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US ETF Snapshot: December 2009-State Street Global Advisors
January 14, 2010--As of December 31, 819 ETFs in the US — with assets totaling approximately $776BN — were managed by 31 ETF managers.
For the month, ETF industry assets rose $36.4BN, or 4.9%.
For the year, the number of ETFs increased by 72, or 10%. ETF assets increased by $242BN, or 45%.
Asset Classes — Overall
The S&P 500® Index rose 1.9% in December and finished 2009 up 26.5% overall. The MSCI EAFE® Index gained 1.5% for the month in USD terms with a year-to-date return of 32.5%. The Barclays Capital U.S. Treasury Index fell 2.6% (down 3.6% YTD) while the Barclays Capital U.S. Aggregate Index fell 1.6% (up 5.9% YTD). Gold fell to $1,087.50 an ounce, a loss of 7.4% from last month’s close (but up 25% YTD).
The Size and International categories rose the most in absolute terms, up $20.8BN and $5.3BN, respectively. Fixed Income assets topped $100BN for the first time driven by a gain of 2.1% for the month.
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Source: State Street SPDR
DB Index Research -- Weekly ETF Reports -- US
January 14, 2010--Highlights
ETF Volume
US ETF turnover declined by 7.5% to US$42.8bn in the previous week. Turnover in the S&P 500 SPDR ("Spider") was US$13.4bn. The PowerShares QQQ Nasdaq 100 had turnover of US$3.2bn followed by iShares Russell 2000 with turnover of US$3.1bn.
There were eight new ETFs launched in the last week. BlackRock Fund Advisors launched six new Bond ETFs followed by ETF Securities which launched two new Commodity ETFs. All the listings were on NYSE Arca.
In the previous week, average daily turnover in the Large Cap, US Sector, Leveraged and Global Regional products was US$17.9bn (-8.0%), US$7.2bn (-4.0%), US$4.4bn (-12.9%) and US$3.6bn (-7.4%) respectively.
Among the Emerging country ETFs, iShares MSCI Brazil ETF turnover was US$886m followed by iShares FTSE/Xinhua China ETF with turnover of US$673m. In non-US developed market flows, iShares MSCI Japan had turnover of US$235m. In non-domestic regional flows, emerging market turnover was US$2.5bn and developed markets regional flows EAFE had turnover of US$0.9bn.
Assets under Management (AUM)
Total assets under management for equity based ETFs remained at about the same level in the previous week, AUM were US$621.8bn.
To request a copy of the report
Source: Aram Flores and Shan Lan -DB Index Research
FINRA Foundation Issues Seeking Solid Financial Footing for the Next Decade: 10 Tips for 2010
January 14, 2010--The Financial Industry Regulatory Authority (FINRA) Investor Education Foundation today released Seeking Solid Financial Footing for the Next Decade: 10 Tips for 2010, which provides practical advice to help people regain their financial footing. The 10 Tips for 2010 are based on the findings of the FINRA Foundation's National Financial Capability Survey, which showed that many Americans are unprepared for economic upheavals and that far too many people are engaging in financial behaviors that generate excessive expenses and fees.
"The National Financial Capability Survey highlighted many of the financial challenges that American families face. These tips are designed to help people regain their financial footing and start off a new decade on a path to financial security," said John Gannon, President of the FINRA Investor Education Foundation.
10 Tips for 2010 advises Americans to become more financially secure by:
Figuring out how much to save for retirement. Nearly three of every five people who are not yet retired have not done the math to calculate how large their retirement nest egg should be.
Avoiding fees from overdrawing bank accounts. Nearly one-quarter (23 percent) of Americans with checking accounts reported overdrawing their accounts on occasion.
Shopping around for financial products. Of those surveyed, 63 percent said they did not compare credit card offers.
Taking advantage of tax breaks for college savings. Only 33 percent of those saving for a child's college education are using tax-advantaged accounts, such as a 529 plan.
Creating a rainy day fund to cover expenses for three months in the case of sickness, job loss, economic downturn or other emergency. 51 percent of Americans have not set up this vital lifeline.
The National Financial Capability Survey compiled responses from nearly 1500 American adults to reveal in detail how Americans save, borrow and plan for their financial future. The Survey results were released in December 2009
Seeking Solid Financial Footing for the Next Decade: 10 Tips for 2010
Source: FINRA
CBOE Update on Benchmark Indexes and Volume
January 14, 2010--CBOE Benchmark Indexes in 2009
Here are the percentage changes for CBOE benchmark indexes in 2009
47.3%-VPD - CBOE VIX Premium Strategy Index-www.cboe.com/VPD
45.6% -BXN - CBOE Nasdaq BuyWrite Index - www.cboe.com/BXN
32.2%-BXY - CBOE S&P 500 2% OTM BuyWrite- www.cboe.com/BXY
31.5%-PUT - CBOE S&P 500 PutWrite Index-www.cboe.com/PUT
29.1% -BXR - CBOE Russell 2000 BuyWrite Index -www.cboe.com/BXR
25.9%-BXM - CBOE S&P 500 BuyWrite Index-www.cboe.com/BXM
23.3% -BXD - CBOE DJIA BuyWrite Index -www.cboe.com/BXD
17.6% - CLL - CBOE S&P 500 95-110 Collar Index-www.cboe.com/CLL
(The S&P 500 Index total return was up 26.5% in 2009.)
