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AdvisorShares Set to Launch the Peritus High Yield ETF (NYSE: HYLD)
HYLD Is the First Actively Managed High Yield Bond ETF
October 28, 2010-- AdvisorShares Investments, LLC, an innovator of actively managed Exchange Traded Funds (ETFs), today announced an expected launch date of no later than December 3rd, 2010 for the first ever actively managed high yield bond ETF, the Peritus High Yield ETF (NYSE: HYLD). HYLD is managed by Peritus I Asset Management ("Peritus"), a Santa Barbara, California-based investment manager.
Peritus is a unique value focused, active credit manager capitalizing on opportunities in the corporate bond market. They place limited value on the rating agencies and their methodologies, believing the agencies lag the market perception of risk and often ignore critical components of a company's credit profile. Instead, Peritus views credit as either "AAA" or "D," either the credit is expected to pay its coupon and principal obligations or it isn't. By avoiding arbitrary restrictions on aspects such as ratings and subordination and not being forced to take the one-of-everything approach as in the index products, Peritus is able to focus exclusively on the credits where they see the best risk reward. In addition, HYLD may utilize U.S. Treasuries in an effort to hedge against adverse market declines in periods of excessive exuberance as evidenced by compressed spreads and questionable underwriting standards. Short term treasuries (less than 5 year maturities) benefit from the "flight to quality" trade when there is a market disruption. While there is an opportunity cost in adding Treasuries to the portfolio (the yield is less), the possible Treasury "overlay" is expected to help potentially reduce risk and maximize the income stream regardless of the environment.
Noah Hamman, CEO and Founder of AdvisorShares said, "Peritus has an established track record managing high yield bonds. More importantly they have extensive high yield bond trading experience and the relationships to find the best opportunities. We believe that the high yield asset class is one which is best served through active management. We are very excited to be the first Firm to offer an actively managed high yield bond ETF to investors."
Tim Gramatovich, Chief Investment Officer of Peritus said, "We are very excited to launch HYLD with AdvisorShares as investors have begun to realize the benefits of yield in their portfolios. Delivering this via an ETF brings both transparency and liquidity to a much misunderstood asset class. Given the massive size of the marketplace, we believe that we have the tools to manage this portfolio through any and all environments and as such view HYLD as an active credit fund with all season tires. Our goal is to deliver a monthly income stream while also positioning the portfolio to generate capital gains by acquiring securities at a discount to par value."
Source: AdvisorShares
ELX Futures Exceeds 100,000 Contracts of Open Interest and Sets New Volume Record in Eurodollar Futures
October 28, 2010--ELX Futures, L.P. (ELX) announced today that it has reached a new milestone in open interest (OI) and set a new volume record in its Eurodollar Futures contract, which was launched in June 2010.
On Wednesday, October 27th, OI for Eurodollar Futures reached 104,313 contracts, with OI more than doubling every month since launch. Eurodollar Futures also set a new volume record, reaching 20,227 contracts on Tuesday, October 26th. Month over month, market share in Eurodollar contracts increased over 100% since September.
Neal Wolkoff, Chief Executive Officer of ELX Futures, said, “The Eurodollars Futures contract has been a very successful product for ELX, achieving new records every month. The exponential growth in open interest and the increase in volume show the great interest by market participants for an alternative Eurodollar Futures contract, which provides cross margining opportunities and adds to ELX’s suite of U.S. Treasury futures products.”
Source: ELX Futures
CME Group Inc. Reports Solid Third-Quarter 2010 Financial Results
October 28, 2010--CME Group Inc. (Nasdaq: CME) today reported that third-quarter total revenues increased 13 percent to $733 million and operating income increased 10 percent to $443 million from the year-ago period. Third-quarter net income was $244 million, up 21 percent from third quarter last year, and diluted earnings per share were $3.66, up 20 percent.
