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Investors Moving Away From Mutual Funds and Towards ETFs
Vanguard Favored in Both Product Categories
January 25, 2011--Fewer affluent Americans are using mutual funds, and even among those investors who continue their use, allocations to mutual funds are down significantly. Meanwhile, ETFs continue to gain in both popularity and proportional share of retail investor assets. As this major industry shift unfolds, Vanguard leads other providers in investor impressions across both product categories. These and other findings are included in the 2011 Investor Brandscape™ report that was released by Cogent Research on January 7, 2011. The report is based on a nationally representative sample of 4,000 investors with at least $100,000 in investable assets.
According to Cogent, as of October 2010, 75% of investors own mutual funds, a figure that is down from 78% a year earlier and a full nineteen percentage points below the more than nine in ten (94%) of investors who owned at least one mutual fund in October of 2006. Meanwhile, within the same 4-year period, the proportion of investors who report owning ETFs has increased 57%, from 7% to 11%.
Despite the decline in use over the past year, the proportion of assets current mutual fund owners allocate to these products remained steady. However, since 2006, the average allocation investors make to mutual funds has eroded significantly, down from 53% to a present level of 44%. During that time, the average ETF allocation increased 45%, from 11% to 16%.
“These numbers reflect a dramatic shift in preference among investors for both mutual funds and ETFs,” said Cogent Research Principal John Meunier. “And while it’s impossible to know exactly how things will play out, it’s clear that a major realignment is underway.”
According to Meunier, “Traditional mutual fund providers are fighting tooth and nail for a shrinking piece of real estate, while established ETF providers face a different challenge; fending off a rush of new providers in a rapidly expanding marketplace.”
One key measure of which firms are best positioned to compete in the battles for market share that lie ahead is how favorable investors are toward the providers they know. This bodes especially well for Vanguard, which leads in investor favorability in both product categories. In fact, half of all investors that know Vanguard have strong positive impressions (top-3 favorability ratings on a 0-10 scale) of the firm as both an ETF (52%) and mutual fund (50%) provider. Vanguard’s strongest competition on this measure among mutual fund providers comes from Riversource (47%), Fidelity Investments (44%) and American Funds (40%). Among ETF providers, iShares (46%), PowerShares (43%), Claymore/Guggenheim (43%), PIMCO (42%), and Charles Schwab (40%) all resonate favorably with at least four in ten investors familiar with each brand.
According to Meunier, “These investor favorability scores not only reflect the strong positive net flows earned last year by Vanguard in both the mutual fund and ETF categories. More importantly, they suggest the company’s momentum is very likely to continue in 2011.”
About Cogent Research
Emerging Markets Week in Review- 1/17/2011 - 1/21/2011
January 24, 2011--The Dow Jones Emerging Markets Sector Titans Composite Index fell 1.69% last week on concerns that rising food prices will drive tighter monetary policy.
Telecom and Energy, two of the worst performing sectors last year, declined the least last week, down 0.45% and 0.53% respectively. The Consumer and Financial stocks were down 3.08% and 2.92% respectively.
read more
Source: Emerging Global Advisors
Exchange-Traded Funds: US ETF Weekly Update Morgan Stanley
January 24, 2011--Weekly Flows: $2.1 Billion Net Inflows
ETFsTraded $253 Billion Last Week
No ETF Launches-AdvisorSharesLowers Expense Cap on ETF
Van Eck Announces Share Split on Indonesia ETF
US-Listed ETFs: Estimated Flows by Market Segment
ETFshad net inflows of $2.1 billion last week; third week in a row of net inflows
Net inflows were led by US Large-Caps last week; US Large-Caps account for 22% of total ETF assets
ETF assets stand at more than $1 trillion dollars, nearly doubling over the past two years
13-week flows remain mostly positive among asset classes
$44.8 bln of net inflows into ETFs over past 13 weeks (75% into US Equity ETFs)
We note that Fixed Income ETFsposted net outflows over the past 13 weeks, a big reversal from most of 2010
US-Listed ETFs: Estimated Largest Flows by Individual ETF
For the third straight week, SPDR S&P 500 ETF (SPY) posted largenet inflows
SPY generated net inflows of $1.8 billion last week and over the last 13 weeks has exhibited net inflows of $9.0 billion
iShares MSCI Emerging Markets ETF (EEM) exhibited the largest net outflows over the past 4 and 13 weeks ($2.7 billion and $3.9 billion, respectively)
request report
Source: ETF Research-Morgan Stanley
SEC Releases Staff Study Recommending a Uniform Fiduciary Standard of Conduct for Broker-Dealers and Investment Advisers
January 24, 2011-- The Securities and Exchange Commission submitted to Congress a staff study recommending a uniform fiduciary standard of conduct for broker-dealers and investment advisers -- no less stringent than currently applied to investment advisers under the Advisers Act -- when those financial professionals provide personalized investment advice about securities to retail investors.
