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Searching for a New Investment Paradigm
May 15, 2013--Investment management is supposed to be built on brilliant minds, novel insights and innovative approaches-or so our training and traditions have led us to believe.
We celebrate our best investors, such as Warren Buffett, Peter Lynch, and Bill Gross, and our best financial theories, such as modern portfolio theory (MPT) and the efficient markets hypothesis (EMH). Yet it seems a long time since we have seen true genius or radically new ideas; and, even more unsettling, recent literature suggests that investors of the future may be deprived of the kind of revolutionary thinking that energized the investment profession in the last half-century.
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Source: Research Affiliates
Pimco Looks to Clone ETF Success
Three new actively managed ETFs will follow the strategies of existing mutual funds.
May 15, 2013--How do you follow up one of the most successful exchange-traded fund launches in history? You start three more, of course. Ba-dum-bum-CHING
Last year, Pimco, the Newport Beach, Cal., bond giant, launched Pimco Total Return Exchange-Traded Fund (symbol BOND). It now has $5.3 billion in assets. The draw: BOND is actively managed, unlike most ETFs, which are tied to an index. Also, it's run by Bill Gross, who uses the same strategy he's become famous for at Pimco Total Return (PTTDX), which, with $293 billion in assets, is the world's biggest mutual fund. And then there's the ETF's outsize return: From its February 2012 inception through May 8, BOND returned a cumulative 14.2%. The mutual fund, by contrast, gained just 8.5% – more on that later.
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Source: Kiplingers
SEC Names Lona Nallengara as Chief of Staff
May 15, 2013--The Securities and Exchange Commission today announced that Lona Nallengara has been named the agency's chief of staff.
Mr. Nallengara came to the SEC in March 2011 and served as deputy director for legal and regulatory policy in the Division of Corporation Finance until he was appointed in December 2012 as its acting director.
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Source: SEC.gov
IMF Working paper-Is the Growth Momentum in Latin America Sustainable?
May 15, 2013--Summary: A favorable external environment coupled with prudent policies fostered output growth in most of Latin America during the last decade. But, what were the drivers of this strong growth performance from the supply side and will this momentum be sustainable in the years ahead?
We address these questions by identifying the proximate causes of the recent high GDP growth and estimating potential growth rates for the period ahead for a large group of Latin American countries based on standard (Solow-style) growth accounting methodologies. We find that factor accumulation (especially labor), rather than growth in total factor productivity (TFP), remains the main driver of GDP growth. Moving forward, given the expected moderation of capital accumulation and some natural constraints on labor, the strong growth momentum is unlikely to be sustainable unless TFP performance improves significantly.
view the IMF Working paper-Is the Growth Momentum in Latin America Sustainable?
Source: IMF
Costs matter: Are fund investors voting with their feet?
May 15, 2013--When investors evaluate a mutual fund, how much do costs matter to them? Mutual fund fees and expenses are a frequently mentioned consideration, but are investors actually walking the talk?
In an updated Vanguard research paper, the authors address this question by examining the relationship between mutual fund expense ratios and net cash inflows. They find the answer to be a resounding yes, not just among index funds and index-based ETFs, but among actively managed funds as well.
view the whitepaper-Costs matter: Are fund investors voting with their feet?
Source: Vanguard
IndexIQ Tops $1 Billion in Assets as Leader in Liquid Alternative Exchange-Traded Funds
Award-winning company was first to market with broad range of innovative liquid alternative investment products, including ETFs, mutual funds, managed accounts and ETF model portfolios
May 15, 2013--IndexIQ, whose innovative liquid alternative investment products helped launch an entirely new asset class, has surpassed the $1 billion threshold, it was announced today.
“In a few short years, liquid alternatives have gone from a novelty to playing an important role in a diversified investment portfolio and we’ve seen strong interest in our offerings from the institutional and retail advisor channels,” said Adam Patti, IndexIQ’s chief executive officer. “We’re very proud of our focus on the liquid alternatives space from the beginning, and our growth reflects our investors’ views regarding the quality of our products, the strength of our funds’ track record, and the increased acceptance of these products as an important asset class.”
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Source: IndexIQ
Treasury International Capital Data for March
May 15, 2013--The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for March 2013. The next release, which will report on data for April 2013, is scheduled for June 14, 2013.
The sum total in March of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC inflow of $2.1 billion. Of this, net foreign private inflows were negative $34.8 billion, and net foreign official inflows were $36.9 billion.
Foreign residents increased their holdings of long-term U.S. securities in March – net purchases were $15.3 billion. Net purchases by private foreign investors were $9.7 billion, and net purchases by foreign official institutions were $5.6 billion.
At the same time, U.S. residents increased their holdings of long-term foreign securities, with net purchases of $28.8 billion.
Taking into account transactions in both foreign and U.S. securities, the net foreign purchases of long-term securities were negative $13.5 billion. After including adjustments, such as estimates of unrecorded principal payments to foreigners on U.S. asset-backed securities, the overall net foreign acquisition of long-term securities is estimated to have been negative $31.9 billion in March.
Foreign residents increased their holdings of U.S. Treasury bills by $34.2 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities increased by $35.6 billion.
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Source: US Department of the Treasury
Nasdaq halts trading in some options contracts due system issues
May 15, 2013-- Nasdaq OMX Group Inc on Thursday halted trading in some options contracts on one of its options exchanges on Thursday due to system issues.
The system issues, which started at 9:48 a.m. ET (1348 GMT) on the Nasdaq PHLX options exchange, affected options on equity underlying symbols beginning with the letter Z - approximately 21 options, including Zynga Inc , the exchange said.
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Source: NBC News
VelocityShares Announces Licensing of Innovative Hedged Equity Indices
May 15, 2013--VelocityShares is pleased to announce the licensing of the VelocityShares Volatility Hedged Large Cap Index and the VelocityShares Tail Risk Hedged Large Cap Index. These indices represent the next frontier in hedged equity investing.
The indices have been licensed to ALPS Advisors, Inc., a leader in the Exchange Traded Funds (ETF) industry. These two indices provide a solution for investors seeking an efficient way to hedge large cap equity exposures without the excessive costs often associated with traditional hedging strategies.
"US equity indices are at or near their all-time high, but investors have not forgotten the pain of the crash in 2008, or the multiple drawdowns of greater than 15% since then," said Nick Cherney, Chief Investment Officer and Co-founder of VelocityShares. "Traditional hedging strategies have failed many investors; these innovative solutions meet the needs of many of the institutional investors we work with."
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Source: Wall Street Journal
US regulator sets final rules for swaps trading
May 15, 2013--The top U.S. derivatives regulator unveiled rules for swaps trading that could break open Wall Street's dominance of the $630 trillion market, yet contain important concessions to the industry.
The Commodity Futures Trading Commission (CFTC) is writing a host of new rules based on lessons learned from the 2007-09 financial crisis, which highlighted the opacity of derivatives and triggered a regulatory crackdown.
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Source: Reuters
