Category archive: Week 3 2012
Global ETP Assets Reach $1.52 trillion
(LONDON) According to the latest figures released today by the BlackRock Investment InstituteFixed income exchange traded products (ETPs) were the ETP marketplace’s fastest growing asset category in 2011, with assets under management (AUM) increasing by 24.4 percent, or $50.6 billion, compared with 2010. Global fixed income ETP assets now total $258 billion.
The Year End “ETP Landscape” report notes that while flows into equity and commodity categories have been up and down throughout the year, fixed income ETPs have displayed resilience, garnering new flows for every month in 2011 and showcasing the popularity of this asset class in a tumultuous year for global markets. The category’s expansion was largely driven by U.S.-listed products, with investors in European-listed products remaining on the sidelines due to sovereign and bank debt concerns.
Global highlights include:
· Global AUM Grows in 2011: The global ETP industry ended the year with $1.525 trillion in AUM, up 2.9 percent from $1.482 trillion at year-end 2010. Net inflows totaled $151.9 billion in 2011.
· December Flows Reverse November’s Trend: In December, ETPs globally gathered net inflows of $14.2 billion, compared with net outflows of $0.6 billion in November.
· Developed Market Equities Attract Healthy Inflows: The developed market equity category grew by 3.3 percent in 2011, with healthy net inflows of $93 billion offset by negative market return of -$65.5 billion, for net growth of $27.7 billion in AUM. Despite the year’s serious macro-economic challenges, ETPs offering equity exposure to the U.S. and Europe captured more new money in 2011 ($48.8 billion and $15.0 billion, respectively) than in 2010 ($40.1 billion and $8.7 billion).
· Emerging Market Equity Category Contracts: The emerging market equity category contracted by 18.7 percent, due to negative market return of -$43 billion and net redemptions of $1.8 billion for the year. By comparison, the category attracted $40.5 billion in net inflows in 2010.
Regional highlights include:
· U.S.: The U.S. remains the largest and most mature market in the ETP industry, with asset growth of 5 percent in 2011. U.S. ETP assets now total $1.061 trillion, representing 69.6 percent of global AUM. Product offerings grew by 26.7 percent, with 308 new products launched and 37 de-listed.
· Europe: European assets ended the year down 5.3 percent from 2010. European assets now total $298.5 billion, representing 19.6 percent of global AUM. Product offerings grew 13.3 percent, with 258 new products launched and 47 de-listed. European-listed ETPs offering exposure to German equities delivered strong asset gathering results in 2011, representing 97 percent ($17.3 billion) of all flows into equity products listed in Europe during the year.
· Asia Pacific: Asia Pacific (inc. Japan) assets grew by 8.3% in 2011, and now total $92.6 billion. The region now represents 6.1 percent of global AUM. Product offerings grew 38.5 percent, with 123 new products launched and three de-listed.
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First Hong Kong Domiciled Swap-based ETF Platform Launched
(HONG KONG) Some days ago, Hong Kong based asset management firm, Enhanced Investment Products Limited (EIP) announces that it has received the Securities and Futures Commission’s (SFC) authorisation for the launch of a new and innovative suite of ETF products. The investment boutique EIP was established in 2002 by a team from Jardine Fleming (which trades today under the JP Morgan brand). Expected to be the first Hong Kong domiciled swap-based synthetic ETF platform managed by a local manager, EIP will list the initial suite of products on the Hong Kong Stock Exchange on 16 February 2012.
With regulators tightening requirements and raising the bar, the set-up of the new portfolio of ETFs managed by EIP has undertaken a rigorous authorisation process. The new suite will be the first of its kind in Hong Kong to be managed by the local manager. The suite will launch with country-specific ETFs providing investors easy access to individual countries in Emerging Asia. Investors can long or short these ETFs to express their positive or negative views on these markets. EIP’s new products will allow the firm to further establish itself as an emerging market specialist, building on 10 years’ experience in the region. It will also enable EIP to capitalise on growing global interest in passive investment products. Further details will be announced during the press conference on Wednesday, 15 February 2012.