The study, provided to Congress last night, which looked into obligations and standards of conduct of financial professionals, was required under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
In the study, the staff notes that investment advisers and broker-dealers are regulated extensively under different regulatory regimes. But, many retail investors do not understand and are confused by the roles played by investment advisers and broker-dealers. The study finds that "many investors are also confused by the standards of care that apply to investment advisers and broker-dealers" when providing personalized investment advice about securities.
The study further states that "retail investors should not have to parse through legal distinctions to determine" the type of advice they are entitled to receive. "Instead, retail customers should be protected uniformly when receiving personalized investment advice about securities regardless of whether they choose to work with an investment adviser or a broker-dealer."
view the Study on Investment Advisers and Broker-Dealers
Source: SEC.gov
JP Morgan files with the SEC
January 24, 2011--JP Morgan has filed a Amendment No.2 to FORM S-1 with the SEC for the J.P. Morgan Physical Copper Trust.
view filing
Source: SEC.gov
iShares files with the SEC
January 24, 2011---iShares has filed a post-effective amendment, registration statement with the SEC for the iShares High Dividend Equity Fund.
view filing
Source: SEC.gov
iShares files with the SEC
January 24, 2011--On January 21, 2011. iShares filed a post-effective amendment, registration statement with the SEC for the iShares MSCI EAFE Minimum Volatility Index Fund.
view filing
Source: SEC.gov
WisdomTree files with the SEC
January 24, 2011--WisdomTree has filed a post-effective amendment, registration statement with the SEC for the Asia Bond Fund, Latin America Bond Fund and
EMEA Bond Fund
view filing
Source: SEC.gov
State Street Global Advisors Issues 2011 ETF Outlook Report
January 24, 2011--State Street Global Advisors (SSgA), the investment management business of State Street Corporation (NYSE: STT), today released a new report titled, SPDR® ETF Outlook?Taking Aim at 2011, which offers insights into recent developments in the exchange traded funds (ETF) industry and the trends expected to shape asset flows in 2011.
According to the report, ETF industry assets in the United States reached a record $995 billion at the end of 2010, as net new inflows exceeded $100 billion for the fourth consecutive year. Exchange traded fund investors distributed their investments across several asset classes including fixed income, international, dividend and commodities during the year.
“As awareness of core benefits of ETFs grows, they are becoming the preferred choice of a growing number of institutional, professional and retail investors,” said Tom Anderson, global head of ETF strategy and research at State Street Global Advisors. “Looking ahead to 2011, we expect to see investors increase their exposure to non-correlated asset classes and high dividend paying stocks using ETFs to implement strategies designed to improve their risk-return profile and generate a steady source of income amid an improving economic backdrop.”
Among the key themes highlighted in SPDR ETF Outlook-Taking Aim at 2011 are:
Continued growth of ETF industry assets;
Insights into how investors are evaluating ETFs;
Implications of the Flash Crash;
Potential growth of non-US exposure in investor’s portfolios; and
Outlook for dividend, actively managed, and “real assets” ETFs in 2011.
For more information on these developments and others emerging in the ETF industry, financial professionals can download a copy of SPDRETF Outlook-Taking Aim at 2011 at SPDR University (www.spdru.com), State Street’s award winning online educational resource for investment professionals.
State Street manages more than $255 billion in SPDR ETF assets worldwide (as of December 31, 2010) and is one of the largest ETF providers in the US and globally.
Source: State Street Global Advisors
CFTC.gov Commitments of Traders Reports Update
January 21, 2011---The current reports for the week of January 18, 2011 are now available.
view updates
Source: CFTC.gov
