Americas ETP News
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State Street Buys Goldman Sachs Unit as Revenue
July 17, 2012--State Street Corp. (STT), the third- largest custody bank, agreed to buy the hedge-fund administration unit of Goldman Sachs Group Inc. (GS) to boost growth as second-quarter revenue
fell amid declining global markets and record-low interest rates.
State Street agreed to pay $550 million in cash for the Goldman Sachs unit to become the world’s largest servicer of alternative assets such as hedge funds, the Boston-based company said today.
State Street fell as much as 5.6 percent in New York, the most in seven months, as declining assets and fees spurred a 1.9 percent drop in revenue to $2.43 billion.
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Source: Bloomberg
Treasury International Capital Data for May
July 17, 2012--The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for May 2012. The next release, which will report on data for June 2012, is scheduled for August 15, 2012.
The sum total in May of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC inflow of $101.7 billion.
Of this, net foreign private inflows were $60.3 billion, and net foreign official inflows were $41.4 billion.
Foreign residents increased their holdings of long-term U.S. securities in May – net purchases were $50.1 billion. Net purchases by private foreign investors were $19.9 billion, and net purchases by foreign official institutions were $30.2 billion.
At the same time, U.S. residents decreased their holdings of long-term foreign securities, with net sales of $4.9 billion.
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Source: US Department of the Treasury
Chairman Ben S. Bernanke Semiannual Monetary Policy Report to the Congress
U.S. Senate, Washington, D.C.
July 17, 2012-Chairman Bernanke presented identical remarks before the Committee on Financial Services, U.S. House of Representatives on July 18, 2012
Chairman Johnson, Ranking Member Shelby, and other members of the Committee, I am pleased to present the Federal Reserve's semiannual Monetary Policy Report to the Congress. I will begin with a discussion of current economic conditions and the outlook before turning to monetary policy.
The Economic Outlook
The U.S. economy has continued to recover, but economic activity appears to have decelerated somewhat during the first half of this year. After rising at an annual rate of 2-1/2 percent in the second half of 2011, real gross domestic product (GDP) increased at a 2 percent pace in the first quarter of 2012, and available indicators point to a still-smaller gain in the second quarter.
view the Semiannual Monetary Policy Report to the Congress
Source: Federal Reserve
Vanguard strikes back against ..Bogle?
A new study refutes founder's concerns that exchange-traded funds encourage excessive trading
July 17, 2012--The Vanguard Group Inc. released a study today that refutes the concerns of founder John Bogle and others that exchange-traded funds encourage excessive trading, which is bad for long-term investors.
Vanguard looked at more than 36,000 ETF positions and more than 500,000 mutual fund positions in its Vanguard Total Stock Market Index Fund (VTI), Vanguard Total Bond Market Index Fund (BND), Vanguard Emerging Markets Index Fund (VWO) and Vanguard REIT Index Fund (VNQ) from 2007 through 2011. Vanguard's ETFs are share classes of its mutual funds, which is unique.
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Source: Investment News
US senator opposes JPM's copper ETF plan
July 17, 2012--U.S. regulators should block JPMorgan Chase & Co's plan for an exchange-traded fund (ETF) physically backed by copper because it would create a boom and bust cycle in the market, according to U.S. Senator Carl Levin.
Levin outlined his opposition in a letter to the Securities and Exchange Commission, arguing the proposed product would disrupt supply and inflate prices by removing a significant chunk of material from the market.
"There is ample evidence that if the ETF shares are listed and traded on the NYSE exchange, the trust will disrupt the global supply of copper," the Democrat from Michigan said in his letter dated July 16.
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Source: Bloomberg
Bernanke: Gloomy on economy, few hints of QE3
July 17, 2012--Federal Reserve Chairman Ben Bernanke gave senators a rather gloomy outlook for the economy Tuesday.
Europe's debt crisis and fiscal cliff in the United States are threatening the recovery, he told the Senate Banking Committee in his semi-annual report to Congress. Meanwhile, economic growth has probably already slowed, and the unemployment rate is unlikely to fall below 7% for at least another year.
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Source: CNN
ShariahShares Serves Muslims' Investment Needs
July 17, 2012--About two in seven people on the planet are Muslim. At about 6.5 million people, Muslims account for about 2% of the U.S. population.
Saied Hamedanchi believes they're an underserved niche market in the investment industry.
As founder and CEO of Irvine, Calif.-based ShariahShares, Hamedanchi is developing ETFs that invest according to Shariah law or the moral codes of Islam. The $77 billion in Shariah mutual funds currently are merely a speck among the trillions invested in the market.
