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Latin America - Markets refocus on fundamentals
April 12 , 2012--Latin American equities trailed global equities in 2011, giving back a small part of the huge outperformance delivered over the past decade.
Risk aversion has persisted since the fourth quarter of 2010, largely because of deterioration in the financial stability of the euro zone.
In 2012, however, we anticipate that markets will once again focus on local fundamentals. Starting from a base case of decelerating inflation across Latin America, we see room for multiple expansion across the region’s equity markets over the coming 18 months. In addition, because the political calendar appears relatively quiet in 2012, we believe election-related market volatility likely will be reduced.
Inflationary pressures that negatively affected Latin American equities in 2011 are expected to ease into 2012, removing the key, recent, local overhang to performance. The one exception is in Argentina, where official data mask a more deep-rooted inflation issue. In Brazil, we forecast that inflation data will have peaked in 2011, followed by a downward trend throughout the first half of 2012. Brazilian IPCA readings have remained stubbornly high since April 2011, above the 6.5% ceiling of the target band.
MSCI Tries to Make 'Frontier' Markets Safer
April 12, 2012--A new ETF offering announced Wednesday hopes to bring a little more civility to the frontier.
Investment product provider MSCI Inc. (NYSE:MSCI) is launching a new index, the MSCI Frontier Markets 100 Index — a spin-off of its broader MSCI Frontier Markets Index and comprising 100 of its largest and most liquid companies. In turn, this new index, will be used for a future BlackRock (NYSE:BLK) iShares ETF.
Nasdaq Proposes Issuers Pay Market Makers in Less-Active ETFs
April 12, 2012--Nasdaq Stock Market (NDAQ) (NDAQ) asked the U.S. Securities and Exchange Commission to allow companies sponsoring exchange-traded funds to pay market makers about $200 per day to quote their shares more aggressively.
The practice, currently illegal in the U.S., would spur quoting and transactions in ETFs that trade less than 2 million shares daily, benefiting investors by making more volume available to buy or sell at better prices, Nasdaq told the SEC in a filing published on April 6. The exchange said it would begin the program, which regulators must approve before it can be implemented, as a one-year study. The SEC rejected two earlier requests before they reached the public comment stage.
Fed's Dudley: Too soon to say economy out of danger
April 12, 2012--The disappointing performance of the U.S. labor market in March shows it is too early to conclude the economy is out of the woods, despite months of encouraging economic data, New York Federal Reserve Bank president William Dudley said on Thursday.
The Fed is gathering more data to determine whether last month's non-farm payrolls report, which showed the economy added way fewer jobs than expected, was just a weather-related setback or a sign the recovery is losing momentum again, Dudley said.
Asset managers demand ETF clarity
April 12, 2012--BlackRock and Vanguard, two of the largest issuers of exchange traded funds, are calling for clearer discrimination between their products and securities offered by investment banks that promise similar returns but would leave investors exposed were the issuing bank to fail.
The move comes as at least two regulators investigate unusual price movements last month in a tradeable security issued by Credit Suisse, which ETF issuers worry could lead investors to turn away from their own products.
US equity funds see $7 bln outflow in week -Lipper
April 12, 2012--Investors pulled $7.03
billion from equity funds in the week ending April 11, with the bulk of the money coming out of funds invested in U.S. stocks, especially through exchange-traded funds, data from Thomson
Reuters' Lipper showed on Thursday.
Over the course of the holiday-shortened reporting week, the
Standard & Poor's 500 Index, the U.S. benchmark for equities, fell 2.16 percent.
Taxable bond funds took in $56 million, but investors pulled $4.39 billion from money market funds and $57 million from municipal bond funds, Lipper said.
Investors pulled $6.88 billion from equity funds invested in U.S. equities, of which $5.68 billion came from ETFs holding U.S. stocks. The high rate of investment outflow from ETFs suggests it came from institutional investors.
Almost half of the money withdrawn from ETFs that was invested in U.S. stocks came from funds that mimic the return of two major stock indexes, the S&P 500 and the Dow Jones industrial average.
CFTC.gov Financial Data for Futures Commission Merchants Update
March 11, 2012--The selected FCM financial data as of 2/29/2012 (from reports filed by 4/1/2012) is now available
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Fitch: Popular Short-Term ETFs Offer Higher Yield, But Add Risk
April 11, 2012--Fitch Ratings notes the growing popularity of short-term fixed-income Exchange Traded Funds, or ETFs. These are short-term bond funds that market themselves as a close alternative to money market funds.
We note one example that underscores the growing popularity of this product in PIMCO Enhanced Short Maturity Strategy ETF (MINT). The objective of MINT is the maximum current income consistent with preservation of capital and daily liquidity, identical to that of MMFs. The fund has reached $1.5 billion in the 2.5 years since its inception in November 2009. MINT currently offers a 0.96% 30-day yield versus an average 0.03% yield delivered by taxable MMFs, according to iMoneyNet. That's a sizable difference, and one that underscores the allure for investors in traditional MMFs.
Investors also benefit from additional transparency with actively managed ETFs, as they are obligated under Securities and Exchange Commission rules to disclose their portfolio holdings daily versus monthly for MMFs.
SEC readies vote on circuit-breaker replacement
April 11, 2012--On 4 April, the US Securities and Exchange Commission (SEC) announced, after several extensions, that it would finally decide whether to approve a new volatility-mitigation plan for the US equities market by 31 May.
