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Morgan Stanley-US ETF Weekly Update
October 14, 2013--Weekly Flows: $16 Million Net Inflows
ETFs Have Exhibited Net Inflows of $123.2 Billion YTD
ETF Assets Stand at $1.6 Trillion, up 17% YTD
Five ETF Launches Last Week
US-Listed ETFs: Estimated Flows by Market Segment
ETFs exhibited net inflows of just $16 mln last week, ending two consecutive weeks of net outflows
Last week’s net inflows were led by US Mid-Cap ETFs at $2.3 bln; conversely, US Large-Cap ETFs posted net outflows of $3.4 bln, the most of any category we measured
ETFs have exhibited net inflows 27 out of 41 weeks YTD
ETF assets stand at $1.6 tln, up 17% YTD; $123.2 bln net inflows YTD
13-week flows remain mostly positive among asset classes; combined $31.0 bln in net inflows
International - Developed ETFs generated net inflows of $18.1 bln over the last 13 weeks, the most of any category we measured; European ETFs or international equity ETFs with significant European exposure were the primary driver to the category’s large net inflows
Over the last 13 weeks, Fixed Income ETFs have posted net outflows of $3.9 bln; despite Fixed Income ETF weakness, four funds in the category actually posted $1+ bln net inflows (three short duration and one high yield ETF)
US-Listed ETFs: Estimated Largest Flows by Individual ETF
SPDR S&P MidCap 400 ETF (MDY) posted net inflows of $2.2 bln this past week, the most of any ETF
Notably, the previous two weeks, MDY exhibited net outflows of $2.1 bln
The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) exhibited net outflows of $295 mln last week and $2.5 bln over the last 13 weeks; LQD’s net outflows over the last 13 weeks are the most of any fixed income fund
Despite not posting net flows for the last two weeks, the iShares MSCI Emerging Markets ETF (EEM) has generated net inflows of $4.8 bln over the last 13 weeks, the most of any ETF
US-Listed ETFs: ETF Dollar Volume
ETF monthly $ volume as a % of listed trading volume was essentially flat in September relative to August at 27%
Over the past 5 years, ETFs peaked at 36% of listed trading volume in November 2008
ETFs traded $349 bln last week, up $16 bln from the prior week and 26% above their 13-week average
Fixed Income ETFs accounted for only 4% of volume last week, however, make up 15% of ETF market cap
US-Listed ETFs: Short Interest Data Updated: Based on data as of 9/30/13
The SPDR Dow Jones Industrial Average ETF (DIA) had the largest increase in USD short interest at $318 mln
Shares short of the iShares MSCI Emerging Markets ETF (EEM) declined to 74.8 mln from 106.8 mln the prior period; EEM’s shares short are at their lowest level since 2/28/13
600 ETFs exhibited short interest declines while 585 experienced short interest increases over the last period
Aggregate ETF USD short interest decreased by $10.5 bln over the period ended 9/30/13
The average shares short/shares outstanding for ETFs is currently 3.9% down from 4.2% last period
For the third straight period, the SPDR Retail ETF (XRT) exhibited the highest shares short as a % of shares outstanding; XRT’s shares short are currently 247%, down from last period’s 280%
Based on multiple borrowings and the ability to continuously create new shares, shares short as a % of shares outstanding can exceed 100% (only five ETFs exhibited shares short as a % of shares outstanding greater than 100%)
US-Listed ETFs: Most Successful Recent Launches by Assets
$9.3 bln in total market cap of ETFs less than 1-year old
International Equity ETFs account for 44% of market capitalization of ETFs launched over the past year and 41% of net inflows over the last 13 weeks
After a month-long lull in issuance from the end of August through the end of September, 15 ETFs have launched over the past three weeks
106 new ETF listings and 43 closures/delistings YTD
The top 10 most successful launches make up 70% of the market cap of ETFs launched over the past year
Four ETF sponsors and two asset classes represented in top 10 most successful launches; we note that the representation of funds with an income orientation is currently five (down from seven at the end of the second quarter)
Despite not cracking the top 10 most successful launches over the past year, the iShares Short Maturity Bond ETF (NEAR) generated net inflows of $90 mln last week, trailing only the $150 mln net inflows into the iShares Core MSCI Emerging Markets ETF (IEMG)
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Source: Morgan Stanley
US energy revolution will end old Opec regime
American independence creates different and new supply hub for markets
October 14, 2013--Wednesday marks the 40th anniversary of the Arab oil embargo, a turning point for US energy security policy.
The embargo was imposed by the Organization of Arab Petroleum Exporting Countries after the Yom Kippur war. Oapec banned oil exports to Israel's supporters -the US and the Netherlands -tightening the oil markets to lead to a 400 per cent price rise. It used the promise of oil exports on favourable terms to separate them from Nato partners...
