Global ETF News Older than One Year
7 Emerging Market Shifts Investors Must Watch
February 13, 2015--Brown Brothers Harriman points to seven recent developments in developing economies that mark important shifts for investors:
1) The Mexican central bank has taken rate cuts off the table (for now.)
2) Venezuela's modification of the FX regime seems like more of the same.
3) Brazilian President Dilma Rousseff's popularity fell off a cliff.
The latest polls showed that those who rate her government positively fell from 42% to 23%-the worst ratings for a president since 1998, when President Cardoso devalued the currency.
Moreover, 77% of the people interviewed believe that she knew about the corruption at Petrobras (PBR).
4) The Indian political landscape his shifted: The ruling BJP lost badly in the Delhi local elections, calling into question just how far Prime Minister Narendra Modi can push his reform agenda nationally.
Source: Barron's
Gold Demand Trends Full Year 2014
February 12, 2015--Executive summary:
This section of the report considers the main themes to have emerged in global gold demand and supply during 2014.
Full year gold demand totalled 3,923.7 tonnes in 2014 (from 4,087.6t in 2013). The 4% year-on-year drop was unsurprising as consumer demand was never likely to match the previous year's record surge.
Source: World Gold Council
Warning-Falling (U.S. Treasury) Objects
February 12, 2015--The remarkable collapse in the price of oil-a key global price that has virtually halved in the space of just a few months-has received a lot of attention lately.
Meanwhile, another significant shift has taken place in recent months that is just as surprising and has wide-reaching global implications-the dramatic drop in long-term U.S. Treasury bond yields. The last time we saw 10-year Treasury bond yields this low was in early May 2013. As many will remember, this didn’t last long and when it corrected, it set off a burst of volatility across emerging markets.
Source: IMF
HK's CSOP expanding ETF business to US
February 12, 2015--Hong Kong-based CSOP Asset Management has been busy this year with new fund launches in the territory, where it is actively trying to drum up more retail business in a bid to get more institutional investors interested.
Simultaneously, it is laying the groundwork for a US business, aiming for a first-half listing for an exchange traded fund in the market.
Source: FT.com
IMF Working Paper-Asset Bubbles: Re-thinking Policy for the Age of Asset Management
February 11, 2015--Summary: In distilling a vast literature spanning the rational- irrational divide, this paper offers reflections on why asset bubbles continue to threaten economic stability despite financial markets becoming more informationally-efficient, more complete, and more heavily influenced by sophisticated (i.e. presumably rational) institutional investors.
Candidate explanations for bubble persistence-such as limits to learning, frictional limits to arbitrage, and behavioral errors-seem unsatisfactory as they are inconsistent with the aforementioned trends impacting global capital markets.
In lieu of the short-term nature of the asset owner-manager relationship, and the momentum bias inherent in financial benchmarks, I argue that the business risk of asset managers acts as strong motivation for institutional herding and ‘rational bubble-riding.’ Two key policy implications follow. First, procyclicality could intensify as institutional assets under management continue to grow. Second, remedial policies should extend beyond the standard suite of macroprudential and monetary measures to include time-invariant policies targeted at the cause (not just symptom) of the problem. Prominent among these should be reforms addressing principal-agent contract design and the implementation of financial benchmarks.
view the IMF Working Paper-Asset Bubbles: Re-thinking Policy for the Age of Asset Management
Source: IMF
Moody's negative on SSGA ETF fee cut
February 10, 2015--State Street Global Advisors' decision last week to lower fees on 41 exchange-traded funds is credit negative for the firm and a handful of US ETF providers,
ratings agency Moody's said Monday, pointing to an ongoing "commoditization" of the products and an increasingly competitive market.
Source: Financial News
BlackRock ETP Landscape: Currency-hedged equity surges
February 10, 2015--JANUARY ETP FLOWS HIGHLIGHTED BY STRENGTH FOR NON-U.S. DEVELOPED MARKETS EQUITIES AND FIXED INCOME
Global asset gathering moderated from recent months to $11.6bn, with significant inflows for Europe equity and corporate bonds diverging from heavy redemptions for U.S. large cap and EM equity
The more aggressive than expected ECB quantitative easing announcement was well received by the market, contributing to record flows of $8.4bn for pan-European equity and $13.7bn for Europe-listed ETPs
Exchange rate movements, particularly U.S. dollar appreciation against the euro, led to a new monthly high of $6.9bn for currency-hedged ETP flows, which were concentrated in Europe and EAFE equity exposures
Equity market volatility, uncertainty surrounding global growth and the ECB stimulus news all supported ongoing demand for fixed income funds, which gathered $13.0bn, and kept downward pressure on interest rates
Source: BlackRock- ETP Research
Research: Fixed Income and Commodity ETFs/ETPs Have 3rd Best Month In January
February 9, 2015--ETFGI's new research finds overall net new asset (NNA) flows in January were US$12.2 Bn. Net inflows of US$13.3 Bn into fixed income products and US$5.2 Bn of net inflows of into commodity ETFs/ETPs globally ranked as the third largest months on record for both asset classes while equity ETFs/ETPs suffered net outflows of US$8.0 Bn in January.