"For the third consecutive quarter, we've shown solid year-over-year volume gains," said CME Group Executive Chairman Terry Duffy. "Additionally, we've seen strong performances in several areas, including 41 percent growth in Treasury contracts versus the same time period last year, and combined 32 percent growth across our FX, agricultural commodities and metals products, with strong participation during non-U.S. trading hours. This performance highlights the value of CME Group's wide array of products to a diverse, global user base, which in turn creates optimal strategic positioning for us going forward."
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Source: CME Group
House Money
Speech of Commissioner Bart Chilton to the National Supply Summit, Las Vegas, NV
October 28, 2010--Everyone knows that casinos operate with a “house edge”—the mathematically determined odds that ensure the house maintains an advantage over the players. Sometimes, however, there’s a player on a winning streak who keeps piling the bets back on the table—“playing with the house’s money.” That’s a sweet win for the player, if it happens, but a sore loss for the house—which is why the odds are that it’s relatively rare.
Despite what some people say, the U.S. futures markets aren’t gambling marts—they are intended to be used for risk management and price discovery. Yes, speculators play an important part in these markets—they provide necessary liquidity. But when they begin to “play with the house’s money”—that is, when they are more than just liquidity providers, when they are a new, large, potent force in the markets, making money from the markets without providing inputs that go to the core functions of the markets—then that raises some serious red flags.
That’s what we saw in 2008. When supplies of crude were at record highs, and demand was at a record low, prices skyrocketed. I asked myself, what’s going on? Part of the answer was the increase in “Massive Passives,” new speculators that were playing with the house’s money, getting in the markets and staying there, rolling from one delivery month to the next, insensitive to price. And they had an effect on prices. To what degree we can’t say, but—in hindsight—we can surely say they had an effect.
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Source: CFTC.gov
Global X files with the SEC
October 28, 2010--Global X has filed a post effective amendment, registration statement with the SEC for 2 ETFs
Global X Russell Emerging Markets Growth ETF
Global X Russell Emerging Markets Value ETF
view filing
Source: SEC.gov
Pimco files with the SEC
October 28, 2010--Pimco has filed a post effective amendment, registration statement with the SEC for 6 actively-managed ETFs.
3 short duration
PIMCO Enhanced Short Maturity Strategy Fund (MINT NYSE Arca)
PIMCO Government Limited Maturity Strategy Fund (GOVY)
PIMCO Prime Limited Maturity Strategy Fund (PPRM)
2 Tax-exempt municipal
PIMCO Short-Term Municipal Bond Strategy Fund (SMMU NYSE Arca)
PIMCO Intermediate Municipal Bond Strategy Fund (MUNI NYSE Arca)
1 Taxable Municipal
PIMCO Build America Bond Strategy Fund (BABZ NYSE Arca)
view filing
Source: SEC.gov
Upgrades Top Downgrades; Issuance Soars in U.S. Corporate Bond Market in 3Q'10
October 28, 2010--The par value of U.S. corporate bonds affected by upgrades again topped downgrades in the third quarter of 2010 and by a wider margin that in the second quarter. Downgrades of $21.1 billion affected 0.6% of market volume while upgrades of $51.7 billion moved 1.5% of outstanding bonds.
The third-quarter downgrade tally was the lowest level of the year and in line with similar activity in the precrisis years of 2006-2007. While downgrades had a muted impact on both the investment-grade and speculative-grade portions of the market, the vast majority of the quarter's upgrades were concentrated at the speculative-grade level - a trend repeated in each quarter of 2010. Through September, the par value of U.S. corporate bonds affected by downgrades at $95.8 billion, trails upgrades of $123.4 billion.
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Source: Fitch Ratings
Knight Capital Group Announces Agreement to Acquire Designated & Lead Market Maker Businesses from Kellogg Capital Markets
Acquisition augments Knight's current partnership with NYSE Euronext through the addition of the DMM and LMM units
October 28, 2010-Knight today announced that it has entered into an agreement to acquire Kellogg Capital Markets' (Kellogg) Designated and Lead Market Maker businesses, which make markets in approximately 800 NYSE and NYSE Amex listed securities and 322 NYSE Arca exchange traded funds (ETFs). Knight anticipates that it will assume Kellogg's responsibilities across its entire portfolio of NYSE-, NYSE Arca- and NYSE Amex-listed securities as well as Kellogg's participation in the NYSE Amex UTP program.