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Source: FT.com
IMF-Regional Economic Outlook Update: Western Hemisphere-Latin America and the Caribbean
October 11, 2013--Growth in Latin America and the Caribbean (LAC) remains in low gear, reflecting a less supportive external environment and, in some cases, domestic supply-side constraints. The region's output is projected to expand by 2¾ percent in 2013, with domestic demand remaining the main driver. The growth rate is expected to edge up to 3 percent in 2014 as external demand strengthens gradually, but will remain below the average growth rate of the last decade.
In countries with low inflation and anchored inflation expectations, monetary policy should be the first line of defense if downside risks to the baseline materialize. Fiscal consolidation remains appropriate for countries with tight capacity constraints or limited fiscal space; it will also help constrain the continued widening of current account deficits. Safeguarding financial stability is a key priority in an environment of tighter global financial conditions and increased asset price volatility.
view the Regional Economic Update-Latin America and the Caribbean, October 2013
Source: IMF
S&P Dow Jones Indices Announces Quarterly Index Reviews
October 11, 2013--S&P Dow Jones Indices Canadian Index Operations announces the following index changes as a result of the quarterly S&P/TSX Preferred Share Index and S&P/TSX Venture Select Index Reviews.
These changes will be effective at the open on Monday, October 21, 2013.
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Source: Wall Street Journal
Exclusive: U.S. watchdog readies tighter new commodity limits rule
October 11, 2013--The U.S. derivatives regulator is finishing a new rule to curb speculators with large positions in commodity markets that is in parts tougher than the previous version, two sources with direct knowledge of the plan said.
Commodity Futures Trading Commission Chairman Gary Gensler is rushing to get a revamped rule out before his term runs out in December, said the sources, even while agency lawyers are preparing to defend the original position limits rule that was knocked back by a U.S. court last year.
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Source: Reuters
Investors Increasingly Concerned About Interest Rate Risk, Look to Short Term Instruments in Search for Yield
State Street Global Advisors Launches Ultra Short Term Bond ETF as the category captures more than $9 billion year to date(1)
October 10, 2013--State Street Global Advisors (SSgA)*, the asset management arm of State Street Corporation (NYSE:STT), today announced the launch of the SPDR SSgA Ultra Short Term Bond ETF (Symbol: ULST). The newest actively managed SPDR ETF began trading on the NYSE Arca on October 10, 2013, and provides investors with access to a diversified portfolio of ultra short term bonds.
"The SPDR SSgA Ultra Short Term Bond ETF is an attractive option for the cash investor who is seeking incremental yield but does not want to sacrifice liquidity," said James Ross, senior managing director and global head of SPDR ETFs at SSgA. "We are seeing tremendous flows year to date in short and ultra short term bonds, as investors are increasingly anticipating rising interest rates."
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Source: Wall Street Journal
CIBC Investor's Edge enhances online investment platform for self-directed investors
Launches new ETF Centre; adds research from Morningstar, Thomson Reuters
October 10, 2013--CIBC Investor's Edge Inc. today announced enhancements to its online trading platform for self-directed clients with a new ETF Centre and added tools and research from Morningstar and Thomson Reuters.
The new ETF Centre is a comprehensive, one-stop place for self-directed investors on exchange-traded funds, with extensive educational resources ...
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Source: Canadian Imperial Bank of Commerce
ProShares Launches S&P 500 Aristocrats ETF (NOBL)
October 10, 2013--ProShares, a premier provider of alternative ETFs, today launched the S&P 500(R) Aristocrats ETF (NYSE Arca: NOBL), the first fund that invests in the select group of S&P 500(R) companies that have increased their dividends for at least 25 consecutive years.
The ETF tracks the S&P 500® Dividend Aristocrats(R)Index, which since its 2005 inception has outperformed the S&P 500 with less volatility.
"Consistent dividend growth is considered an important indicator of a company’s financial strength," said Michael Sapir, Chairman and CEO of ProShare Advisors LLC, ProShares' investment advisor.
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Source: ProShares
Invesco PowerShares Lists China A-Share ETF
The First ETF Providing China A-Shares Market Exposure Using SGX FTSE China A50 Index Futures
October 10, 2013--Invesco PowerShares Capital Management LLC, a leading global provider of exchange-traded funds (ETFs), today announced the launch of the PowerShares China A-Share Portfolio (NYSE Arca: CHNA) on the NYSE Arca. CHNA is the first ETF providing exposure to the China A-Shares market by investing primarily in SGX FTSE China A50 Index Futures.
"U.S. investors currently have very limited access to China's domestic A-Shares market, which embodies the amazing growth story of the world's second largest economy by GDP," said Lorraine Wang, Invesco PowerShares global head of ETF products and research. "The PowerShares China A-Share Portfolio (CHNA) is uniquely designed to provide a liquid, efficient and cost effective alternative to direct investments in China A-Shares."
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Source: Wall Street Journal
US default swaps trade soars on debt fear
October 9, 2013--Growing investor fears that Washington could miss a payment on its debt has led to a surge in activity in the once-sleepy market for derivatives that insure against a US default.
Average daily trading of credit default swaps (CDS), which give investors protection on US government debt, has jumped to £150m in the past week from about £1.6m in recent months, according to the trading desks of two major European banks.
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Source: FT.com
