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Morgan Stanley-US ETF Weekly Update
June 14, 2011--Weekly Flows: $399 Million Net Outflows
Launches: 7 New ETFs
Guggenheim Changes Index on 1 ETF
US-Listed ETFs: Estimated Flows by Market Segment
ETFs exhibited net outflows of $399 million last week; 2nd consecutive week of net outflows
US Large-Cap ETFs posted the largest net outflows over the past 1- and 4-week periods
SPY accounted for roughly 60% of US Large-Cap net outflows over both timeframes
ETF assets stand at $1.1 trillion, up 5.5% YTD; combination of market appreciation and net new money
13-week flows remained mostly positive among asset classes
$31 billion net inflows into ETFs over past 13 weeks (Fixed Income up $10.0 bln; Commodity down $2.7 bln)
We estimate ETFs have generated net inflows 14 out of 23 weeks YTD
US-Listed ETFs: Estimated Largest Flows by Individual ETF
iShares Russell 2000 Index Fund (IWM) & iShares Russell Midcap Index Fund (IWR) posted the
largest net inflows last week while SPDR S&P 500 ETF (SPY) posted the largest net outflow
IWM & IWR accounted for 243% and 165% of US Small-/Micro-Cap and US Mid-Cap net inflows, respectively
Interestingly, iShares S&P SmallCap 600 Index Fund (IJR) & iShares S&P MidCap 400 Index Fund (IJH)
posted net outflows of $137 mm and $100 mm last week
5 of the top 10 ETFs to post the largest net inflows last week were from the suite of Select Sector SPDR ETFs
US-Listed ETFs: Change in Short Interest
SPY exhibited the largest increase in USD short interest since last updated
Roughly $2.3 billion in additional short interest
Second highest level of shares short for SPY since 8/31/10 (recent high for shares short posted on 4/29/11)
EFA exhibited the largest decline in USD short interest since last updated
Roughly $467 million in reduced short interest
EFA is coming off of its highest level for shares short since 10/29/10
request report
Source: Morgan Stanley
BrightScope Announces the Top 20 Exchange-Traded Funds Held in America's 401k Plans
June 14, 2011--BrightScope, a leading provider of independent financial information and investment research, today announced the Top 20 Exchange-Traded Funds (ETFs) Distribution List for the 401k and defined contribution industry. This list is part of a series of rankings BrightScope will regularly publish to provide investment managers, mutual fund companies, investors, and others with more insight into the top funds and managers in the retirement marketplace.
The proliferation of this critical information will dramatically increase the efficiency of the marketplace and lead to lower cost plans and better outcomes for the 60 million Americans who depend on their 401k plan for retirement.
“ETFs are off to a slow start in terms of their distribution in 401k plans but we expect their prevalence to grow dramatically in the future as plan sponsors begin to understand the benefits of including them on plan menus,” said Mike Alfred, co-founder and CEO of BrightScope. “The risks of ETFs have been wildly exaggerated. In many ways, ETFs are actually less risky than other instruments if the focus is on long-term returns.”
Since its infancy, the 401k marketplace has suffered from a lack of quality data that is comprehensive enough to be useful for most strategic functions. Historically, it has been virtually impossible to determine a specific mutual fund’s total distribution in 401k plans.
BrightScope’s revolutionary database includes a detailed investment menu on more than 50,000 plans, representing nearly 90 percent of all the assets in 401ks. With this dataset, BrightScope is able to provide detailed analysis of total fund distributions.
read more
Source: BrightScope
First US Real Estate Small Cap ETF (ROOF) Launched by IndexIQ
IQ US Real Estate Small Cap ETF (NYSE Arca: ROOF) is intended to serve as a unique new income producing solution and complement to large-cap US real estate exposure; Holdings cover wide range of small-cap REITs
June 14, 2011--IndexIQ, a leader in developing index-based liquid alternative investments, including absolute return, real asset and international strategies, is set to launch the IQ US Real Estate Small Cap ETF (Ticker: ROOF) on the NYSE Arca platform this morning, it was announced today.