High Gross Premiums for BXM Index. The CBOE S&P 500 BuyWrite Index (BXM) received gross premiums averaging around 2.8 percent per month in 2009, and the BXM Index was up 25.9% in 2009. www.cboe.com/BXM
Visit www.cboe.com/benchmarks
Source: CBOE
Schwab Introduces Two New Low-Cost ETFs Focused on Emerging Markets and International Small-Cap Equities
New ETFs Have No Online Trading Commissions for Schwab Clients
January 14, 2010--Charles Schwab Investment Management, Inc. (CSIM) has launched its seventh and eighth exchange-traded funds with low operating expense ratios and commission-free online trading in Schwab accounts. The latest two are the Schwab Emerging Markets Equity ETF (SCHE) and the Schwab International Small-Cap Equity ETF (SCHC) and they begin trading on Jan. 14th, 2010.
The first four Schwab ETFs — U.S. Broad Market (SCHB), U.S. Large-Cap (SCHX), U.S. Small-Cap (SCHA) and International Equity (SCHF) were launched Nov. 3. In addition, the Schwab U.S. Large-Cap Growth ETF (SCHG) and the Schwab U.S. Large-Cap Value ETF (SCHV) were launched on Dec. 11.
As of Jan. 12, CSIM had $419 million in assets under management in the first six Schwab ETFs, and trading volume has increased steadily across the six ETFs since inception.
“Individual investors and investment advisors count on Schwab for products that provide exceptional value, and our clients have indicated an interest in ETFs as a way to invest in and trade entire segments of the market,” said Peter Crawford, senior vice president at Charles Schwab & Co., Inc. “These two new ETFs allow investors to access emerging markets equities and international small-cap equities. And commission-free online trades make the Schwab ETFs an even more cost-effective investment.”
The new Schwab ETFs have some of the lowest expense ratios in the market for funds with similar objectives — the two new funds each have an expense ratio of 0.35 percent. Like the first six funds, the two new Schwab-managed ETFs can be bought and sold commission-free online in Schwab accounts.
"We are extremely pleased with the successful launches of our new suite of Schwab ETFs,” Crawford said. “The compelling value proposition combined with the steady trading volumes since inception and relatively tight bid/ask spreads have resulted in strong adoption by both retail investors and independent investment advisors. We are committed to supporting and growing these new products and relationships."
Commission-free online trading of Schwab ETFs is available to individual investors at Schwab, to the more than 6,000 independent investment advisors who use Schwab’s custodial services and through Schwab retirement accounts that permit trading of ETFs.
Elimination of 12b-1 Plan
The Board of Trustees of the Schwab ETF Trust approved the termination of the Distribution and Shareholder Services (12b-1) Plan for all proprietary ETFs. This change was filed with the SEC on January 13, 2009.
“We've eliminated our Rule 12b-1 plan to simplify our pricing and remove the potential additional costs,” said Crawford. “This change reaffirms our commitment to providing clients with optimal value in our relationship with them.”
Source: Charles Schwab Investment Management
China Materials ETF (CHIM) added to family of China sector ETFs
January 14, 2010--New York-based asset manager Global X Management Company today launched the Global X China Materials ETF (NYSE Arca: CHIM), the first ETF offering targeted access to the China Materials sector. CHIM is the latest addition to the comprehensive family of China sector ETFs offered by Global X Funds.
The Global X China Materials ETF seeks to replicate the S-BOX China Materials Index, which is designed to reflect the performance of the materials sector in China. As of December 30, 2009, the Metals & Mining sector represents 66% of the index and Chemicals 34%. The largest index components were Aluminum Corporation of China, Angang Steel, Fufeng Group and Shougang Concord International.
China is the world’s largest consumer of copper, zinc, tin, aluminum, lead, platinum, steel, iron ore, fertilizer and many other materials. China is also the world’s top producer of steel, aluminum, zinc, tin, fertilizer and other materials, including 95% of the world’s rare earths, used in a variety of applications, especially in the high technology area.
“China is a large producer and the world’s largest consumer of materials, and its hunger for resources will continue to grow as it builds more cars, railroads and high rises,” said Bruno del Ama, CEO of Global X Management. “China’s GDP is expected to expand 9.4% in 2010, after growing 8.5% in 2009, according to the median estimate of economists surveyed by Bloomberg. The country’s economic upswing will help drive demand for materials in 2010 and beyond.”
