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Morgan Stanley-US ETF Weekly Update
October 27, 2014--US ETF Weekly Update
Weekly Flows: $7.2 Billion Net Inflows
High-conviction ETF Recommendations Slide
ETFs Have Generated Net Inflows 32 of 43 Weeks YTD
ETF Assets Stand at $1.8 Trillion, Up 10% YTD
Five ETF Launches Last Week
SEC Rejects Non-transparent Actively Managed ETFs
US-Listed ETFs: Estimated Flows by Market Segment
ETFs posted net inflows of $7.2 bln last week; ETFs have generated net inflows 11 of the last 13 weeks
Last week's net inflows were led by US Large-Cap ETFs at $6.0 bln; conversely, US Sector & Industry ETFs posted net outflows of $3.6 bln, the most of any category we measured
Fixed Income ETFs have posted net inflows for four consecutive weeks, totaling $18.6 bln
Eleven of the 15 categories we measured posted net inflows last week; ETFs have generated net inflows 32 of the 43 weeks YTD
ETF assets stand at $1.8 tln, up 10% YTD
13-week flows remain positive among most asset classes; combined $52.4 bln in net inflows
Fixed Income ETFs generated net inflows of $23.3 bln over the last 13 weeks, the most of any category
Trailing only Fixed Income ETFs, US Large-Cap ETFs have exhibited net inflows of $19.1 bln over the last 13 weeks
Commodity ETFs continue to struggle and over the last 13 weeks have posted net outflows of $1.8 bln; notably, Commodity ETF market share has declined to 3% from 9% over the last two years
US-Listed ETFs: Estimated Largest Flows by Individual ETF
SPDR S&P 500 ETF (SPY) posted net inflows of $3.3 bln last week, the most of any ETF
The three ETFs to mirror the S&P 500 Index (SPY, IVV, VOO) generated a combined $5.1 bln in net inflows last week
The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and the SPDR Barclays High Yield Bond ETF (JNK) posted a combined $1.1 bln in net inflows last week
Despite a risk-on environment last week, the iShares Short Treasury Bond ETF (SHV) had net inflows of $1.0 bln, accounting for 32% of SHV's current market cap
After posting net inflows of $2.5 bln two weeks ago, the iShares Russell 2000 ETF (IWM) had net outflows of $2.2 bln last week, giving most of it back
The PowerShares QQQ (QQQ) continues to bleed money and over the last 13 weeks has exhibited net outflows of $8.4 bln, the most of any ETF
US-Listed ETFs: ETF Dollar Volume
ETF monthly $ volume as a % of listed trading volume remained flat in September relative to August at 25%; over the last 5 years, ETF monthly $ volume as a % of listed trading volume averaged 28%
Over the last five years, ETF monthly $ volume as a % of listed trading volume peaked in August 2011 at 36%
ETF $ volume declined by $277 bln last week compared to the prior week, but is still 15%above its 13-week average
US Sector & Industry ETFs accounted for 16% of ETF $ volume last week compared to their 13-week average of 14% and market capitalization share of 12%
US-Listed ETFs: Short Interest Data Updated: Based on data as of 10/15/14
SPDR S&P 500 ETF (SPY) had the largest increase in USD short interest at $6.8 bln
SPY's shares short at 292 mln are at their highest level since 5/31/12
Notably, the SPDR Barclays High Yield Bond ETF (JNK) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) exhibited meaningful declines in short interest last period; shares short in JNK are at their second lowest level of 2014 and HYG's shares short are at their lowest level of the year
694 ETFs exhibited short interest increases while 646 experienced short interest declines over the last period
Aggregate ETF USD short interest increased by $12.2 bln over the period ended 10/15/14
The average shares short/shares outstanding for ETFs is currently 3.9%, down from 4.2% last period
For the third consecutive period, the SPDR Retail ETF (XRT) was the most heavily shorted ETF as a % of shares outstanding at 267%
Seven of the 10 most heavily shorted ETFs as a % of shares outstanding are sector/industry based (XRT, SMH, XOP, IYR, XBI, OIH, DRV)
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
$8.3 bln in total market cap of ETFs less than 1-year old
Active ETFs account for 22% of recently launched ETF market share and 35% of net inflows over the last 13 weeks, the most of any category
The International - Emerging ETF category was the only recently launched ETF segment to exhibit net outflows last week
163 new ETF listings and 57 closures YTD
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Source: Morgan Stanley
LedgerX Hopes to Establish First U.S.-Regulated Options Exchange for Bitcoin
October 27, 2014--A new startup out of New York called LedgerX LLC has recruited big financial-industry names to its board of directors and raised venture funding from Lightspeed Venture Partners, Google Ventures and others to add a dose of legitimacy to the bitcoin market.