ROOF, a unique new ETF designed to be income producing, is the first Exchange-Traded Fund (ETF) dedicated to providing access to the small-cap US real estate sector and will include exposure to a wide variety of small-cap Real Estate Investment Trusts (REITs), including Mortgage REITs, Retail
REITs, and Office REITs which made up 20.73 percent, 17.97 percent, and 17.68 percent, respectively, of
the fund’s underlying index as of May 31, 2011. Hotel, Diversified, Specialized (including medical, warehousing & self-storage) and Residential REITs will also be represented as well.
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Source: Index IQ
State Street US ETF Snapshot: May 2011
June 14, 2011--As of May 31, 2011, 1,074 Exchange Traded Funds (ETFs)—with assets totaling $1.10TN—were managed by 35 ETF managers.
ETF industry assets fell $22.7BN for the month—down 2.0%.
The ETF Industry saw a 2.0% decline in assets during May. However, the Fixed Income category experienced a sizeable gain ($5.3BN).
STATE STREET HIGHLIGHTS, MAY 2011
Investing in International Inflation Protected Bonds
The SPDR® DB International Government Inflation Protected Bond ETF [WIP] provides exposure to the inflation-linked government bond markets of developed and emerging market countries outside the United States.
The Index includes government inflation-protected securities in 14 currencies and from 17 countries.
ETF Industry Detail
US Bonds were positive with the Barclays U.S. Treasury Index up 1.6% and the Barclays U.S. Aggregate Index rising 1.3%. The S&P 500® Index lost 1.1%, while the MSCI EAFE® Index dropped 2.8%. The S&P® GSCI Index declined 6.9% even though Gold remained flat.
Fixed Income assets gained $5.3BN.
FLOWS
ETF flows were negative in May, down $218MM, the first month of outflows since August of 2010. The Size - Large Cap category had the most outflows, losing $8.0BN, following an April in which it saw $6.7BN in inflows. The Commodity category also had a large amount of outflows, with $3.4BN leaving the category.
Manager and Fund Detail
The top three managers in the US ETF marketplace were: BlackRock, State Street, and Vanguard. Collectively, they account for approximately 83% of the US listed ETF market.
The top three ETFs in terms of dollar volume traded for the month were the SPDR S&P 500 [SPY], iShares Russell 2000 [IWM], and iShares Silver Trust [SLV].
•The top three ETFs in terms of assets for the month were the SPDR S&P 500 [SPY], SPDR Gold Shares [GLD], and Vanguard Emerging Markets [VWO].
visit www.spdrs.com for more info
Source: State Street Corporation
Component Changes Made to Dow Jones Country Titans Indexes
June 14, 2011--Dow Jones Indexes, a leading global index provider, today announced the results of the regular quarterly review of the Dow Jones Country Titans Indexes. Changes being announced today will be effective after the close of trading on Friday, June 17, 2011.
In the Dow Jones Canada Titans 60 Index, Sino-Forest Corp. (Canada, Basic Resources, TRE.T) will be replaced by MEG Energy Corp (Canada, Oil & Gas, MEG.T). The total free-float market capitalization of the reconstituted Dow Jones Canada Titans 60 Index increased to US$1.148 trillion from US$1.143 trillion as of June 13, 2011.
The Dow Jones Canada Titans 60 Index measures the performance of 60 leading stocks traded in Canada.
Further information on the Dow Jones Country Titans Indexes can be found at www.djindexes.com
Rivermark Finds 80.6% of Advisors Agree: “No More Commodity ETFs”
New Study Finds Staggering Number of Advisors Not Considering New Commodity ETFs; Most Cite “Oversaturation” of the Marketplace as the Top Reason
June 14, 2011-A staggering number of Registered Investment Advisors will not recommend new commodity ETFs to their clients, according to a new study released today by Rivermark Research, a privately held research and consulting firm that specializes in demand and competitive intelligence for ETFs and Mutual Funds.
The study, commissioned by a private party, asked RIA respondents whether they believe ETF sponsors should continue to bring new commodity investments to market.
80.6 % of advisors surveyed say new commodity ETFs are unnecessary, with most advisors listing “oversaturation” of the marketplace as the number one reason, followed by “product complexity” and “risk.”
25.2 % of advisors surveyed also believe new ETF products -- outside of commodity funds -- will not serve a purpose in their clients’ portfolios.
