Americas ETP News
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ProShares Launches First Long/Short RAFI ETF
December 9, 2010 — ProShares, a premier provider of alternative exchange traded funds (ETFs), announced the launch of ProShares RAFI® Long/Short (RALS). The ETF, the first dedicated fund that offers a long/short strategy based on Research Affiliate's pioneering Fundamental Index (RAFI®) methodology, lists on NYSE Arca today.
The RAFI approach uses fundamental measures of company size—sales, dividends, cash flow and book value—instead of security price in selecting and weighting securities. The new ETF seeks to match the performance of the RAFI® US Equity Long/Short Index before fees and expenses. The Index takes long positions in companies with large RAFI weights relative to their capitalization weights and short positions in companies with small RAFI weights relative to their capitalization weights. By allocating an equal dollar amount to its long and short positions, the Index is designed to generate an absolute return over a full market cycle.
"We are pleased to partner with Research Affiliates and Rob Arnott on ProShares RAFI Long/Short," said Michael L. Sapir, Chairman and CEO of ProShare Advisors LLC, ProShares' investment advisor. "This ETF may appeal to investors looking for strategies that strive to deliver low correlation and favorable returns regardless of market direction."
"Lifting the long-only constraint extends the potential benefits of the RAFI approach," said Rob Arnott, founder of Research Affiliates. "We are excited that ProShares is providing access to another important alternative strategy for investors."
Concurrent with the launch of the ProShares RAFI ETF, ProShares is introducing a new marketing campaign with the themeline, “The Alternative ETF Company®." ProShares introduced the industry's first, and today is the world's leading provider of, geared (leveraged and inverse) ETFs. Last year, ProShares introduced ProShares Credit Suisse 130/30 (CSM), the first ETF of its kind. With the introduction of the ProShares RAFI® Long/Short, ProShares continues to demonstrate its commitment to provide investors with ETFs that pursue alternative strategies.
Source: ProShares
FocusShares files with the SEC
December 10, 2010--FocusShares has filed a post effective amendment, registration statement with the SEC for
Focus Morningstar US Market Index ETF
Focus Morningstar Large Cap Index ETF
Focus Morningstar Mid Cap Index ETF
Focus Morningstar Small Cap Index ETF
Focus Morningstar Basic Materials Index ETF
Focus Morningstar Communications Services Index ETF
Focus Morningstar Consumer Cyclical Index ETF
Focus Morningstar Consumer Defensive Index ETF
Focus Morningstar Energy Index ETF
Focus Morningstar Financial Services Index ETF
Focus Morningstar Health Care Index ETF
Focus Morningstar Industrials Index ETF
Focus Morningstar Real Estate Index ETF
Focus Morningstar Technology Index ETF
Focus Morningstar Utilities Index ETF
view filing
Source: SEC.gov
PowerShares Water Resources Portfolio (PHO) Commemorates 5-Year Anniversary
December 9, 2010--nvesco PowerShares Capital Management LLC, a leading provider of exchange-traded funds (ETFs) with more than $50 billion in franchise assets, announced today the five-year anniversary of PowerShares Water Resources Portfolio (NYSE Arca: PHO).
The PowerShares Water Resources Portfolio is the industry’s first water ETF. Listed on Dec. 6, 2005, PHO is the largest and most actively traded ETF providing investors with access to a portfolio of U.S.-listed companies engaged in the water industry and is positioned in a way that seeks to benefit from the rapidly accelerating water resource challenges (Bloomberg LP, as of Dec. 6, 2010).
“The world’s supply of clean water is increasingly in demand for consumption, irrigation and industrial production, and we believe the PowerShares Water Resources Portfolio (PHO) is a compelling way for investors to capitalize on this investment theme,” noted Ben Fulton, Invesco PowerShares managing director of ETFs. “We are pleased with the performance and success of PHO, and remain committed to expanding investors’ access to investment themes, strategies, and asset classes that were previously difficult to reach.”
“That Invesco PowerShares had the insight to pioneer water as an investment is a testament to their leadership in the field. It was truly a unique combination; water as an investment theme packaged in the then relatively new framework of a specialized ETF,” said Steve Hoffmann, designer of the Palisades Water Index.
Consistent with the long-term investment fundamentals of the water industry, the Palisades Water IndexTM underlying PHO gained a cumulative total return of 36.10% over the five-year period, significantly outperforming the S&P 500, which gained a total return of 7.87% during the period as indicated in the chart below. The comparisons are also favorable relative to the cumulative total returns of other major market indexes calculated for the five-year period ending Dec. 3, 2010, which saw the DJIA up 19.81%, the Nasdaq up 32.68%, and the Russell 2000 gaining 17.72%.
visit www.invescopowershares.com for more info.