The acquisition will build upon Knight's electronic market making business by adding another venue in which to make markets. It will also leverage Knight's strengths in trading technology to efficiently provide liquidity for its new listing companies. Kellogg's Designated Market Maker (DMM) business will complement Knight's current liquidity providing activities as a Supplemental Liquidity Provider (SLP) on NYSE and a NYSE Amex UTP DMM. The addition of Kellogg's ETF Lead Market Maker (LMM) business will be incremental to Knight's electronic market making and institutional ETF sales and trading team.
"The Kellogg acquisition is a natural extension of two of our already successful businesses: electronic market making and ETF trading," said Thomas M. Joyce, Chairman and Chief Executive Officer, Knight Capital Group. "We are excited to further our partnership with the NYSE Euronext, a prominent global brand. We also look forward to continuing the strong and meaningful relationships that Kellogg has built with its listed companies."
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Source: Knight
ETF Securities Launches New Precious Metals Basket (GLTR)
First US-Based Product to Offer Gold, Silver, Platinum and Palladium
under a Single Ticker
October 27, 2010--Highlights of The New Offering
Unique offering: ETFS Physical Precious Metal Basket Shares (Ticker: GLTR) will be the first US-based physically backed precious metal basket ETP to hold gold, silver, platinum and palladium in fixed weights.
GLTR complements the existing suite of products provided by ETF Securities and continues to offer the broadest range of physically backed precious metal ETPs in the US market.
>Precious metals Basket: It is expected that GLTR will appeal to those investors looking for a "one size fits all" ETP for their precious metal exposure.(
Cost effective: The Sponsor's Fee for GLTR will be 0.60%(3). It is expected that the transaction costs for buying and selling the Shares will be lower than purchasing, storing and insuring physical gold, silver, platinum and palladium.
Liquid - The Shares will trade on the NYSE Arca. The Trust structure allows for shares to be created and redeemed according to supply and demand in the market.
Transparent - The gold, silver, platinum and palladium bullion held by the trust is inspected biannually by the independent metal assayer, Inspectorate International. The pricing information, net asset value, and precious metals bar numbers held by the Trust are published daily on our website www.etfsecurities.com.
Flexible - The shares are available to be bought or sold, like ordinary listed securities throughout the trading day. The shares are eligible for margin accounts.
Source: ETF Securities
U.S. Leveraged Market Quarterly
October 27, 2010--Corporate Credit Themes
Although market fears of a double-dip recession appeared to peak in August and recede somewhat in September, recently released economic data have once again led the market to regard a stagnating economy as the biggest risk factor that could potentially derail the corporate credit recovery moving into 2011.
Sector Spotlight: Media & Entertainment
The media & entertainment sector significantly over-indexed the corporate bond default rate in
2009. Thus far in 2010, from an operating perspective, advertising revenue has rebounded off
of 2009 trough levels. Through the first six months of 2010, advertising is up over 5%. The recovery has been broad based across subsectors, with only newspapers and Yellow Pages still
posting declines. Fitch’s base case for 2011 anticipates a modest growth scenario that should support ad growth of 1%–3% even with the absence of the Olympics and lower political spend.
Sector Spotlight: Latin America The Latin America corporate issuers have performed relatively well since the financial crisis began in the middle of 2007. Only eight cross-border issuers defaulted during this time period. The overall credit quality of Fitch’s lowest rated companies in the region is relatively healthy and the trends are positive.
U.S. High Yield Default Trends
The U.S. default rate continued to trend lower this quarter with eight issuer defaults affecting a combined $2.5 billion in bonds. On a trailing 12-month basis, the default rate fell to 3.5% at the end of September, down from 4.5% at the end of June and 13.7% at the end of 2009. The default rate is expected to finish 2010 at roughly 1%-one of the lowest levels on record according to Fitch’s High Yield Par Default Index.
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Source: Fitch Ratings
