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The Emerging Market Benchmark Bear Hug: Competitive Opportunity for Wealth Managers
February 17, 2012-Highlights:
Wealth managers often default to broad emerging market benchmarks as investment positions
Index components represent an implied point of view
Wealth managers that compete against this approach can differentiate their value proposition
Many wealth managers are investing in emerging markets via products that track market capitalization weighted broad benchmarks, including the MSCI Emerging Markets (EM) Index. We believe that the use of these vehicles in emerging markets represents an investment view, whether intended or unintended. The continued maturation of emerging markets has allowed wealth managers to make choices beyond broad benchmarks, thereby differentiating client portfolios and their own value propositions.
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Source: EGShares
High-yield poised for rocky road as ETFs grow, inventories shrink
February 16, 2012--The high-yield market is poised to become intrinsically more volatile going forward as ETF participation, mixed with shrinking dealer inventories, become the norm.
ETFs, or exchange traded funds, are share-based investment products that match the performance of a high-yield benchmark index, and their growth is skyrocketing as investors seek attractive higher yielding instruments.
Currently, ETFs make up US$25.9bn of a total US$143bn in high-yield assets under management on a weekly dataset basis, according to Lipper FMI. (Including monthly reporting funds, total assets rise to US$241bn). This compares to US$20.4bn at the start of the year, US$13.9bn at the end of 2010 and just US$8.4bn at the end of 2009.
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Source: IFR
iShares Launches Seven New Fixed Income ETFs to Help Meet Investor Demand for Targeted Exposures
The First Fixed Income ETFs to Target Sectors and Corporate Credit Quality
February 16, 2012--BlackRock, Inc. announced today that its iShares Exchange Traded Funds (ETFs) business, the world's largest manager of ETFs, has launched seven new fixed income funds to help meet investors' increased demand for targeted fixed income exposures in an ETF.
The new funds represent a number of “firsts.” iShares is offering the first fixed income ETFs that provide exposure to specific industry sectors, certain sectors within the mortgage-backed securities marketplace and high credit quality corporate bonds.
“We are launching these new iShares ETFs specifically in response to growing demand for liquid and transparent fixed income investments that are easy to buy and trade. Investors have shown a clear interest in ETFs as they readjust their fixed income portfolios,” said Matt Tucker, Head of iShares Fixed Income Investment Strategy at BlackRock.
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Source: BlackRock
NASDAQ OMX Statement on H.R. 3606
February 16, 2012--Regarding H.R. 3606"Reopening American Capital Markets to Emerging Growth Companies Act of 2011," NASDAQ OMX Executive Vice President of Global Corporate Client Group Bruce Aust provides the following statement:"NASDAQ OMX offers its unequivocal support of H.R. 3606. We are proud to be the home of many great companies that started out as smaller companies and subsequently experienced high growth on our market.
NASDAQ is engaged in starting the BX Venture Market that is designed to provide the environment where early stage, high growth companies can thrive.
"This legislation will enhance the opportunities for these companies to become public companies, and eliminate regulatory obstacles that do not serve investors or the public. In the end, the U.S. economy will benefit and more jobs will be created in this country."
Source: NASDAQ OMX
Dow Jones Indexes' Dow Jones Golden Crossover U.S. Large-Cap Total Stock Market Index To Begin Increasing Its Equity Allocation To 100% From 25%
Index Signals 'Golden Cross' or Upward-Trending Market Condition
FEBRUARY 16, 2012-Dow Jones Indexes announced that, beginning today, the equity weighting of its Dow Jones Golden Crossover U.S. Large-Cap Total Stock Market Index would increase over the next four days to 100% from 25%.
Previously, the remaining 75% had been allocated to U.S. T-Bills.
The index’s quantitative and rules-based algorithm has signaled the start of an upward-trending market condition. The indication, called a “Golden Cross”, occurs when a market’s 50-day moving average crosses above its 200-day moving average.
The Dow Jones Golden Crossover U.S. Large-Cap Total Stock Market Index applies the “Moving Average Crossover System” to U.S.large-cap equity securities. Based on a risk-based methodology, the index is designed to dynamically reallocate component weights between an underlying equity index and a cash index according to the occurrence of “Golden Cross” and “Dead Cross” signals. During Golden Cross periods, the entire 100% is allocated toward the underlying equity index or simply tracks the underlying index.