The global ETF/ETP industry had 5,585 ETFs/ETPs, with 10,770 listings, assets of US$2.77 trillion, from 242 providers listed on 63 exchanges in 51 countries at the end of January 2015 according to preliminary data from ETFGI's end January 2015 global ETF and ETP industry insights report.
Source: Nasdaq.com
Deutsche Bank-Synthetic Equity & Index Strategy-ETF Annual Review & Outlook-ETF Assets to Pass $3 trillion
February 9, 2015--Report issued on January 26, 2015
Data in this report is as of 31st December 2014
ETF assets up by 17% reaching $2.64 trillion in 2014 driven by record inflows
The global ETF Industry experienced best growth ever pushing AUM to $2.6 trillion by the end of 2014 reaching a new record. The strong 17% growth was mainly attributable to organic sources (i.e. new money inflows) which made up 14.6%, while price appreciation had a much less significant contribution of 2.7%-definitely different from previous years when both components had contributed almost equally to the overall growth.
The global ETF industry received healthy cash flows during 2014 recording cash inflows for +$328bn which represent significant growth compared to the previous two years in which the industry attracted +$263bn (2013) and +$247bn (2012), respectively. During the last three years equities have stood as leaders contributing the major portion of the inflows, but during 2014 fixed income ETFs also showed significant signs of growth and contributed +$89.3bn in inflows (vs. +$24.4bn in 2013).
The US, Europe, Asia-Pac, and RoW regional ETF assets closed the year at $1.92 trillion (+19%), $438.9bn (+11%), $201.4bn (+20%), and $77.8bn (+5.6%), respectively. Global ETP (including ETC/ETVs) assets grew by 16% to $2.7 trillion last year.
We expect global ETF assets to pass $3 trillion in 2015
We project the industry will continue to grow at a fast pace in 2015. In our base case scenario, assuming a neutral market condition, global ETF assets may grow c.20%: broken down into 11.6% or $305bn growth from new cash flows, and 9% from price appreciation. This growth should put the ETF assets well on their way to $3.2 trillion by the end of 2015. We expect the US ETF market to be the major contributor with similar asset growth (19.5%) and inflows in the vicinity of $230bn. In a bull market case, ETF assets may grow over 30% approaching $3.5 trillion. We expect ETPs (including ETFs and other exchange traded products such as ETVs/ETCs) to experience a similar, but slightly lower, growth rate than ETFs and reach about $3.26 trillion in 2015 in our base case scenario, and pass $3.5 trillion in a bull market case.
ETF flows suggest investors preferred less risky assets
US Equity-focused ETPs played a major role in 2014 as investors took positions to benefit from an improving US economy, allocating $234.5bn to such funds. We saw significant flows going into different segments in fixed income space, but caution was the main theme for the year as investors embraced safer products as their main allocation preference. After suffering what can only be described as the worst year for Commodity-focused ETPs during 2013 from a flows perspective, we saw investors' lack of interest continue during 2014.
Source: Deutsche Bank Markets Research Synthetic Equity & Index Strategy
ETF Securities Research-Precious Metals Weekly-Is that it for Gold? The Stock Market may be Key
February 9, 2015--Gold nears US$1,200/oz. support as stocks rally and volatility declines. Gold had its brief shining moment near US$1,300/oz. resistance a few weeks ago but has continued to back away, nearing US$1,200/oz. support. Friday's unemployment number for January was
indisputably good, but bad for gold.
The precious metals market readjusted to pricing backin some fed tightening. Fed tightening expectations, a year forward, leaped about 14bps last week to a total of about 50bps by the end of February 2016 (see chart below).
The US 10yr yield correspondingly spiked 31bps to 1.95%, which was the sharpest one-week yield increase since the week ending June 21, 2013. Stocks rallied, volatility declined and so did some gold and silver lustre. If these conditions are sustained, the gold price could suffer. Since the beginning of 2015, the S&P 500 has essentially ranged between 2,000 and 2,060. It is ripe to make its next move and it appears the consensus path of least resistance remains up. Moderate economic growth in a low inflation environment has historically been stock market friendly. If the consensus fails and the stock market stumbles and/or volatility increases, gold should be a primary beneficiary.
Source: ETF Securities Research