The ETFs will be managed by Paul So, Head of Beta Products at EIP, who has recently been building the team in anticipation of the launch. Following EIP’s philosophy of separating its active and passive businesses, the firm confidently believes that it is now the right time to launch these new ETFs to the market. So comments: “This is a monumental milestone for EIP. We are the first local asset management firm to have received SFC’s authorisation* to launch a suite of swap-based synthetic ETF products in Hong Kong. We commend the SFC in introducing various initiatives to update the regulation of investment products in Hong Kong in light of market events in order to protect investors, a key to Hong Kong’s success as an international asset management centre and growth of the Hong Kong fund management industry.”
Tobias Bland, CEO of EIP, says: “The ETF market is very strong in the US and Europe and is growing substantially in Asia, as investors become savvy to investment opportunities in Emerging Asia. We feel that it is the right time to take advantage of this interest and are pleased to be the first local firm to be launching and managing swap-based synthetic ETFs authorised by the SFC. We are looking forward to their formal launch in mid-February.”
DetailsETFs Grow 20.6%, NYSE Claims Most New Listings
(NEW YORK CITY) The number of listed exchange-traded funds grew 20.6 percent in 2011 and the number of listed exchange-traded notes grew 53.8 percent, according to U.S. figures developed by the Exchange-Traded Fund Association. Separately, NYSE Euronext said it led the market in listings of new exchange-traded products, globally, in 2011. The operator of the NYSE Arca exchange, which is a major venue for exchange-traded products, said it listed more than 450 new exchange-traded notes, funds and vehicles.
All told, there were 1,166 ETFs listed in the United States at the end of December, according to the ETF Association. That is up from 967 at the end of December 2010 and 836 at the end of December 2009.
The NYSE’s announcement of the growth of its ETF listings came on the same day that BATS Global Markets said it received the first listings of any type for its Z exchange. These were eight new ETFs, from BlackRock. The Z exchange started competing with the New York Stock Exchange and the Nasdaq Stock Market for listings in December 2011.
DetailsVanguard, iShares and SSgA Are Inflow Leader 2011
(IRVINE/NAPLES/LONDON) Accordig to the lastet figures, U.S.-listed exchange traded funds attracted higher inflows in 2011 to take the business to $1 trillion in assets under management. Leading the charge, Vanguard brought in the most in new investment dollars for the second year in a row. While smaller providers gained greater market share as larger providers attracted lower inflows, Vanguard still brought in $35.8 billion in new inflows last year, compared to iShares at $28.8 billion and State Street Global Advisors with $17.2 billion, reports Chris Flood for the Financial Times.
ProShares, the largest provider of leveraged and inverse ETF products, saw inflows rise to $6.4 billion from $2.8 billion in 2010. Inflows to U.S.-listed leveraged and inverse ETFs more than doubled to $11.1 billion in 2011, despite growing scrutiny on the investment product. Inflows to long fixed-income ETFs rose 70% to $44.6 billion in 2011 as investors piled into U.S. government bonds. Vanguard Total Bond Market ETF (NYSEArca: BND) and iShares Barclays Aggregate Bond (NYSEArca: AGG) attracted the largest amount of last year’s inflows, gathering $5.2 billion and $2.4 billion, respectively, according to the FT story. Corporate debt was also a popular draw. The iShares iBoxx High Yield Corporate Bond ETF (NYSEArca: HYG) and the iShares iBoxx Investment Grade Corporate Bond ETF (NYSEArca: LQD) were among the top 10 for inflows.