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Source: Dow Jones Indexes
Bill Gross ETF seen as watershed moment for active ETFs
ETF version of PIMCO Total Return fund launches March 1
Launch will make it highest profile active ETF
Inability to use derivatives a question mark
Active ETFs account for less than 1 pct of ETF assets
February 16, 2012--Exchange-traded funds
have exploded in the last few years, but there's one corner of the market that hasn't seen that kind of growth: actively managed ETFs.
Actively managed ETFs account for less than 1 percent of all
assets in the $1.3 trillion ETF market, barely making a dent in
the rapidly growing sector.
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Source: Chicago Tribune
Q+A: SEC's widened probe of ETFs: What you need to know
February 16, 2012--Retail investors, institutions and hedge funds like ETFs because they are an easy way to get exposure to a sector or an index. They are traded throughout the day on exchanges.
The SEC has widened its examination of the trillion-dollar exchange-traded funds industry. ETFs are baskets of stocks, commodities or other securities that trade like stocks on an exchange. There is concern in the industry about instances where trades in ETFs fail to settle on time.
Here is quick look at what the SEC examination means.
What exactly is the U.S. Securities and Exchange Commission examining?
The SEC is looking at whether there is a connection between how hedge funds and high-frequency traders use popular exchange-traded funds and the fact that some of them are failing to settle their trades within the standard four-day window.
How do hedge funds and high-frequency traders use ETFs?
A hedge fund, for example, can make a big bet on a single stock, and then hedge its trade by short-selling an ETF, thus shorting the entire sector in one swoop.
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Source: Reuters
BlackRock Set To Slice Corporate Bond ETFs By Sector
February 16, 2012--Three new iShares ETFs are expected to launch to provide investors with finer tools to slice and dice investment-grade corporate bonds
BlackRock expects to come out with more at a later date to cover a wider range of different segments
The latest expansion in bond funds comes as investors continue to flock into high-grade investment bonds at a record pace
The iShares unit of global asset management giant BlackRock (BLK) is planning to launch Thursday what is expected to be the industry's first sector-specific ETFs tracking U.S. corporate high-grade issues.
Income-hungry investors have been flocking to investment-grade corporate bond exchange-traded funds at record rates this year, and the new set of funds are designed to let them target market segments in their search for higher yields and lower portfolio volatility. The initial three ETFs will follow Barclays indexes concentrating separately on financials (MONY), utilities (AMPS) and industrials (ENGN).
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Source: Wall Street Journal
Citigroup, JP Morgan and RBS announced as counterparties to new XIE Shares
February 16, 2012--Enhanced Investment Products' XIE Shares (EIP), the first Hong Kong-domiciled swap-based synthetic ETF platform to be authorised by the Securities and Futures Commission, has appointed Citigroup Global Markets Limited, JP Morgan Chase Bank, NA and The Royal Bank of Scotland Plc as counterparties to its range of exchange traded funds.
XIE Shares’ seven ETFs, which correspond to the performance of local Emerging Asian stock exchange indices, are expected to provide liquid and low cost passive investment in India, Indonesia, Korea, Malaysia, the Philippines, Taiwan and Thailand. These country-specific products intend to provide an estimated Total Expense Ratio# (TER) of 39 bps.
The funds will be managed by Paul So, Head of Beta Products at EIP. So says: “Because we are an independent asset manager, we are able to adopt a flexible approach and change counterparties if needed, allowing us to manage the ETFs’ counterparty risks. We are pleased to announce Citigroup, JP Morgan and RBS as the counterparties to XIE Shares. We chose these particular financial institutions because they are major, reputable financial houses and provide investors with confidence.”
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Source: Canadian ETF Watch
CFTC to Hold Open Meeting to Consider Two Final Rules and One Proposed Rule
February 16, 2012--The Commodity Futures Trading Commission (CFTC) will hold a public meeting on Thursday, February 23, 2012, at 9:30 a.m., on the following topics:
Final Rule: Further Definition of "Swap Dealer," "Security-Based Swap Dealer," "Major Swap Participant," "Major Security-Based Swap Participant" and "Eligible Contract Participant;"
Final Rule: Swap Dealer and Major Swap Participant Recordkeeping and Reporting, Duties, and Conflicts of Interest Policies and Procedures; Futures Commission Merchant and Introducing Broker Conflicts of Interest Policies and Procedures; Swap Dealer, Major Swap Participant, and Futures Commission Merchant Chief Compliance Officer; and
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Source: CFTC.gov
