Global ETF News Older than One Year
Emerging Markets kicks off benchmark transitions
January 10, 2013--In the first of a series of moves designed to lock in high-quality benchmarks at lower costs for shareholders of 22 Vanguard index funds, Vanguard Emerging Markets Stock Index Fund recently began its two-step transition to a new target index, the FTSE Emerging Index.
The fund now tracks a temporary FTSE benchmark, the FTSE Emerging Transition Index, and will complete the transition to its permanent benchmark later this year.
The transition is part of a broader move, announced in October, to change benchmarks for 6 Vanguard international stock index funds to existing FTSE indexes and for 16 U.S. stock and balanced index funds to indexes developed by the University of Chicago's Center for Research in Security Prices (CRSP). The transition from the previous benchmarks for these funds is being staggered over a number of months, with completion expected by mid-2013.
Last year, Vanguard struck long-term agreements with CRSP and FTSE providing cost certainty in an environment of escalating licensing fees. It negotiated licensing agreements for these benchmarks that it expects will deliver significant value to its index fund shareholders and lower expense ratios over time.
Source: Vanguard
OECD-Strengthening Euro Area banks
January 10, 2013--Big changes are needed to strengthen the capital positions of euro area banks
European banks remain at the heart of the euro area crisis. Despite actions to strengthen banks and build a banking union, confidence in the euro area banking system remains weak, and is likely to remain so until underlying concerns over low capitalisation of some banks are addressed.
Low bank capitalisation persists in many countries despite an EU requirement that banks reach in 2012 a ratio of a minimum 9% of the best quality “Core Tier-1” capital to risk-weighted assets, in excess of the current international requirements.
Source: OECD
Investors flock to ETPs in droves in 2012
January 10, 2013--BlackRock's iShares business led the global industry in 2012 by capturing US$85.3 billion in new flows of the record-breaking $262.7 billion global exchange traded products (ETP) market flows.
All regions contributed to iShares growth. The iShares US product line led the way with a record $61 billion of new assets in 2012, surpassing the previous record for US iShares ETPs of $59.1 billion in 2007. In Europe, the business captured 56% of all new money entering European ETPs, recording $18.3 billion in net new flows. The iShares Canada business also had a strong year, with its assets under management (AUM) increasing to $42 billion, as the broader Canadian market posted the second highest rate of growth in ETF assets of any region for 2012.
iShares global AUM reached $758.6 billion as of December 31, 2012.
Source: Asia Asset Management
Investor compass rotating towards EM Funds
January 10, 2013--Janaury 18, 2013--Emerging Markets Equity and Bond Funds maintained their strong start to the New Year during the second week of January, absorbing another $7.2 billion between them and taking their combined inflows for the first 16 days of 2013 over the $18 billion mark.
During the same period last year they had taken in just over $4 billion.
The flows in Emerging Markets Equity Funds helped all EPFR Global-tracked Equity Funds outgain their Bond Fund counterparts for the fifth straight week. The margin was, however, much slimmer than the previous week’s $15.6 billion gap in favor of Equity Funds. Those funds took in a net $7.19 billion during the week ending Jan. 16, with roughly 20% of those flows going to Dividend Equity Funds versus 8% the previous week, while Bond Funds attracted a 10 week high of $6.95 billion.
Equity Funds did attract retail money for the second week running, the first time that has happened since the second half of April, 2011.
Visit http://www.epfr.com for more info
Source: EPFR
Credit Suisse agrees to sell ETF business to BlackRock
In a strategic move, Credit Suisse announces the sale of its ETF business
January 10, 2013--Credit Suisse today announced that it has signed an agreement to sell its exchange traded funds (ETF) business to BlackRock, Inc. (BlackRock).
This is an important strategic step in an industry that requires significant scale, and allows Credit Suisse to realize value in a business successfully built over many years.
The sale is part of Credit Suisse’s strategic divestment plans that were announced on July 18, 2012. It comprises Credit Suisse’s ETF business with assets under management of CHF 16.0 billion as of November 30, 2012. The transaction is subject to customary closing conditions, including regulatory approvals and is expected to complete by the end of the second quarter of 2013. The terms of the deal are not being disclosed.
Source: Credit Suisse AG
IMF Working paper-A Modern History of Fiscal Prudence and Profligacy
January 9, 2013--Summary: We draw on a newly collected historical dataset of fiscal variables for a large panel of countries-to our knowledge, the most comprehensive database currently available-to gauge the degree of fiscal prudence or profligacy for each country over the past several decades.
Specifically, our dataset consists of fiscal revenues, primary expenditures, the interest bill (and thus both the primary and the overall fiscal deficit), the government debt, and gross domestic product, for 55 countries for up to two hundred years. For the first time, a large cross country historical data set covers both fiscal stocks and flows. Using Bohn’s (1998) approach and other tests for fiscal sustainability, we document how the degree of prudence or profligacy varies significantly over time within individual countries. We find that such variation is driven in part by unexpected changes in potential economic growth and sovereign borrowing costs.
view the IMF Working paper-A Modern History of Fiscal Prudence and Profligacy
Source: IMF
The Eurozone Debt Crisis: 2013 Could Be A Watershed Year
January 9, 2013--After more than three years of economic, financial, and budgetary stress in the European Economic and Monetary Union (eurozone), especially on its so-called "periphery"' some signs of stabilization emerged in the latter half of 2012.
Is this a sign that the financial and economic troubles leading to the rating downgrades of 12 of the 17 eurozone member states since the onset of the crisis may have run their course? We believe that 2013 could be a watershed year for the eurozone debt crisis. It could mark the start of the region sustainably overcoming the market volatility and fragmentation that has affected it over the past few years. It could also see the return of some so-called "program countries"--member states that have borrowed from the European Stability Mechanism (ESM) or the European Financial Stability Facility multilateral loan programs--such as Ireland and Portugal, to more substantial primary issuance in the capital markets.
Source: Standard & Poor's
Global ETF and ETP assets hit almost $2 trillion last year
January 9, 2013--ETF and ETP assets have increased by 27.6% from US$1.53 trillion to $1.95 trillion during 2012, according to figures from ETFGI's monthly Global ETF and ETP Industry Insights.
The ten year compounded annual growth rate (CAGR) of global ETF and ETP assets at the end of 2012 was 29.6%. There are currently 4,731 ETFs and ETPs with 9,710 listings, assets of $1.95 trillion, from 208 providers on 56 exchanges.
iShares is the largest ETF/ETP provider in terms of assets with $760 billion, reflecting 39% market share; SPDR ETFs is second with $337 billion and 17.3% market share, followed by Vanguard with $246 billion and 12.6% market share. These top three ETF/ETP providers, out of 208, account for $1.34 billion or 68.9% of global ETF/ETP assets, while the remaining 205 providers each have less than 4% market share.
Source: Asia Asset Management
BNY Mellon-Consultant 360-Volume I, 2013
January 9, 2013--The BNY Mellon Consultant 360: Global Edition-Volume I, 2013 is now available.
Source: BNY Mellon
Risk-on investors turn to emerging markets ETFs
January 9, 2013--Investors poured $54.3bn into emerging market equity exchange-traded funds in 2012, an exponential increase from the net new money invested in the products last year, as risk appetite increased and new products emerged.
Those net inflows to emerging market equity ETFs compare to just $3.7bn in net inflows to the products in 2011, according to data published on Monday by consultancy ETFGI.
Source: Financial News
