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Research Affiliates-Cost and Capacity: Comparing Smart Beta Strategies
July 27, 2017--Key Points
Market impact trading costs arise from buying and selling securities at temporarily impacted prices during index rebalances.
These costs are not easily observed because they simultaneously occur in the index and the index tracking portfolio.
The growth in smart beta investing may erode these strategies' future returns as they reach investment capacity, which is inversely related to annual trading costs.
Investors should consider a strategy's cost-driving characteristics, such as turnover, concentration, liquidity, and total AUM, when making investment decisions.
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Source: Research Affiliates
Research Affiliates-A Smart Beta for Sustainable Growth
July 27, 2017--Key Points
Traditional growth indices, designed as the inverse of value, have delivered negative excess returns and failed to provide faster growth in earnings per share (EPS).
Active growth managers, who track growth indices, have likewise underperformed the market.
Companies that invest aggressively to grow assets and sales despite a low return on capital perform poorly, attributable to negative relative growth in EPS. Companies with a high return on capital and more disciplined growth strongly outperform, attributable to high relative growth in EPS.
smart beta growth strategy, by investing in profitable companies with conservative investment practices, can diversify value strategies while delivering a strong positive excess return from sustainably faster growth in EPS.
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Source: Research Affiliates
The Forum at ETF Research Center-New Heights: 2Q17 Results by Sector
July 27, 2017--Second quarter reports are shaping up surprisingly strong, and are at least partly to thank for the recent string of new market highs. With nearly half of S&P 500 constituents having reported second quarter 2017 results (and using consensus estimates for the remainder) it looks as if overall index earnings grew more than 10% year-on-year, or about $26 billion, to $280 billion.
That would be a new all-time high, equating to about $32.71 per share. (The S&P 500 SPDR ETF (SPY) trades at approximately 1/10th of the S&P 500 Index; its EPS is also about 1/10th). The Technology (XLK), Financials (XLF) and Energy (XLE) sectors were the biggest contributors to overall index earnings growth, but all sectors except Utilities (XLU) likely saw gains (Figure 1).
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Source: AltaVista Research
Canadian securities regulators publish guidance on conflict of interest transactions
July 27, 2017--The securities regulatory authorities in Ontario, Québec, Alberta, Manitoba and New Brunswick (the participating jurisdictions) today published CSA Multilateral Staff Notice 61-302 Staff Review and Commentary on Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions.
The notice outlines the approach used to review material conflict of interest transactions, including insider bids, issuer bids, business combinations and related party transactions that give rise to concerns regarding the protection of minority security holders.
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Source: www.securities-administrators.ca
Federal Reserve issues FOMC statement
July 26, 2017--Information received since the Federal Open Market Committee met in June indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year.
Job gains have been solid, on average, since the beginning of the year, and the unemployment rate has declined. Household spending and business fixed investment have continued to expand. On a 12-month basis, overall inflation and the measure excluding food and energy prices have declined and are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.
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Source: federalreserve.gov
Betterment Adds More Human Advice to Its Robo Services
July 26, 2017--Automated-investing firm streamlines offering, cuts some prices
A company founded on the idea of managing money for individuals based on algorithms is adding more advice from humans.
Robo-adviser Betterment LLC plans to unveil on Wednesday expanded access to human advice with an unlimited text-messaging service, while also cutting 20% off the price of its "premium" service that provides telephone access to a team of planners.
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Source: Wall Street Journal
WisdomTree Model Portfolios Now Available Through Envestnet Wealth Management Platform
July 25, 2017--WisdomTree Investments, Inc. (NASDAQ:WETF), an exchange-traded fund ("ETF") and exchange-traded product ("ETP") sponsor and asset manager driven by research and technology, today announced WisdomTree's model portfolios will now be available on the Envestnet Wealth Management platform.
Envestnet, Inc. (NYSE:ENV) is the leading provider of intelligent systems for wealth management and financial wellness.
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Source: WisdomTree
Horizons Nasdaq 100 Covered Call ETF (QYLD) Crosses $100 Million Threshold
July 25, 2017--Horizons (US) flagship buy-write fund delivered high-quality strategy and income at low cost.
Horizons ETFs Management (US) LLC ("Horizons US"), announced that its flagship fund, the Horizons Nasdaq 100 Covered Call ETF (ticker: QYLD) ("the fund"), surpassed $100 million in assets.
That milestone coincides with the first day it traded over 1 million shares. The fund started 2017 with $58.8 million in assets and has since grown by 111.34 percent to $125 million as of July 19, 2017. Created for and since embraced by investors who are a bit risk-averse and want to access the top 100 companies in the Nasdaq while generating a steady income stream, QYLD launched on December 11, 2013 and tracks the CBOE Nasdaq-100(R) BuyWrite V2 Index ("BXNT Index").
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Source: Horizons ETFs Group
The Nasdaq Stock Market(R) Welcomes 14 New ETPs in the Second Quarter of 2017
July 25, 2017--Nasdaq (Nasdaq:NDAQ), the single largest U.S. equity exchange by market share, announced 14 new exchange-traded product (ETP) listings from five issuers during the second quarter of 2017.
Nasdaq now has a total of 348 products listed from 39 issuers as of June 30, 2017.
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Source: Nasdaq.com
Latest Outlook for The Americas: Back on Cruise Control, But Stuck in Low Gear
July 25, 2017--After disappointing growth over the past few years, economic activity in Latin America remains on track to recover gradually in 2017-18 as recessions in a few countries-notably Argentina and Brazil-are coming to an end. Our latest projections show the region growing by 1 percent in 2017 and 1.9 percent in 2018.
But amid low confidence, domestic demand continues to remain weak across most economies, and is expected to only recover slowly as actual output catches up to potential and internal sources of growth build strength, based on a decline in political and policy uncertainty across some major economies. Some countries in the region will need clear strategies to adjust further following a permanent loss in commodity revenues.
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Source: IMF
