Americas ETP News
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Morgan Stanley-ETFs Exhibited Net Inflows of $51.7 Billion in 1Q13
May 7, 2013--There were 19 new ETFs listed in the US in the first quarter of 2013. An additional 23 ETFs were launched since the end of the first quarter, bringing year-to-date ETF issuance to 42.
However, there have also been 27 closures/delistings this year, and as of 5/3/13, there were 37 issuers with 1,254 ETFs listed in the US.
Net inflows into US-listed ETFs were $51.7 billion during 1Q13. This is well above the average quarterly rate of net cash inflows over the past three years of $36.1 billion and the largest first quarter flows on record. In addition, this is the third consecutive quarter and the fourth out of the previous five quarters in which ETF net cash inflows exceeded $50 billion.
The largest net cash inflows this past quarter went into International-Developed ETFs. These ETFs had net cash inflows of $13.8 billion this past quarter. Demand for Japanese equities was a key contributor to the strong flows into this market segment. ETFs tracking US sector and industry indices had the next highest net cash inflows this past quarter at $12.3 billion. Within this segment, ETFs providing exposure to real estate and the housing industry were among the ETFs generating the most interest.
Commodity ETFs had the largest net cash outflows in the first quarter of 2013. Net outflows from Commodity ETFs were $7.8 billion. We note that ETFs providing exposure solely to gold had net cash outflows of $8.3 billion with the largest gold ETF accounting for over 93% of those outflows. US ETF industry assets of nearly $1.5 trillion are ~11% higher year to date. Despite the growth of the ETF market, it remains concentrated with three providers and 20 ETFs accounting for almost 81% and 44% of industry assets, respectively.
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Source: Morgan Stanley
US investors increase reliance on ETFs
May 7, 2013--Investors in the US are increasing their use of exchange traded funds as the role of ETFs within investment portfolios continues to expand and broaden, finds a new study by Greenwich Associates, the research consultancy.
ETFs are now used by 18 per cent of US institutional funds (corporate and public pension funds, endowments, and foundations), up from 14 per cent in 2012, according to 970 institutional investors surveyed by Greenwich.
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Source: FT.com
Brazilian pension funds go global
May 7, 2013--As little as a year ago, Brazil's greatest concern was the currency war- a tsunami of international funds that it believed was threatening to inundate its financial markets and those of other emerging countries.
Now, Brazilian real interest rates have fallen so low that, in a dramatic reversal, the country’s own pension funds are looking abroad.
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Source: FT.com
New Records: Dow Ends Above 15000 for First Time; S&P in Bull Market
May 7, 2013--Stocks finished near their best levels Tuesday, with the S&P 500 extending its recent rally to a fresh high and the Dow closing above the 15,000 milestone for the first time.
The Dow Jones Industrial Average rallied 87.31 points, to end at 15,056.20, finishing above 15,000 for the first time, led by Caterpillar and JPMorgan. The index first broke above the milestone on Friday. The blue-chip index also ended higher for the 17th consecutive Tuesday. This is the first time in history that the index has posted such a streak.
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Source: CNBC
ISE ETF Ventures and YieldShares Announce Partnership to Develop and Promote New ISE High Income IndexTM
May 6, 2013--The International Securities Exchange (ISE) today announced a partnership with YieldShares, a new firm created by Christian Magoon , a well-recognized entrepreneur in the ETF industry.
ISE and YieldShares will jointly develop and launch the ISE High Income IndexTM, an index that allows investors to efficiently track a portfolio of high income and high discount Closed-End Funds.
"Partnering with YieldShares to create the ISE High Income Index is a demonstration of ISE's growing presence in the indexing space," said Kris Monaco, Head of ISE ETF Ventures. "This agreement provides YieldShares with the global experience and network of ISE ETF Ventures while leveraging ISE's business development, marketing support and capital to effectively bring products to market. We look forward to growing this partnership with YieldShares and Christian Magoon."
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Source: International Securities Exchange (ISE)
Reggie Browne: Not All ETFs Traded Equally
May 7, 2013--Reggie Browne, perhaps the most influential ETF trading expert in the world, says investors are clearly starting to grasp the power of the ETF, but they are still assimilating all the nuances of ETF trade.
That knowledge gap is more significant than meets the eye, as ETF trading these days can amount to as much as 40 percent of dollar-value trading volume on U.S. exchanges.
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Source: IndexUniverse
DB-Synthetic Equity & Index Strategy-US ETF Market Monthly Review-ETPs added $23bn in AUM while investors 'cherry pick' risky assets
May 7, 2013--US ETP assets higher by $23bn
ETP assets in the US rose by $23.4bn to $1.472 trillion (YTD +10.4%) last month. Global ETP industry assets closed at $2.001 trillion (YTD +8.8%)
Flows Review: "cherry picking" risky assets
US ETP experienced inflows of $9.6bn during April (0.7% of last year’s AUM).