LedgerX hopes to become the country’s first bitcoin options exchange with Uncle Sam's blessing. It submitted applications to the U.S. Commodity Futures Trading Commission, or CFTC, which regulates U.S. futures and options exchanges, in late September to be approved as a derivatives exchange with bitcoin as the underlying asset to be traded, according to LedgerX co-founder and Chief Executive Paul Chou.
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Source: Wall Street Journal
SEC rejects NYSE proposal to list 'non-transparent' ETFs
October 24, 2014--U.S. regulators on Friday rejected a proposal from the NYSE Arca exchange to be able to list and trade actively managed exchange-traded funds that do not have to disclose their holdings on a daily basis.
The move follows the U.S. Securities and Exchange Commission's announcement earlier this week that it intends to deny proposals from Precidian Investments and BlackRock Inc to be allowed to create such ETFs. Because the NYSE filing is linked to the Precidian funds, the rejection of the exchange's proposed rule change was largely expected.
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Source: Reuters
SEC to Keep Veil Open on ETFs
Asset-Management Industry Suffers Setback After BlackRock Proposal Is Rejected
October 24, 2014--The asset-management industry suffered a setback when regulators rejected a proposal by BlackRock Inc. to launch an exchange-traded fund that would have kept its holdings hidden from investors.
The product, known as a "nontransparent ETF," is a key part of the industry's attempt to broaden its customer base beyond traditional index-tracking investments by selling more funds that are actively managed
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Source: Wall Street Journal
U.S. Bancorp Fund Services Adds Third Exchange Traded Fund from Vident Financial to its Multiple Series Trust
October 23, 2014--U.S. Bancorp Fund Services (USBFS) has added a third exchange traded fund (ETF) from Vident Financial to its ETF Series Solution (ESS) multiple series trust (MST).
Vident Core U.S. Bond
Strategy ETF (VBND) launched Thursday, October 16, 2014.
"The Vident Core U.S. Bond Strategy ETF provides investors with access to our rules-based principled reasoning methodology. We are proud to collaborate again with U.S. Bancorp Fund Services and Exchange Traded Concepts to launch our third ETF within ETF Series Solutions. The benefits of ESS have allowed us to seamlessly plan, launch and grow our ETF family successfully," said Nick Stonestreet, chief executive officer for Vident Financial.
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Source: .S. Bancorp Fund Services (USBFS)
Global X Funds Launches Two New ETFs Based On J.P. Morgan Indexes
October 23, 2014--Global X Funds, the New York-based provider of exchange-traded funds (ETFs), today launched two ETFs based on indexes developed by J.P. Morgan Corporate and Investment Bank: the Global X | JPMorgan Efficiente Index ETF (NYSE Arca: EFFE) and the Global X | JPMorgan US Sector Rotator Index ETF (NYSE Arca: SCTO).
These new ETFs from Global X enter the market at a time when investors are increasingly interested in products linked to strategies that are designed to help manage against downside risks.
