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When the Going Gets Tough, the Tough Use ETFs
July 3, 2013--Investors talked and ETFs sure listened in June.
While we've written about market rollercoasters and nail biters here on the blog before, this past month was a doozy, and we saw investors turn to ETFs to express their rapidly shifting market views.
Heading into June, global ETF flows were following a record-setting pace, breaking through the $100 billion mark. But market sentiment shifted toward the end of May when Fed Chairman Ben Bernanke signaled that the Fed could slow its bond-buying program. After Bernanke said on June 19 that the Fed could begin tapering its monetary stimulus before the end of 2013, yields on the 10-year Treasury jumped and global investors – who have become hypersensitive to central bank comments – reacted quickly, selling emerging markets equity, gold and fixed income ETFs.
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Source: iShares Blog
Vanguard completes transition to FTSE benchmarks
July 3, 2013--FTSE Group ("FTSE") has announced the retirement of its FTSE Emerging Transition Index following the successful completion last week of the six-month transition of the Vanguard Emerging Markets Stock Index Fund to FTSE's Emerging benchmark.
The $70 billion Vanguard fund and its related exchange traded fund (Ticker: VWO), the world’s largest emerging markets ETF, now track the FTSE Emerging Index, used by investors worldwide to benchmark emerging market equities.
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Source: FTSE
Versatility Fuels ETF Growth in Canadian Institutional Portfolios
More than a third of institutions in Canada using exchange-traded funds (ETFs) expect to increase their allocations in the coming year.
July 3, 2013--Executive Summary
More than one-third of Canadian institutional funds and asset managers taking part in a special study by Greenwich Associates expect to increase their use of exchange-traded funds ETFs in the coming year.
The growing use of ETFs is being driven largely by institutional investors’ success in finding new applications for the products within their portfolios. Throughout Canada, institutions are extending their use of ETFs from mainly tactical functions to strategic purposes and from equities to fixed income and other asset classes.
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Source: Greenwich Associates
An Innovative Series Trust for Actively Managed ETFs Enters the Market in the US
July 3, 2013--Atlantic Fund Services Luxembourg is pleased to announce that Atlantic Fund Services in the US has launched Forum ETF Trust, a series trust designed for independent investment advisers to launch and operate adviser-branded actively managed ETFs.
Forum ETF Trust will offer all the benefits of a traditional shared trust, with an important innovation. The Trust will use an investment manager–investment adviser structure rather than the typical adviser–sub adviser structure. The distinction is important because, while Forum Investment Advisors (FIA) will serve as investment manager to the Trust and has responsibility for certain compliance and oversight functions, the Trust’s advisers have sole responsibility for investment decisions.
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Source: Atlantic Fund Services
TMX Group Consolidated Trading Statistics-June 2013
Toronto Stock Exchange, TSX Venture Exchange, TMX Select, Alpha, Montreal Exchange, NGX
July 3, 2013--TMX Group Limited today announced June 2013 trading statistics for its diversified group of exchanges -Toronto Stock Exchange, TSX Venture Exchange,TMX Select, Alpha, Montreal Exchange (MX) and Natural Gas Exchange (NGX).
Trading volume on Toronto Stock Exchange in June 2013 decreased 7% from May 2013, and decreased 4% year-over-year. Volume on TSX Venture Exchange decreased 16% from the previous month and decreased 15% compared to June 2012. TMX Select trading volume decreased 23% from the previous month, but increased 4% compared to the same month last year. Alpha trading volume for June 2013 decreased 21% compared to the previous month and was down 57% compared to the same month a year earlier.
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Source: TMX Group Inc.
US state pension funds urged to index
July 3, 2013--US public employee pension funds are wasting billions of dollars paying fees to investment managers on Wall Street when they could save money and make better returns if they used low-cost index funds, according to a new joint study by two think-tanks based in Maryland.
“State pension funds should consider indexing. This would be a safer, more responsible use of resources than paying Wall Street management firms billions of dollars each year to deliver sub-par results,” said Jeff Hooke, chairman of the Maryland Tax Education Foundation.
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Source: FT.com
DB-Synthetic Equity & Index Strategy-North America-US ETF Market Monthly Review-Market stress removes $63bn from ETP assets in June
July 3, 2013--Data in this report is as of Fri, June 28th
US ETP assets dropped $63bn during June
ETP assets in the US dropped by $62.7bn to $1.419 trillion (YTD +6.4%) last month. Global ETP industry assets closed at $1.921 trillion (YTD +4.4%)
Flows Review: investors stay in stocks while exiting bonds and commodities
US ETPs experienced outflows of $10.9bn during June (-0.7% of last month’s AUM).