Source: PowerShares
ETSpreads, LLC files with the SEC
December 9, 2010--ETSpreads, LLC (referred to herein as “ETSpreads,” or the “Adviser”) and Exchange Traded Spreads Trust (the “Trust”) and, ALPS Fund Distributors, Inc. (the "Distributor" and collectively with ETSpreads and the Trust, (the “Applicants”) have filed a restated and amended application for exemptive relief with the SEC.
view filing
Source: SEC.gov
Opening Statement, Public Meeting on Proposed Rules Under Dodd-Frank Act
Commissioner Michael V. Dunn
December 9, 2010--Thank you all for joining us today for this important meeting regarding the implementation of the Dodd-Frank Act. Today’s meeting will address proposed rules regarding:
Business conduct standards for swap dealers and major swap participants with counterparties;
End-user exception to mandatory clearing of swaps; and
Governance requirements for DCOs, DCMs and SEFs.
The business conduct standards for swap dealers and major swaps participants is of particular interest to me, because I believe that strong standards for swap dealers and MSPs are necessary to prevent another financial crisis. By implementing strong business conduct standards, the Commission can establish meaningful protections for counterparties and hopefully prevent the types of behavior that necessitated the passage of Dodd-Frank.
An inherent conflict of interest exists when a swap dealer acts as both an advisor and counterparty to its customers. The business conduct standards proposed today provide meaningful protections to counterparties, and I support them, but I believe more can be done. I am particularly interested in public comment on this rulemaking, specifically whether the proposed rules go far enough in protecting counterparties.
read more
Source: CFTC.gov
Opening Statement, Seventh Series of Proposed Rulemakings Under the Dodd-Frank Act
Commissioner Scott O’Malia
December 9, 2010--The holidays are right around the corner, and as many of you know, I have three daughters, and therefore, three wish lists. My youngest daughter, Macey, spent the weekend scouring the various catalogs that haven’t made it to the recycling bin in search of the perfect gift to top her list. And you know what she came up with? A towel warming rack. She had no idea why she wanted it, but it was in the catalogue, and thus had equal opportunity with a lot of other items to make it to the list.
I didn’t think much of the towel rack until I read today’s proposal relating to swap execution facilities (“SEFs”), namely, the parts that aim to further define what a SEF is. And I thought to myself that this SEF rule is very similar to the towel rack episode: no reason, just because.
I’m not buying a seven year-old a towel warming rack, and I’m not supporting this proposed rulemaking today
read more
Source: CFTC.gov
CFTC to Hold Open Meeting on Eighth Series of Proposed Rules under the Dodd-Frank Act
December 9, 2010-- The Commodity Futures Trading Commission (CFTC) will hold a public meeting on Thursday, December 16, 2010, at 9:30 a.m. to consider the issuance of proposed rulemakings under the Dodd-Frank Wall Street Reform and Consumer Protection Act on the following topics:
Position limits for physical commodity derivatives;
Confirmation, portfolio reconciliation and portfolio compression requirements for swap dealers and major swap participants;
Risk management requirements for derivatives clearing organization; and
read more
Source: CFTC.gov
DB Global Equity Index & ETF Research : US ETP Market Weekly Review: ETP assets reach record high driven by equity market rally
December 9, 2010--Market Review
Last week began with bearish flavor as global economic issues kept weighing the equity markets down. However after positive jobs and economic related data released in the US, and the European Central Bank delaying its withdrawal of emergency liquidity measures by purchasing more government bonds, the markets were able to recover the lost ground towards the second half of the week ending on positive territory. The S&P 500 was up by 2.97%, the MSCI World increased by 3.04% and the MSCI EM rose by 3.77%. At the same time, Gold price in USD was up by 3.69% and the USD depreciated 1.3% against the EUR. Total US ETP flows experienced meager inflows of $0.3 bn vs $4.1 bn inflows the previous week. The weekly average ETP flows stands at $2.2 bn year to date. US ETPs AUM reached an all-time high of $969 bn.
Equity ETP flows: Investors look for sector edge over diversification
Equity ETPs recorded $1.1 bn in outflows vs $4.5 bn in inflows in the previous week. Inflows received in the last two days of the week were not enough to offset the flight that preceded the end of the week pick up. Within Long Equity ETPs, US-focused products saw $2.4 bn being swept from their accounts, while EM and Other Developed countries/regions ETPs received inflows of $805 mm and $632 mm, respectively .
The previous week’s flight into Mid and Small Cap was reverted ($2.7 bn outflows) last week as these segments’ returns realigned with the Large cap segment’s return, the S&P MidCap 400 and the S&P SmallCap 600 returned 3.18% and 3.06% for the week, respectively.
The inflow highlight of the week came from Sector ETPs, which totaled $2.3 bn in new money, out of which most went into the Energy ($1.4 bn) and Materials ($0.7 bn) sectors
For more insights on equity ETP flows see our special commentary titled: “The SPY December Effect” on Page 4.
Fixed Income ETP flows show some sparks of life
After a couple of weeks of being either looked down or forgotten, Fixed Income ETPs recaptured the attention of investors, which poured in $542 mm of fresh cash vs almost-flat $22 mm inflows in the previous week, for a total of $35 bn year to date. Corporates led the inflows with $293 mm, followed by Sovereign with $177 mm.
Commodity ETP: Precious Metals (PM) rule, but are we talking about the same PM?