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Source: Global X
U.S. BANCORP FUND SERVICES ADDS THIRD EXCHANGE TRADED FUND FROM VIDENT FINANCIAL TO ITS MULTIPLE SERIES TRUST
October 23, 2014--U.S. Bancorp Fund Services (USBFS) has added a third exchange traded fund (ETF) from Vident Financial to its ETF Series Solution (ESS) multiple series trust (MST). Vident Core U.S. Bond Strategy ETF (VBND) launched Thursday, October 16, 2014.
"The Vident Core U.S. Bond Strategy ETF provides investors with access to our rules-based principled reasoning methodology. We are proud to collaborate again with U.S. Bancorp Fund Services and Exchange Traded Concepts to launch our third ETF within ETF Series Solutions. The benefits of ESS have allowed us to seamlessly plan, launch and grow our ETF family successfully," said Nick Stonestreet, chief executive officer for Vident Financial.
VNBD is a fixed income strategy that seeks to track the performance of the Vident Core U.S. Bond Strategy Index. Vident Financial has two additional ETFs in the ESS trust; the Vident International Equity Fund (VIDI), which launched on October 29, 2013 and the Vident U.S. Core Equity Fund (VUSE) which launched January 22, 2014. Exchange Traded Concepts is the Investment Adviser for VIDI, VUSE and VBND.
"We're proud that our partnership with Vident continues to grow through our ESS multiple series trust," said Joe Redwine, president of U.S. Bancorp Fund Services. "The efficiencies of our ESS model continue to provide Vident with a collaborative structure to meet their requirements, and we’ve enjoyed watching their success grow as each new fund has launched."
USBFS launched ESS in February 2012. ESS extends the benefits of a shared trust model to one of the industry’s fastest growing segments, and marks the fifth MST, out of six, for U.S. Bancorp Fund Services. Currently, U.S. Bancorp Fund Services shared trusts have over $30.5 billion in mutual fund assets, 143 participating funds, 237 classes, and 81 different advisers.
Source: U.S. Bancorp Fund Services
DAX has been licensed for an exchange-traded fund in the U.S.
Index now available in the European, Asian and North American regions for the first time
October 23, 2014--Deutsche Börse today announced the DAX Index has been licensed to Recon Capital Partners to underlie an exchange-traded fund (ETF) in the U.S. The Recon Capital DAX Germany ETF is available today on Nasdaq.
'Germany continues to be among the most promising and compelling economies in Europe. As the trusted measure of German blue-chips, DAX is one of the leading indices for financial products in the world. For the first time, it underlies ETFs in three key financial centers in Europe, Asia and now the United States," said Hartmut Graf, chief executive officer, STOXX Limited. STOXX Ltd. is the marketing agent for the indices of Deutsche Börse AG and SIX, including the DAX and SMI indices.
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Source: Deutsche Börse
Six Federal Agencies Jointly Approve Final Risk Retention Rule
October 22, 2014--Six federal agencies approved a final rule requiring sponsors of securitization transactions to retain risk in those transactions.
The final rule implements the risk retention requirements in the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The final rule is being issued jointly by the Board of Governors of the Federal Reserve System, the Department of Housing and Urban Development, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission. As provided under the Dodd-Frank Act, the Secretary of the Treasury, as Chairperson of the Financial Stability Oversight Council, played a coordinating role in the joint agency rulemaking.
view final rule
Source: SEC.gov
ValueShares Launches U.S. Quantitative Value ETF (QVAL)
October 22, 2014--ValueShares today announced that it has launched its first active exchange-traded fund, the ValueShares U.S. Quantitative Value ETF (BATS:QVAL). QVAL pursues its investment objective by investing primarily in U.S. equity securities the Advisor believes to be the cheapest, highest-quality value stocks in the market.
The Advisor to QVAL anticipates transferring $50 million from its separately managed accounts into the Fund. The managed account capital’s sources are a multi-billion dollar family office and other high-net-worth clients of the Fund’s Advisor, Alpha Architect.
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Source: ValueShares
