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Morgan Stanley-US ETF Weekly Update
April 28, 2014--US ETF Weekly Update
Weekly Flows: $1.5 Billion Net Inflows
ETFs Have Generated Net Inflows 11 of 17 Weeks YTD
ETF Assets Stand at $1.7 Trillion, Up 2% YTD
Two ETF Launches Last Week
Change to Indices That State Street International Debt ETFs
Track
US-Listed ETFs: Estimated Flows by Market Segment
ETFs posted net inflows of $1.5 bln last week
Last week's net inflows were led by Fixed Income ETFs at $1.3 bln; conversely, US Large-Cap ETFs posted net outflows of $2.4 bln, the most of any category we measured
Twelve of the 15 categories we measured posted net inflows last week; ETFs have generated net inflows 11 of the 17 weeks YTD
ETF assets stand at $1.7 tln, up 2% YTD
13-week flows remain positive among asset classes; combined $30.5 bln in net inflows
Fixed Income ETFs generated $14.4 bln in net inflows over the last 13 weeks, the most of any category we measured, as long-term interest rates have traded in a tight range for the past few months and failed to move higher as many pundits anticipated
US Sector & Industry ETFs have posted net inflows of $8.6 bln over the last 13 weeks, trailing only Fixed Income ETFs; we find it interesting that US Sector & Industry ETFs have continued to gather ETF market share despite lackluster issuance in the category (flows are not coming from innovation)
US-Listed ETFs: Estimated Largest Flows by Individual ETF
iShares Russell 2000 ETF (IWM) posted net inflows of $488 mln this past week, the most of any ETF
The iShares 20+ Year Treasury Bond ETF (TLT) had another solid week, generating net inflows of $476 mln; TLT has exhibited net inflows five of the last six weeks
Interestingly, the iShares MSCI Brazil Capped ETF (EWZ) posted net inflows of $318 mln last week; over the last year, EWZ has had net outflows of more than $2 bln as investors have fled a number of emerging market countries, including Brazil
Notably, the SPDR S&P 500 ETF (SPY) posted net outflows of $2.3 bln last week, and over the last 13 weeks SPY has exhibited net outflows of $10.7 bln
The PowerShares QQQ (QQQ) had its fifth consecutive week of net outflows ($506 mln last week) as investors remain cautious on some of the momentum stocks (i.e., technology and biotech names)
US-Listed ETFs: ETF Dollar Volume
ETF monthly $ volume as a % of listed trading volume increased in March to 27%, up from 25% the prior month; 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 to $271 bln last week, which is 25% below its 13-week average
US Small-& Micro-Cap ETFs accounted for 10% of ETF $ volume last week, however, make up only 5% of ETF market share
US-Listed ETFs: Short Interest Data Updated: Based on data as of 4/15/14
SPDR S&P 500 ETF (SPY) had the largest increase in USD short interest at $1.3 bln
Notably, the iShares MSCI Emerging Markets ETF (EEM) had a big decrease in USD short interest ($2.5 bln); EEM's shares short (132 mln) are at their lowest level since 12/31/13
618 ETFs exhibited short interest increases while 661 experienced short interest declines over the last period
Aggregate ETF USD short interest increased by $84 mln over the period ended 4/15/14
The average shares short/shares outstanding for ETFs is currently 4.5%, up from 4.4% last period
The SPDR Retail ETF (XRT) is the most heavily shorted ETF as measured by shares short/shares outstanding at 267%
The SPDR S&P 1500 Momentum Tilt ETF (MMTM) cracked the top 10 list of shares short/shares outstanding as investors look to take advantage of a rotation out of momentum stocks; of note, MMTM is a relatively small ETF (market cap of $20 mln), so it does not take much money on the short side to push the short % above 100%
Based on multiple borrowings and the ability to continuously create new shares, shares short as a % of shares outstanding can exceed 100% (only nine ETFs exhibited shares short as a % of shares outstanding greater than 100%)
US-Listed ETFs: Most Successful Recent Launches by Assets
$7.9 bln in total market cap of ETFs less than 1-year old
Over the last year, 34 Fixed Income ETFs have been brought to market, the most of any category; Fixed Income ETFs currently account for 25% of ETF market share measured by market capitalization as investors continue to show interest in the asset class
61 new ETF listings and 19 closures YTD
The top 10 most successful launches make up 46% of the market cap of ETFs launched over the past year
Six ETF sponsors and two asset classes (equities and fixed income) represented in top 10 most successful launches
Over the last year, 29 different ETF sponsors issued ETFs for a total of 165 ETFs
Despite not cracking the top 10 most successful launches over the past year, the Global X Next Emerging & Frontier ETF (EMFM) generated net inflows of $34 mln last week, the most of any recently launched ETF; this is the second consecutive week that EMFM led recently launched ETFs in net inflows
request report
Source: Morgan Stanley
Morgan Stanley-ETFs Exhibited Net Inflows of $10.8 Billion in 1Q14
April 28, 2014--There were 52 new ETFs listed in the US in the first quarter of 2014 and one new provider entered the market. There were 19 liquidations
in 1Q14 as weaker ETFs exited the marketplace. An additional seven
ETFs have been launched since the end of 1Q14 and as of 4/23/14 there
were 43 issuers with 1,372 ETFs listed in the US.
Net inflows into US-listed ETFs were $10.8 billion during 1Q14. This
is well below the average quarterly rate of net inflows over the past three
years of $40.7 billion and is meaningfully below first quarter flows of the
past three years (averaged $43.2 billion in net inflows). Notably, global
equity markets were slightly positive in 1Q14.