The China Materials ETF is the latest launch in the family of China sector ETFs offered by Global X Funds, joining the China Consumer ETF (CHIQ), China Energy ETF (CHIE), China Financials ETF (CHIX), China Industrials ETF (CHII), and China Technology ETF (CHIB), all trading on the NYSE Arca. All funds have a 0.65% expense ratio.
Source: Global X Management Company
Deposits regulator points finger at Fed
January 14, 2010--The US regulator that insures depositors against bank failures laid much of the blame for the financial crisis at the door of the Federal Reserve on Thursday.
Sheila Bair, chairman of the Federal Deposit Insurance Corporation, told an inquiry that “much of the crisis may have been prevented” if the Fed had not waited seven years to put in tough rules to regulate subprime mortgage lending.
The typically forthright written testimony from Ms Bair to the second day of hearings held by the Financial Crisis Inquiry Commission pits one of the most politically powerful regulators against one of the weakest. The Fed is under attack on multiple fronts in Congress with attempts to conduct sweeping audits of the central bank and remove much of its regulatory role.
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Source: FT.com
Morningstar Reports U.S. Mutual Fund and ETF Asset Flows Through December 2009
January 14, 2010--Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research, today reported estimated U.S. mutual fund and exchange-traded fund asset flows through December 2009. Net inflows for mutual funds amounted to $377.4 billion in 2009, with $356.6 billion of that total going to bond funds. The U.S. ETF industry closed out 2009 with $784.9 billion in assets under management, up from $744.7 billion at the end of November, and $533.4 billion at the end of 2008.
Additional highlights from the report on mutual funds:
As bond funds raked in the cash, U.S. stock funds bled assets in 2009. They saw an additional $8.1 billion in outflows in December, taking the full-year total outflow to $25.7 billion.
Although international-stock funds fared better than domestic-stock funds in 2009, taking in $25.5 billion in flows, they have not come close to making up for the $70.4 billion in outflows they experienced in 2008.
In spite of the broad trend toward inflows, a handful of fund families didn't join the party. American Funds, Legg Mason/Western Asset, Putnam, Oppenheimer, Van Kampen, and Morgan Stanley were among the fund families that experienced net outflows in 2009.
Investors largely preferred active strategies in 2009. Active funds gathered $304.2 billion in assets for the year, while passive long-term funds took in $69.7 billion. However, investors pulled $52.9 billion out of active U.S. stock funds, while passive domestic-equity funds saw inflows of $26.2 billion.
Additional highlights from the report on ETFs:
Despite being the only broad asset class to show net outflows in 2009, U.S. stock ETFs closed out the year with $19.6 billion in net inflows in December. Taxable-bond ETFs were the most popular asset class of 2009, bolstered by continued interest in Treasury Inflation-Protected Securities and short-duration ETFs, which were once again the category's top asset gatherers in December.
Following their explosive performance over the past year, investors continued to pile into emerging markets in December.
SPDR Gold Shares, which saw $11.2 billion in total net inflows in 2009 and currently has more than $40.2 billion in assets under management, was easily the most popular ETF in 2009 in terms of total asset flows.
To view the complete report, please visit http://www.global.morningstar.com/decflows09.
Source: Morningstar
Statement of Dan M. Berkovitz, General Counsel, Background on Position Limits and the Hedge Exemption
January 14, 2010--This statement provides a brief history of the federal legislation authorizing and directing the Commodity Futures Trading Commission (“CFTC” or “Commission”) to impose position limits in CFTC-regulated futures markets and of the CFTC’s regulatory program to implement this authority. This paper also describes the legislative and regulatory provisions that exempt bona fide hedgers from these position limits.
Since 1936, the Commodity Exchange Act (CEA) has directed the CFTC to establish such limits on trading as it finds “are necessary to diminish, eliminate, or prevent” the undue burdens on interstate commerce that result from excessive speculation in those commodities. Presently, position limits are imposed in several ways. The CFTC fixes the position limits for certain agricultural commodities, and specifies acceptable practices for the exchanges to follow when establishing limits for other commodities. The CEA also allows the exchanges to use “position accountability levels” in months other than the spot month for commodities, “where necessary and appropriate.”
The CEA has always exempted “bona fide hedging transactions” from position limits. Initially, the Act defined the term “bona fide hedging” as transactions that were offsetting price risks in the cash market for a commodity. In 1974, Congress provided the Commission with discretion to define the term, provided that the definition enables producers and users of a commodity to hedge their anticipated business needs.
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Source: CFTC.gov
Open Meeting on Proposed Energy Speculative Position Limits Rule
January 14, 2010--Presentation of Steve Sherrod's, Acting Director, Division Market Surveillance on Proposal to Set Position Limits in the Energy Futures and Options Markets.
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Source: CFTC.gov