNs by inflows: QQQ (+$1.3bn), XLE (+$0.8bn), EFA (+$0.6bn)
Top 3 ETPs & ETNs by outflows: BND (-$0.3bn), KRE (-$0.3bn), IJR (-$0.3bn)
New Launch Calendar: No new listings
There were no new listings during the previous week.
Turnover Review: Floor activity decreased by 18.7%
Total weekly turnover decreased by 18.7% to $251.9bn vs. $309.9bn from the previous week. Furthermore, last week's turnover level was 12.0% below last year's weekly average. Equity, Fixed Income and Commodity ETPs turnover decreased by $51.5bn (-18.5%), $4.7bn (-27.7%) and $1.3bn (-11.2%) during the same period, respectively.
Assets under Management (AUM) Review: assets increased by 13.2bn
US ETP assets rose by $13.2bn (+0.8%) totaling $1.683 trillion at the end of the week. As of last Friday, US ETPs had accumulated an asset growth of +0.3% YTD. Assets for Equity, Fixed Income and Commodity ETPs moved +$12.4bn, +$0.2bn and +$0.6bn during last week, respectively.
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Source: Deutsche Bank- Synthetic Equity & Index Strategy -North America
ETF Securities and E Fund License the MSCI China A Index for New UCITS ETF
February 23, 2014--MSCI Inc (NYSE: MSCI), a leading provider of investment decision support tools worldwide, announced today that ETF Securities Limited and E Fund Management (HK) Co., Ltd, have licensed the MSCI China A Index as the basis for a proposed exchange traded fund (ETF).
"The attractive China A shares market is gaining much ground with global investors. E Fund is pleased to be working on a new product for Europe with ETF Securities that, once launched, will give a clear measure and representation of this segment"
“We are delighted to be able to license the MSCI China A Index. We expect our product to be the first UCITS ETF listed in London tracking the MSCI China A Index which provides better diversification and sectorial coverage than other indices we have reviewed,” said Matt Johnson, Head of Distribution EMEA, ETF Securities.
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Source: MSCI
ETF roundup: BAML reports big rise in high-yield ETF inflows
February 21, 2014--9.8% increase in flows year on year; equity redemptions hit ETPs in January; North American ETFs suffer worst quarter for five years; iShares lists Europe's first fund to use international security structure
Inflows into credit funds through the exchange-traded funds (ETFs) route have risen dramatically this year, according to Bank of America Merrill Lynch. With a weekly combined average inflow of $240 million for high-grade and high-yield funds, total inflows for 2014 are now in excess of $1.4 billion, driven by a 9.8% year-on-year increase in money going into high-yield ETFs, with 3.3% finding its way into investment grade ETFs.
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Source: Risk.net
Invesco PowerShares Announces a Special Dividend for PowerShares QQQ
February 21, 2014--Invesco PowerShares Capital Management LLC, a leading global provider of exchange-traded funds (ETFs), announced today that PowerShares QQQ expects to issue a special dividend payment on Friday, March, 7,, 2014.
The special dividend is due to a corporate action event by Vodafone Group PLC ADR which is held by PowerShares QQQ. As of February 20, 2014 Vodafone represented 0.93% of total holdings in PowerShares QQQ.
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Source:Invesco PowerShares Capital Management LLC
U.S. SEC reviewing if some high-speed traders should register
February 21, 2014--U.S. securities regulators are studying whether more proprietary high-speed trading firms should register as broker-dealers, which would subject them to greater oversight, a U.S. Securities and Exchange Commission official said on Friday.
Speaking at the Practising Law Institute's annual SEC Speaks conference, John Ramsay, the outgoing acting director of the SEC's Trading and Markets Division, said that whether certain high-speed proprietary trading firms should be formally registered as brokers "is something we are looking at carefully."
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Source: Reuters
CBOE to close stock-trading venue
January 21, 2014--The Wall Street Journal is reporting: CBOE Holdings plans to shut a stock-trading venue because the small exchange doesn't fit into its long-term business plan.
The exchange, CBSX, accounts less than a half-percent of U.S. equity market trading volume, the newspaper reported.
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Source: Chicago Tribune