The largest net cash inflows in the first quarter went into International -Developed ETFs. These ETFs had net cash inflows of $13.1 billion this past quarter, driven by European equity ETFs or those ETFs with significant European equity exposure. Fixed Income ETFs had the next highest inflows this past quarter at $10.0 billion amid a rally in long-term interest rates. Eight of the 10 ETFs to generate the largest net inflows in 1Q14 were equity-based.
US large-cap ETFs had the largest net outflows in the first quarter of 2014. Net cash outflows from these ETFs were $17.9 billion this past quarter. The SPDR S&P 500 ETF (SPY), the largest ETF, was the primary driver of the net outflows in this category. SPY exhibited net outflows of $20.3 billion in 1Q14. International-Emerging ETFs also struggled during 1Q14, posting net outflows of $12.3 billion.
Interestingly, International - Emerging ETF market share has declined to
8% from 11% over the past year.
US ETF industry assets of over $1.7 trillion. Despite the growth of the
ETF market, it remains concentrated with three providers and 20 ETFs
accounting for over 80% and 41% of industry assets, respectively.
request report
Source: Morgan Stanley
Can Short-Sellers Help ETFs?
A fund's bet against its own shares can enhance returns.
April 26, 2014--There's nothing wrong with a side business--so long as you're not shortchanging your primary focus.
Many exchange-traded funds make a little extra money every year lending their securities to short-sellers. Should investors be worried? Maybe--it depends on who's profiting, you or the fund company.
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Source: Barron's
Fidelity-BlackRock ETF deal working-to a point
Why Fidelity's foray into ETFs still has a long way to go
April 26, 2014--Fidelity Investments and BlackRock Inc. on Thursday gave the public a rare look-see at how their strategic ETF alliance has progressed in the last year, and the results show that Fidelity-a latecomer to exchange-traded funds-is starting to play catch-up in the ETF Wars while allowing iShares to remain the industry leader
thanks to the partnership.
Just over a year ago, the two investment giants dramatically expanded an existing program, allowing investors to trade in 65 of BlackRock's iShares exchange-traded products commission-free through Fidelity; over the past year...
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Source: MarketWatch
Vanguard chief defends high-frequency trading firms
April 25, 2014--The chief executive of Vanguard, which became the world,s largest mutual fund company by championing low costs for the small investor, has ridden to the defence of high-frequency trading firms and dismissed suggestions that the stock market is "rigged."
Bill McNabb's contribution to the increasingly shrill debate follows the publication last month of Michael Lewis's book...
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Source: CNBC.com
IMF-Regional Economic Outlook: Western Hemisphere-Rising Challenges
April 24, 2014--Global economic activity strengthened in the second half of 2013 and is expected to pick up further in 2014, led by a faster recovery in the advanced economies. World output growth is projected to increase from 3 percent in 2013 to slightly above 3½ percent in 2014 and nearly 4 percent in 2015.
Activity in the advanced
economies will be driven by a reduction of fiscal headwinds, except in Japan, and still highly accommodative
monetary conditions. Meanwhile, the momentum of growth in emerging market economies is likely to remain
subdued, reflecting tighter financial conditions and homemade weaknesses in some cases. Risks around the
outlook have diminished somewhat, but remain tilted to the downside, including because of more prominent
geopolitical risks.
view the IMF-Regional Economic Outlook: Western Hemisphere-Rising Challenges report
Source: IMF
Fidelity rolls out new ETF managed account with BlackRock
April 24, 2014--Fidelity Investments and BlackRock Inc, already partners in the exchange-traded funds market, are teaming up once again to launch a new ETF-heavy managed account aimed at providing income for investors preparing for retirement.
The new BlackRock Diversified Income Portfolio, which will be roughly 70 percent invested in ETFs, will be available beginning May 1 exclusively to the roughly 14 million retail customers who have Fidelity brokerage accounts, the company said on Thursday.
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Source: Reuters
BlackRock Starts ETF in Brazil to Follow S&P 500 Index
April 23, 2014--BlackRock Inc. (BLK) said it will list an exchange-traded fund on the Brazilian stock exchange to track the U.S. benchmark Standard & Poor's 500 Index.
The ETF will be the first listed in Brazil linked to the performance of stocks trading outside the country, BlackRock spokeswoman Melissa Garville said in an e-mailed statement. The ETF, to be called the iShares S&P 500 FIC FI Investimento no Exterior, will start trading April 29, according to a separate statement from the exchange operator, BM&FBovespa SA. (BVMF3)
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Source: Bloomberg
NYSE ARCA-Listing of 1 Barclays ETN
April 22, 2014--NYSE Euronext is pleased to announce that on Thursday, April 24, 2014, the following ETN will be listed on NYSE Arca and will begin trading as a new issue:
Security Name:Barclays OFI SteelPath MLP ETN
Short Name: Barclays OFI MLP ETN
CUSIP: 06742K 61 8
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Source: NYSE Arca
NYSE Arca-1 ETF Launch: iShares
April 22, 2014--NYSE Euronext is pleased to announce that on Thursday, April 24, 2014, the following ETF will be listed on NYSE Arca and will begin trading as a new issue:
Security Name: iShares Yield Optimized Bond ETF
Short Name: iShares Opto Yield
CUSIP: 46434V 78 7
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Source: NYSE Euronext