Within long-only ETPs, total flows were +$8.1bn in April vs. +$16.3bn in March. Equity, Fixed Income, and Commodity long-only ETPs experienced flows of +$9.1bn, +$6.8bn, and -$8.0bn, respectively.
Investors were not willing to give up risky assets just yet, but they have definitely become more selective in their elections. April’s strong equity flows set the YTD flows at +$57.9bn. Developed markets (+$11.7bn) flows, with special emphasis in the US (+$8.2bn) remain in uptrend while EM equity flows saw outflows of $2.9bn during last month. Outside the US, Japan ETPs continue to attract significant new assets (+$4.2bn, +$9.7bn YTD); meanwhile, Dividend ETPs kept capturing investors’ attention, with $2.9bn in fresh cash. Sector wise investors parked on defensives and away from cyclicals during the same period. Fixed income ETPs experienced strong inflows of $6.9bn (+$14.6bn YTD), with a tilt towards quality and a strong preference towards short-termed debt. Last but not least, long-only ETPs which offer exposure to commodities saw what’s now, by far, their worst month on record, with strong outflows of $8.0bn, mostly due to Gold ETPs (-$7.6bn) outflows.
New Launch Calendar: income, EM, leverage and quantitative strategies
There were twenty new ETPs and one new ETN listed during the previous month. Seventeen of them were listed in the NYSE Arca, while the remaining four where listed in the Nasdaq. The new products offer exposure to IG corporate bonds with set maturity, senior loans, international income-generating equity strategies, country and broad emerging markets, a silver option-based income strategy, and a set of quantitative factor (momentum, value and size) and active strategies focusing in US equities.
Turnover Review: Floor activity increased by 30% in April
ETP turnover totaled $1.388 trillion last month, 30.7% (+$326bn) higher than the previous month figure of $1.062 trillion, and 18.8% above last year’s monthly average of $1.168 trillion. Equity, Fixed Income and Commodity ETPs turnover increased by 29% (+$265.3bn), 15% (+$11.4bn) and 114% (+$49.4bn) during April
ETP trading made up 28.0% of all US cash equity trading in April, down from last year’s peak of 28.8% in June, and still below its 3-year monthly average of 28.6%.
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Source: Deutsche Bank - Synthetic Equity & Index Strategy - North America
CBO-Monthly Budget Review for April 2013
May 7, 2013--The federal government ran a budget deficit of $489 billion in the first seven months of fiscal year 2013 (that is, from October 2012 through April 2013), according to CBO's estimates.
That amount is $231 billion less than the shortfall recorded during the same period last year, primarily because revenue collections have been much greater than they were at this point in 2012. In contrast, federal spending so far this year has been slightly lower than what it was last year at this time.
view the CBO Monthly Budget Review for April 2013
Source: Congressional Budget Office (CBO)
IMF Regional Economic Outlook: Western Hemisphere-Latin America and the Caribbean
May 6, 2013--Growth in Latin America is set to pick up to about 3½ percent in 2013, broadly in line with potential. The region continues to benefit from favorable external financing conditions and relatively high commodity prices, but these tailwinds are unlikely to last forever.
The key challenges for policymakers today are preserving macroeconomic and financial stability, and building strong foundations for sustained growth in the future. More prudent fiscal policy would help ease pressure on capacity constraints, mitigate the widening of current account deficits, and prepare the economies better to deal with adverse external shocks. Exchange rate flexibility and prudential measures should continue to be used to discourage speculative capital flows. Sustaining strong output growth will require structural reforms to raise productivity growth.
view the IMF Regional Economic Outlook: Western Hemisphere-Latin America and the Caribbean
Source: IMF
DB-Synthetic Equity & Index Strategy-North America-US ETF Trade Alert-Adjusting your Dividend ETF positions
Understanding the risks in your Dividend ETF positions
May 6, 2013--Some dividend strategies seem crowded, expensive and too exposed to defensives. We prefer growth over yield, or a more selective approach to yield.
Dividend Yield seems crowded according to our DB Quant colleagues
Although crowded doesn’t mean that the trade is going to underperform right away, it does pose a risk in the case that a market shock pushes investors out of the trade at the same time. (See Cahan et al, 3 May 2013)
Dividend Yield ETFs are expensive and more concentrated on defensives
We believe that dividend ETFs with focus on dividend growth or payment, trading cheap, and with less exposure to defensives provide protection against a rotation away from defensives or investors exiting the yield trade all at once.
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Source: Deutsche Bank - Synthetic Equity & Index Strategy - North America
