Global ETF News Older than One Year
IMF Policy paper-Negative Interest Rate Policies-Initial Experiences and Assessments
August 3, 2017--Summary:
The depth of the crisis and the weakness of the ensuing recovery led to new ways to implement monetary policy. At the onset of the crisis, central banks in several advanced economies quickly moved policy rates to zero and initiated large-scale asset purchases. In more recent years, with inflation still below target and limited support from fiscal policy, several central banks lowered their policy rates below the previous zero lower bound, embarking on so-called negative interest rate policies (NIRPs).
This paper explores the implications of NIRPs for monetary policy transmission and banks' behavior. It considers potential differences between interest rate cuts in positive versus negative territory on deposit and lending rates, as well as banks' interest rate margins and profitability, and market functioning. The paper focuses on the bank transmission channel, where differences between positive and negative policy rates could arise. Finally, the paper reviews cross-country experiences through case studies.
Source: IMF
World Gold Council-Gold Demand Trends Q2 2017-Q2 and H1 gold demand down on slower ETF inflows
August 3, 2017--Q2 gold demand of 953.4t was 10% lower than 2016, while H1 demand slowed 14% to 2,003.8t. Y-o-y comparisons are affected by record ETF inflows in 2016: demand from this sector slowed dramatically after last year's H1 surge.
Central bank net purchases of 176.7t were also slightly lower in the first half (-3%). By contrast, bar and coin investment improved, as did jewellery demand, although the latter remains weak in a long-term context. Technology demand also made modest gains.
Source: World Gold Council (WGC)
Index trackers break basic rules of prudent portfolio management
August 2, 2017--In the great passive versus active management debate, it is beginning to feel like game, set and match to the index trackers.
But notwithstanding the formidable advantages of passive management, most notably the much lower fees, the outcome of the game is not yet conclusive.
Source: FT.com
BlackRock's Midyear Outlook & New Greenwich Global Study
August 2, 2017--The global expansion is chugging along, with an improved eurozone outlook in
particular; deflation fears and near-term political risks look to have faded; and financial market volatility is subdued.
We believe this provides fertile ground for modest gains in risk assets such as equities. Our key views:
Outlook debate: A mid-June gathering of some 90 BlackRock portfolio managers and executives featured vigorous debates on the drivers of low volatility, how to think about valuations and the outlook
for monetary policy and markets. We dissected key risks such as a snapback in government bond yields,
discussed how poor trading liquidity could aggravate any sell-offs in frothy pockets of credit markets,
and concluded that worries over a China slowdown are overstated in the near term.
The results of the 2nd annual Greenwich Associates Global ETF Study point to continued growth as more institutions adopt ETFs for the first time, and existing users find new applications for the funds.
Key Findings*
Institutional flows into ETFs is expected to grow to $300B annually by 2020
Total institutional fund flows into ETFs could increase as new institutions introduce these investment vehicles into their portfolios and existing users continue to increase allocations to ETFs.
Source: BlackRock
ULTUMUS-Global ETF Monitor
August 2, 2017--Americas
In a curious play and perhaps in response to Trump,s protectionist agenda, iShares will be listing a new Russell 1000 ETF in the US (AMCA). AMCA will track companies that earn most of their money through sales in the US homeland compared to other large- and mid-cap companies...
Asia
Big day in Korea.
Kookmin Bank, one of Korea's largest banks, has listed a new inverse ETF that gives the opposite return of the KOSDAQ 150 Futures Index (275750). The index is made up mostly of Korean tech stocks.
Seoul-based asset manager Mirae Asset has listed two new ETFs. The first (276000) tracks the MorningStar Global Upstream Natural Resources Index, which is made up of companies in "upstream" industries-energy, agriculture, metals, timber, water...
The second (275980) tracks the MorningStar Exponential Technologies Index, which is made up of tech stocks that Morningstar's research team thinks will grow...
Europe
Amundi will be cross-listing its USA Equity Multi Smart Allocation Scientific Beta ETF into Italy (SMTU). The smart beta ETF tracks an index with four subindexes, each of which represents one of the four major quant factors (momentum, volatility, value and size). The subindexes are produced by Scientific Beta...
Source: ULTUMUS-Financial Data Management
FSI Insights on policy implementation series launched; first papers focus on proportionality, cyber-risk
August 2, 2017--The Financial Stability Institute (FSI) today launched a new publication series, FSI Insights on policy implementation, to contribute to international discussions on a range of policy issues and implementation challenges faced by financial sector authorities.
The paper on proportionality explores the issue of how best to tailor regulatory requirements for different types of banks by comparing the approaches followed in six jurisdictions. It shows the range of approaches in terms of criteria and the thresholds used to differentiate banks, and also in terms of the regulatory standards that are subject to a proportional implementation. The paper notes that implementation of the proportionality strategy should respect prudential objectives and consider implications for the competitive environment.
The paper on cyber-risk explores regulatory and supervisory initiatives in some leading jurisdictions.
view the Proportionality in banking regulation: a cross-country comparison report
view the Regulatory approaches to enhance banks' cyber-security frameworks report
Source: BIS
Hold on to your seats: why Wall Street could head much higher
July 31, 2017--It is often said stocks must climb a wall of worry, and that seems to be the case with Wall Street breaking out to record highs while valuations appear high to many.
But as this note shows. relative to bond yields. stocks don't appear over valued and valuations seem far from levels that held prior to the four previous major market declines over the past forty years. Bond-equity valuations not yet in the danger zone
Source: betashares.com.au
Pimco becomes world's best selling active manager
July 31, 2017--Pimco became the best-selling active asset manager in the first half of this year, less than three years after the departure of star fund manager Bill Gross saw its total assets fall by a third.
But in a change of fortunes the bond specialist attracted almost $50bn to its funds in the first six months this year, the Financial Times reports.
Source: fundstrategy.co.uk
IMF-The Financing of Ideas and the Great Deviation
July 31, 2017--Summary:
Why did the Great Recession lead to such a slow recovery? A model was built where heterogeneous firms invest in physical and intangible capital, and can default on their debt. In case of default, intangible assets are harder to seize by creditors. Hence, intangible capital faces higher financing costs.
This differential is exacerbated in a financial crisis, when default is more likely and aggregate risk bears a higher premium. The resulting fall in intangible investment amplifies the crisis, and gradual intangible spillovers to other firms contribute to its persistence. Using panel data on Spanish manufacturing firms, I estimate the model matching firm-level moments regarding intangibles and financing. The model captures the extent and components of the Great Recession in Spanish manufacturing, whereas a standard model without endogenous intangible investment would miss more than half of the GDP fall. A policy of transfers conditional on firm age could speed up the recovery, as young firms tend to be more financially constrained, particularly regarding intangible investment. Conditioning transfers on firm size or subsidizing credit (as in current E.U. policy) appears to be less effective.
Source: IMF
Long Finance-Responsibility Without Power? The Governance Of Mutual Distributed Ledgers
July 31, 2017--Mutual Distributed Ledger (MDL, aka blockchain) technology is in an emergent phase. New applications are under development; new uses are being researched; new consortia are being formed to explore MDL applications.
Considering appropriate governance structures has had a lower priority so far, but trust in the increasingly popular systems will depend on their incorporating good governance principles. It was the aim of this study to identify those principles, in order to provide a roadmap for developers and users alike.
Source: Long Finance