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Source: Rivermark Research LLC
"Two Species" Opening Remarks of Commissioner Bart Chilton Before the European Commission
June 14, 2011--Thank you for the invitation to be with you. It is an honor, particularly to be on the panel with Commissioner Barnier.
There are two new species of traders that I believe we need to be cautious about in our markets ecosystem. One, regulators are focusing on and have been discussing, and the other needs heightened attention.
Massive Passives
The massive passives are the first. These speculators, who have invested hundreds of billions into markets in recent years are far out-weighing the traditional commercial speculator and have extremely large—massive—size, along with a fairly price-insensitive—passive—trading strategy. The massive passive trading strategy isn't a secret and others in markets base decisions upon what they know the massive passive will do, which is to go long, by and large. There are more speculative positions in commodity markets than ever before.
I remind folks that we are not a price setting agency. That said, the extreme volatility accompanied by high prices is a concern that needs to be addressed. These markets impact prices consumers pay for just about everything, from a loaf of bread, to a tank of fuel, to a home mortgage. If that price isn't fair, based upon efficient and effective markets, regulators aren't doing the job needed. Quite frankly, we need to do better. We have a requirement in the U.S. to impose position limits. We have, unfortunately, not done so yet, but we will get there.
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Source: CFTC.gov
Opening Statement, Open Meeting to Consider Effective Dates of Provisions in the Dodd-Frank Act
Commissioner Jill E. Sommers
June 14, 2011--Today we are dealing with an issue of great importance to me, providing some certainty to swap market participants concerning the status of their swap transactions on July 16 – the general effective date of Dodd-Frank. First let me say that I intend to vote for this relief because I believe the markets need guidance from the Commission as soon as possible, but I do so reluctantly.
The legal certainty provisions added by the CFMA in 2000 were critical to market participants and I believe that by passing Dodd-Frank and repealing those provisions of the CFMA, Congress in no way intended to decrease the confidence in the markets. Yet that is what has happened. For months I have been talking about the legal uncertainty that would arise on July 16th, and have said that the Commission needed to act sooner rather than later. Market participants have said the same thing. Instead of acting sooner, we are acting later, even though we have all known for many months that despite our best efforts, regulations implementing the new regulatory regime would never be finalized and effective by July 16th.
As a result of waiting until the last minute, we have needlessly allowed uncertainty to mount among market participants. As an example, it has been reported to me that as a result of uncertainty surrounding the applicability of business conduct standards for swap dealers, some swap dealers have already informed their pension fund swap counterparties that as of July 16th they will no longer be able to act as counterparties to pension funds. DCO’s are wondering if they are required to have Chief Compliance Officers in place. This kind of ambiguity is not acceptable.
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Source: CFTC.gov
US derivatives reforms to be delayed till end 2011
June 14, 2011--Derivatives rules are set to be delayed by six months in an effort to quell legal uncertainty around financial reform that some worry could roil markets.
Gary Gensler, chairman of the Commodity Futures Trading Commission, said officials would miss a July 16 deadline to finalise rules stemming from the sweeping Dodd-Frank financial reforms passed last year.
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Source: FT.com
Annual Changes to the NASDAQ OMX Global Auto Index
June 13, 2011-- The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) announced today the results of the annual evaluation of the NASDAQ OMX Global Auto Index (Nasdaq:QAUTO), which will become effective prior to market open on June 20, 2011.
The following six securities will be added to the Index: Ssangyong Motor Company (003620 KP), Geely Automobile Holdings Limited (175 HK), Sanyang Industrial Co., Ltd. (2206 TT), Yulon Nissan Motor Co., Ltd. (2227 TT), AviChina Industry & Technology Company Limited (2357 HK) and Piaggio & C. S.p.A. (PIA IM).
The Index is designed to track the performance of the largest and most liquid companies engaged in manufacturing of automobiles. The NASDAQ OMX Global Auto Index is evaluated annually in June. For more information about the NASDAQ OMX Global Auto Index, including detailed eligibility criteria, visit https://indexes.nasdaqomx.com/.
As a result of the evaluation, the following security will be removed from the Index:
Chongqing Changan Automobile Co., Ltd. (200625 CS).
Source: NASDAQ OMX