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Source: newsinvestors.com
BlackRock's iShares bets cheap isn't better for ETFs
July 17, 2012--BlackRock Inc, the largest global exchange-traded fund provider, has been aggressive in its efforts to maintain U.S. market share but has still found itself losing ground to a cheaper, smaller rival.
Since January, its San Francisco-based iShares ETF unit has started 42 ETFs and has at least 20 more planned this year. Its executives have been out front on regulatory issues and calls for more transparency in ETF labeling and the increasingly popular ETF managed portfolio space.
But, one thing iShares has refused to do is cut costs to compete with rivals like Vanguard, whose ETFs, in some cases cost as little as a third of their iShares equivalents.
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Source: Reuters
Vanguard Finds Investors Not Trading ETFs Excessively
July 17, 2012--Do exchange-traded funds (ETFs) turn long-term investors into speculative day traders, as some critics claim? Not according to a new Vanguard research paper, ETFs: For the better or bettor?, which found that most Vanguard investors exhibit buy-and-hold behavior whether investing in a traditional index fund or ETF.
According to the new research, critics' presumptions about ETF trading are typically based on macro-level share turnover data that is dominated by large institutional investors at the fund level--not built on data at the individual investor level. Using a unique data set of transactions conducted by individual investors, Vanguard researchers analyzed more than 3.2 million transactions in more than 500,000 positions held in traditional mutual fund and ETF share classes of four different Vanguard index funds from 2007 through 2011.
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Source: MarketWatch
DB-Equity Research-US ETF Market Weekly Review:Fixed Income ETPs dominated the weekly flows with +$1.0b
July 17, 2012--Net Cash Flows Review
Markets were mixed during last week. The US (S&P 500) edged higher by 0.16%. While, outside the US, the MSCI EAFE (in USD) and the MSCI EM (USD) fell by 0.75% and 2.01%, respectively.
Moving on to other asset classes, the 10Y US Treasury Yield declined by 5bps last week; while the DB Liquid Commodity Index was up by 2.81%. Similarly, the Agriculture sector (DB Diversified Agriculture Index), the WTI Crude Oil, the Gold, and the Silver prices advanced by 1.56%, 3.14%, 0.37%, and 0.78%, respectively. Last but not least, Volatility (VIX) rose by 2.1% during the same period.
The total US ETP flows from all products registered $0.9bn of inflows during last week vs $6.7bn of inflows the previous week, setting the YTD weekly flows average at +$2.9bn (+$79.9bn YTD in total cash flows).
Equity, Fixed Income, and Commodity ETPs experienced flows of +$0.3bn, +$1.0bn, and -$0.5bn last week vs. +$8.7bn, -$2.2bn, and +$0.2bn the previous week, respectively.
Within Equity ETPs, small cap products experienced the largest inflows (+$1.3bn); while US sector ETPs had the largest outflows (-$1.1bn). Within Fixed Income ETPs, Corporates products had the largest inflows (+$0.6bn); while Sovereign ETPs experienced the only outflows (-$0.4bn), respectively. Within Commodity ETPs, precious metals products experienced the largest outflows (-$0.4bn), followed by Energy ETPs with outflows of $0.2bn.
Top 3 ETPs & ETNs by inflows: IWM (+$1.2bn), OEF (+$0.7bn), DIA (+$0.5bn)
Top 3 ETPs & ETNs by outflows: SPY (-$1.5bn), XLI (-$0.7bn), QQQ (-$0.5bn)
New Launch Calendar: asset allocation and leverage financial exposure
There were 3 new ETFs listed during last week. The new products offer exposure to an active asset allocation strategy and leverage exposure to the US financial sector.
Turnover Review: floor activity rose by 32%
Total weekly turnover rose by 32% to $254bn vs. $192bn in the previous week. Last week’s turnover level was 32% below last year’s weekly average. Equity ETPs experienced an increase of $62.3bn or 37.8% to $227bn, along with Commodity ETPs which rose by 33.5% (+$2.9bn). In the meantime, Fixed Income ETP turnover dropped by 24% (-$4.0bn).
Assets Under Management (AUM) Review: assets remained nearly flat
ETP assets remained practically flat on a week over week basis. ETP assets dropped by 0.1% during last week and ended the week at $1.17 trillion. As of last Friday, US ETPs have accumulated an asset growth of 11.7% YTD. Assets for equity, fixed income and commodity ETPs moved -$3.2bn, +$2.0bn, and +$0.3bn during last week, respectively.
to request report
Source: Deutsche Bank-Equity Research-North America