Within long-only ETPs, total flows were -$10.6bn in June vs. +$17.6bn in May. Equity, Fixed Income, and Commodity long-only ETPs experienced flows of +$0.4bn, -$8.5bn, and -$2.3bn, respectively.
Long-only Equity ETPs (+$0.4bn) managed to gather new cash during June after experiencing significant outflows during the month. Region wise, flows favored the US (+$6.4bn) and DM ex US (+$1.0bn) products, while investors pulled out $6.3bn from EM ETPs. Value (+$1.3bn), Small Cap (+$2.7bn), Germany (+$1.2bn), and Hong Kong (-$1.1bn) ETP flows were some of the other major trends among equities for the month. In the meantime, Fixed Income products reflected the rates sell-off by recording $8.5bn in outflows (worst on record), despite the fact that short duration products received $4.0bn in inflows. Last but not least, Gold ETPs continued losing assets (-$2.3bn) in line with performance during last month.
New Launch Calendar: nineteen new listings covering multiple asset classes
There were seventeen new ETPs and two new ETN listed during the previous month. Fifteen of them were listed in the NYSE Arca, while the remaining four where listed in the Nasdaq. The new products offer exposure to country, sector, triple-leveraged bull-bear pairs, covered call, volatility hedged and currency-hedged country strategies, in addition to providing access to commodities, CEFs, broad and EM debt, investment grade and high yield as well as short and long duration bond portfolios.
Turnover Review: Floor activity increased by 20% in June
ETP turnover totaled $1.619 trillion last month, 20.0% (+$270bn) higher than the previous month figure of $1.349 trillion, and 38.6% above last year’s monthly average of $1.168 trillion. Equity and Fixed Income ETPs turnover increased by 20.5% (+$240.2bn) and 34.0% (+$34.5bn), respectively; meanwhile, Commodity ETPs turnover decreased by 18.3% (-$11.7bn) during June.
ETP trading made up 32.0% of all US cash equity trading in June, the highest level since November 2011, and 12.8% over its 3-year monthly average of 28.4%.
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Source: Deutsche Bank - Synthetic Equity & Index Strategy - North America
DB-US ETF Model Portfolios-Country Rotation Portfolio Update
July 3, 2013--Country Rotation Update as of Jun 28th, 2013
L/S portfolios proved more resilient during June's market stress.
Market Performance
Global equity markets plunged in June. The MSCI AC World Index (ACWI) lost 2.60% during this period, with most countries recording negative returns.
ETF Country Rotation Portfolio (CRP) Series Performance
Our long portfolios posted negative returns for June. The tercile, quartile, and quintile portfolios recorded losses of 4.50%, 5.72%, and 5.70%, respectively. However the long/short portfolios recorded gains of 1.54%, 0.27% and 0.44% for the tercile, the quartile and the quintile portfolios, respectively. Turkey was the main drag on the long side, while Brazil, Greece, and Egypt were the largest contributors to performance on the short side.
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Source: Deutsche Bank - Synthetic Equity & Index Strategy - North America
NASDAQ OMX Commemorates Six Months of Ownership of the NASDAQ Dividend Achievers Indexes
Nearly Thirty-Five Percent Growth in Assets Benchmarked to the Indexes Highlights Demand for Income-Generating Investment Products
July 2, 2013-- The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) today commemorates the six-month anniversary of the ownership of the NASDAQ Dividend and Income Index Family, which has seen assets under management (AUM) on products linked to the Family increase 34.7 percent, to $19.0 billion from $14.1 billion, since it was acquired from Mergent, Inc. in December 2012 and subsequently expanded with two additional indexes.
Assets benchmarked to the NASDAQ Dividend and Income Index Family reached an all-time high of $19.4 billion on June 18, 2013 since NASDAQ OMX purchased the suite of indexes in December 2012.
With the acquisition of the Dividend Achievers, NASDAQ OMX Global Indexes has catapulted into one of the largest providers of dividend indexes in the world, based on benchmarked assets.
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Source: NASDAQ OMX
Federal Reserve Board approves final rule to help ensure banks maintain strong capital positions
July 2, 2013-- The Federal Reserve Board on Tuesday approved a final rule to help ensure banks maintain strong capital positions that will enable them to continue lending to creditworthy households and businesses even after unforeseen losses and during severe economic downturns.
The final rule minimizes burden on smaller, less complex financial institutions.; It establishes an integrated regulatory capital framework that addresses shortcomings in capital requirements, particularly for larger, internationally active banking organizations, that became apparent during the recent financial crisis. The rule will implement in the United States the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
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Source: Federal Reserve Board