The new mechanism would replace the current single-stock circuit breakers for securities in the S&P 500 and Russell 1000 indices and certain exchange-traded funds (ETFs) sets to expire on August 11, or sooner if the new plan is implemented prior to the deadline.
The plan, developed by a consortium of the leading US equities and equity options exchanges – including NYSE Euronext, Nasdaq OMX, BATS Global Markets, Direct Edge and Chicago Stock Exchange – in league with the Financial Industry Regulatory Authority (FINRA), seeks to replace the single-stock circuit breaker pilot that has been in position since June 2011 to better address extraordinary market volatility, such as experienced on 6 May, 2010.
CFTC to Hold Open Meeting to Consider Two Final Rules
April 11, 2012--The Commodity Futures Trading Commission (CFTC) will hold a public meeting on Wednesday, April 18, 2012, at 9:30 a.m., to consider two Final Rules:
Final Rule on Further Definition of "Swap Dealer," "Security-Based Swap Dealer," "Major Swap Participant," "Major Security-Based Swap Participant," and "Eligible Contract Participant."
Final Rule on Commodity Options.
S&P Indices, TMX Group launch Low Volatility and High Beta Versions of the S&P/TSX Composite Index
Indices Licensed to PowerShares Canada
April 11, 2012-S&P Indices and TMX Group Inc. announced today that they are launching two new indices designed to provide market participants with unique measuring tools for specific stock characteristics within the S&P/TSX Composite, the principal broad market measure for the Canadian equity markets.
The S&P/TSX Composite Low Volatility Index measures the performance of the 50 least volatile stocks in the S&P/TSX Composite. The Index is designed to serve as a benchmark for low volatility strategies in the Canadian stock market. Constituents are weighted relative to the inverse of their corresponding volatility, or standard deviation, with the least volatile stocks receiving the highest weights.
The S&P/TSX Composite High Beta Index will measure the performance of the 50 constituents of the Composite that are the most sensitive to changes in market returns. It is designed to serve as benchmark for investors with a bullish strategic or tactical view of the Canadian stock market. Constituents are weighted in proportion to their market sensitivity, or beta, with the highest beta stocks receiving the highest weights.
S&P Indices has licensed both the S&P/TSX Composite Low Volatility Index and the S&P/TSX Composite High Beta Index to PowerShares Canada.
ALPS files with the SEC
April 11, 2012--ALPS has filed a post-effective amendment No. 65, registration statement with the SEC for the ALPS SECTOR DIVIDEND DOGS ETF.
view filing
BlackRock files with the SEC
April 11, 2012--BlackRock has filed a Amendment no. 1 TO Form 40-APP with the SEC.
view filing
SPDR US ETF Snapshot: March 2012
April 11, 2012--1,228 Exchange Traded Funds (ETFs)-with assets totaling $1.2TN-were managed by 36 ETF managers as of March 31, 2012.
Month over month, ETF assets increased by more than $14BN, up 1.2%.
A $12.1BN gain in assets in the Size - Large Cap category fueled a 1.2% increase in overall assets in the ETF Industry for March.
STATE STREET HIGHLIGHTS, MARCH 2012
2012 Investment Themes
At first glance, the S&P 500® Index returned 0.0% in 2011. In other words, it ended the year in the same place that it started. However, when including dividends in the return, the S&P 500 Index was up 2.1%. This boost in total return is something that dividend investments can potentially offer investors in an environment characterized by uncertainty.
For more on this please see our SPDR® ETF 2012 Investment Themes featured on /www.spdru.com.
State Street recently launched a new short duration high yield fixed income ETF.
SPDR Barclays Capital Short Term High Yield Bond ETF [SJNK]: Click here for complete product information.
•For more information, including product fact sheets and related whitepapers, visit www.spdrs.com.
ETF Industry Detail
Asset Classes -Overall
The S&P 500® Index increased 3.3% while the MSCI EAFE® Index decreased 0.5%. Commodities were positive, with the S&P® GSCI® Index down 2.4% and Gold dropping 6.1%. US Bonds were slightly negative with the Barclays US Treasury Index losing 1.0% and the Barclays US Aggregate Index dropping 0.5%.
FLOWS
•ETF flows topped $11BN in March. The Size-Large Cap category had a category-leading $5.9BN in inflows, a reversal from the $4.8BN in outflows it had in February. The Fixed Income category continued to see positive inflows attracting $3.9BN in March and $15.6BN year-to-date.
visit www.spdrs.com for more information.
Van Eck Launches First US Listed "Fallen Angel" ETF
Market Vectors Fallen Angel High Yield Bond ETF (ANGL) offers exposure to
an often overlooked but potentially attractive segment of the high yield bond universe
April 11, 2012--Market Vectors ETF Trust has added another first-of-its-kind exchange-traded fund (ETF) to its rapidly growing fixed income ETF family, it was announced today.
Trading began this morning on Market Vectors Fallen Angel High Yield Bond ETF (NYSE Arca: ANGL), a fund designed to focus on the U.S. dollar denominated “Fallen Angels” segment of the corporate high yield bond market, which currently accounts for approximately 15 percent of the U.S. dollar denominated high yield bond universe.
ANGL seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of The BofA Merrill Lynch U.S. Fallen Angel High Yield Index (H0FA), which is comprised of below investment-grade corporate bonds denominated in U.S. dollars that were rated investment grade at time of issuance. Bonds may have been issued by either U.S. or non-U.S. issuers, but qualifying securities must be issued in U.S. dollars in the U.S. domestic market for inclusion in the index.