“Leverage in the corporate sector has declined in the past few years and default rates remain low. Even in a slow-growth economy, we don’t expect much increase in defaults,” Kathy Jones, fixed income strategist at Charles Schwab, said in the FT article. U.S. equities were among the few global markets that showed positive gains. U.S. stock ETFs saw a 10.3% increase to $41.2 billion in assets in 2011, with the SPDR S&P 500 ETF (NYSEArca: SPY) garnering $6.3 billion. Dividend plays also brought in their fair share, with the Vanguard Dividend Appreciation ETF (NYSEArca: VIG) adding $4.1 billion
DetailsAustralian ETF Industry Inflows Top $500 mn
(SYDNEY) The 2011 year was a watershed year for the Australian ETF industry, with ASX listed ETFs attracting over $500 million in net inflows, according to the latest BetaShares Australian ETF Review. The increase is particularly striking in that it came at a time when the general equity markets dropped significantly. Assisting ETF inflows were the 14 new products listed over the course of 2011 bringing the total number of ETFs available to 59 with investors now able to access currency, commodities and small caps in ETF form for the first time.
The strong performance of the Australian ETF industry mirrored another strong year of ETF growth globally, and continued migration of investor capital from managed funds into ETFs. In the world’s largest ETF market, the United States, ETFs investing in US stocks experienced net inflows of $33 billion, compared to outflows of around $132 billion from comparable managed funds. Net Australian ETF inflows in 2011 represented about 10% of total ETF assets at the start of the year, a growth rate of about 10 times that experienced by the Australian retail managed fund industry (in the year to September 2011). Drew Corbett, Head of Investment Strategy at BetaShares said the inflows for the industry in 2011 were pleasing considering general market sentiment and the strong results point to a greater acceptance of ETFs in the Australian marketplace, as well as further strong growth in 2012.
“As product choice widens, investors are now increasingly considering ETFs when making strategic asset allocation decisions. We have seen this over the course of 2011 as the largest Australian equity ETF saw large redemptions while new money flowed into international ETFs, the U.S. Dollar ETF and commodities such as silver and currency hedged gold,” Mr Corbett said.
DetailsBlackRock to List Eight ETFs on BATS
(NEW YORK CITY) BlackRock, which has created the world’s largest family of exchange-traded funds, has agreed to list eight new ETFs with BATS. The new funds will be based on international stocks and parameters will be issued by BlackRock’s iShares unit.
The iShares funds are based on MSCI indexes. The eight funds listing on BATS Exchange include:
- iShares MSCI Norway Capped Investable Market Index Fund (BATS: ENOR)
- iShares MSCI Australia Small Cap Index Fund (BATS: EWAS)
- iShares MSCI Canada Small Cap Index Fund (BATS: EWCS)
- iShares MSCI Finland Capped Investable Market Index Fund (BATS: EFNL)
- iShares MSCI Germany Small Cap Index Fund (BATS: EWGS)
- iShares MSCI India Index Fund (BATS: INDA)
- iShares MSCI India Small Cap Index Fund (BATS: SMIN)
- iShares MSCI United Kingdom Small Cap Index Fund (BATS: EWUS)
The iShares MSCI Norway Capped Investable Market Index Fund is scheduled to commence trading on BATS Exchange on January 24 and the remaining seven funds will begin trading soon after. The announcement comes five weeks after BATS announced that firms could begin listing stocks on its Z exchange, either through initial offerings of stock to the public or transfers of existing listings from other venues. To pull in listings, BATS last month said it would reward trading firms for putting up more competitive bids and offers in the securities of companies list on its electronic markets. “Our competitive listing provider program is designed to incent market makers to dedicate their focus to providing liquidity and posting tight markets for an issuer, which obviously helps the issuer, but also makes markets better for all participants,” said Joe Ratterman, chairman and chief executive of BATS Global Markets in a statement issued when BATS announced its filing with the Securities and Exchange Commission.
Coincidentally, BlackRock offers a series of mutual funds that go by the BATS acronym. The funds, known as BlackRock Bond Allocation Target Shares, are a series of fee-waived mutual funds that invest in fixed income securities.