Commodity ETPs helped to keep the US ETP flows on positive ground contributing with $961 mm in inflows vs $205 mm outflows in the previous week. Precious Metals (PM) products dominated the inflows with $960 mm, while Crude Oil products stood alone on the negative-flows side of the field with $156 mm outflows.
A closer look at the flows into PM sub sectors reveals new dynamics within this sector. Until Q3 PM used to be mostly gold, both in terms of AUM and flows activity, however since the end of Q3 we have seen growing interest into the white (ex gold) sectors within the PM range. Figure 3 shows the AUM market share breakdown for PM products as of the end of Q3 vs last week, at the end of Q3 Gold dominated with 87.4% of the assets, however in about 2 months it has lost 4.6% of market share towards the rest of the PM products, mainly Silver. A look at the flows market share during Q4 so far, provides additional information regarding the dynamics shift within the PM sector, Figure 4. During the first two months of the current quarter, Silver ETPs have received almost 70% of the net flows coming into PM products, while Gold has been distantly competing for a second place with other relatively new PM products such as Platinum and Palladium.
New Launch Calendar
After a couple of very quiet weeks, the US ETP launch calendar is back in full. Last week there were 7 new ETPs launched in NYSE Arca by 4 different providers. The products include Equity sector, physical commodity baskets, inflation-linked Treasuries and Active Fixed Income products.
AdvisorShares launched a fund employing an active strategy to profit from High Yield debt securities. PowerShares came out with a range of four financial equity ETFs aiming to replicate different sub sector allocation returns including income generation, international companies, and insurance business. BlackRock unveiled a Fixed Income ETF tracking short and mid term inflation-linked Treasuries. Last but not least, ETF Securities Ltd launched the first “white” physical metals basket, which offers exposure to precious metals ex-Gold (Silver, Palladium and Platinum). See Figure 16 on page 8 for further details.
Turnover Review
US ETP Avg. Daily Turnover picked up during last week, rising 5.2% and totaling $65 bn at the end of the week. Equity ETPs registered the largest absolute increase with $2.9 bn or 5.1% week over week.
Assets Under Management (AUM) Review
Although flows were almost flat, the market momentum was enough to add $26 bn to the US ETPs AUM. Assets for US products rose by 2.7%, reaching an all-time high of $969 bn at the end of the week. Year to date US ETPs AUM has increased $188 bn or 24.0%.
To request a copy of the report
Source: Deutsche Bank Global Equity Index & ETF Research
Russell survey: 59% of financial advisors optimistic about capital markets, but only 7% believe clients share their outlook
Disparate views underscore challenge in getting clients to move off the sidelines, into the market and on track to a more secure retirement
December 8, 2010--Financial advisors appear to be significantly more optimistic about the capital markets than their clients.
According to the Financial Professional Outlook (FPO), a quarterly survey of U.S. financial advisors by Russell Investments, only 7% of advisors believe their clients are optimistic about the capital markets over the next three years. This assessment is in stark contrast with the advisors' own outlook — 59% of advisors are optimistic over that same period of time.
Commenting on the findings, Phill Rogerson, managing director, consulting services for Russell's Private Client Services business, said: "Advisors know that the global financial crisis has left many of their clients fatigued, jaded and distrustful. That skepticism means advisors must now work harder to rebuild their clients' trust in the capital markets. That trust is of paramount importance because most individual investors will almost certainly fail to achieve financial security in retirement unless they choose to engage in a sensible savings and investment plan."
Advisors believe that their clients' lack of confidence in the markets has also become a major concern as their clients consider whether they will be able to achieve their financial goals. Seventy-eight percent (78%) of financial advisors responding to the latest survey say that clients see economic uncertainty (slow economic growth) as an impediment to reaching their financial goals. Sixty-one percent (61%) think that market volatility concerns their clients.
read more
Source: Russell Investments
Testimony of Chairman Gary Gensler, before the Senate Committee on Banking, Housing, and Urban Affairs, Subcommittee on Securities, Insurance, and Investment and Senate Committee on Homeland Security and Governmental Affairs, Permanent Subcommittee on Inv
December 8, 2010--Good afternoon Chairman Reed, Chairman Levin, Ranking Member Bunning, Ranking Member Coburn and members of the Subcommittee on Securities, Insurance, and Investment and the Permanent Subcommittee on Investigations. I thank you for inviting me to today’s hearing. I am pleased to testify alongside Securities and Exchange Commission (SEC) Chairman Mary Schapiro. This is our seventh time testifying together, and our third on issues related to the May 6 market events.
Since we last testified before the Subcommittee, staff from the Commodity Futures Trading Commission (CFTC) and SEC released a supplemental report on October 1 on the unusual market events of May 6, 2010. As outlined in the joint staff report, there were three chapters of the May 6 market events:
very fragile and uncertain markets due in part to the unsettling news concerning the European debt crisis;
a liquidity crisis in the E-Mini S&P 500 futures contracts (E-Mini) and related index securities; and
a liquidity crisis in individual securities.
read more
Source: CFTC.gov