DetailsOnline Brokers Hunt For Active Traders
(CAMBRIDGE/MA) Nearly a third of Active Traders, investors who make three or more trades on a monthly basis via a self-service online trading platform, indicate they are likely to open a new online trading account in the next six months. While this group of investors recognizes 19 online brokerage providers, only six firms have a solid opportunity to gather new accounts.
These and other findings are included in the new Active Trader 2012: Profiling the Affluent Active Trader™ report which was released last week by Cogent Research. The report is based on a nationally representative study of nearly 700 affluent Active Traders who on average make 10 trades per month and manage an investment portfolio of $830,000. While brokerage provider consideration criteria varies by trader segment, firms that can clearly demonstrate and support perceptions of a “superior trading platform” are most likely to attract Active Traders. “Traders are very savvy and are seeking relationships with firms that can offer best-in-class trading technology, tools and support,” said Meredith Lloyd Rice, Sr. Project Director and report co-author. While firms like E*TRADE, Charles Schwab, Fidelity Investments, and TD Ameritrade are most likely to be associated with this attribute, smaller providers like FXCM, Cobra Trading and Interactive Brokers are also likely to be identified which highlights the fact that no one firm truly owns this brand trait.
In addition to differentiating on “superior trading platform,” firms must also communicate key advantages in research/analytic tools and pricing structure. Emphasizing key strengths in these areas is important to both prospective and current clients, especially given that nearly one-third of Active Traders did not place their existing provider in their future account provider consideration set.
Read the full report here.
Details“Chuck” Introduces Index Fund 401(k) Plans
(SAN FRANCISCO) Schwab Retirement Plan Services already serves 1.5 million workers saving for retirement, but hopes that its new Schwab Index Advantage service will increase participation even more by demystifying the 401(K) saving process. The new service gives 401(k) plan participants access to index mutual funds with low operating expenses, as an alternative to more expensive actively managed funds typically found in most 401(k) plans. Participants who want knowledgeable, professional advice to get started will have access to a low-cost independent advisory service that develops a savings and investment program with the goal of increasing savings for individuals at retirement. Read the full story.
DetailsInvestors Pulled $171 Bn. From Mutual Funds
(WASHINGTON/DC) Investors worldwide pulled $171 billion out of mutual funds in the third quarter of 2011, according to statistics released late Thursday by the Investment Company Institute. The bulk of the money was withdrawn from equity funds, which posted $109 billion in net outflows for the quarter. In the Americas and Europe, equity funds experienced net outflows of $69 billion and $60 billion, respectively. Balanced/mixed funds and money market funds also posted net outflows for the third quarter, with balanced funds losing $20 billion and money market funds losing $63 billion.
Bond funds, meanwhile, posted inflows of $10 billion, although still less than the previous quarter’s net inflow of $101 billion, according to ICI. For overall asset levels, mutual funds worldwide dropped 10.8% to $23.13 trillion. On a U.S. dollar-denominated basis, equity fund assets decreased 17.8% to $9 trillion, while bond fund assets fell 3.9% to $5.6 trillion. Assets in balanced/mixed funds and money market funds fell 10.8% and 3.8%, respectively, in the third quarter. More than half (55%) of the worldwide assets were in the Americas, 32% were in Europe, and 13% were in Africa and the Asia Pacific region. The statistics, compiled quarterly on behalf of the International Investment Funds Association, contain data from 45 countries, said ICI.
DetailsThe 10 Most Hated Companies in America
(NEW YORK CITY) Customers, employees, shareholders and taxpayers hate large corporations for many reasons. 24/7 Wall St. reviewed a lengthy list of corporations for which there is substantial research data to choose the 10 most hated in America. Research about companies comes in two sets. One is public research about consumer satisfaction, customer care, pricing of products and services, and brand impressions. Wall St. research takes into account another set of factors, which include present earnings, profit forecasts, product development and quality, and brand valuations.
Read the full article here.
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