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Morgan Stanley Report: Exchange-Traded Funds Fixed Income: Accessing Emerging Markets Debt Through ETFs and CEFs
November 24, 2009--Morgan Stanley Smith Barney's Global Investment Committee (GIC) recently increased their suggested allocation for many investors to emerging markets (EM) debt. Their allocation to EM debt now ranges from 0% to 7% across their various allocation models. In their opinion, EM debt offers attractive yields and should benefit from improving financial market conditions. For details regarding their outlook and asset allocation models, see the November GIC Monthly report.
There are two index-linked exchange-traded funds (ETFs) available that invest in EM debt. These are nonleveraged, passively managed products that invest only in US dollar-denominated EM debt. The most notable difference between the two ETFs is their weighting methodology, with one using a modified market cap approach, while the other is equally weighted.
We also cover three actively managed closed-end funds (CEFs) that focus primarily on EM debt. One CEF invests primarily in local currency denominated EM debt whereas the other two invest primarily in US dollar- denominated EM debt. Among the three funds, there are meaningful differences in the amount of leverage utilized and their currency exposures.
ETFs and CEFs have risks, including the general risks associated with investing in securities. Index-linked ETF risks also include tracking error and the possibility that an index may lag other market segments or active managers. CEFs have risks related to active management, liquidity, widening discounts, and, in many cases, the use of leverage. ETFs and CEFs investing in emerging markets may also have foreign currency and geopolitical risks.
click here to request report
Source: Morgan Stanley
Certain ProShares ETF Funds Submission Deadlines for Investors Announced by Bernstein Liebhard LLP
November 24, 2009--Bernstein Liebhard LLP has filed a case against ProShares Trust ("ProShares") concerning ProShares' DXD (NYSE: DXD) fund. This complaint alleges that ProShares, as well as others, violated the Securities Act of 1933 by failing to disclose the following risks, inter alia, in the Registration Statement, Prospectuses, and Statements of Additional Information issued in connection with shares of the DXD fund:
(1) if shares of the DXD fund were held for a time period longer than one day, the likelihood of catastrophic losses was huge; and (2) the extent to which performance of the DUG fund would inevitably diverge from the performance of its benchmark -- i.e., the overwhelming probability, if not certainty, of spectacular divergence.
The current lead plaintiff deadlines for two of the ProShares funds are as follows:
DXD-11/30/09
DIG-01/04/10
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Source: CNN Money
Vanguard broadens bond index ETF offerings
November 23, 2009--Vanguard today introduced seven bond index ETFs featuring expense ratios of 0.15%. The funds will seek to track benchmarks focusing on discrete segments of the bond market, as follows:
ETF (Ticker) |
Benchmark: Barclays Capital Index |
|---|---|
Vanguard Short-Term Government Bond Index ETF (VGSH) |
U.S. 1–3 Year Government Float Adjusted Index |
Vanguard Intermediate-Term Government Bond Index ETF (VGIT) |
U.S. 3–10 Year Government Float Adjusted Index |
Vanguard Long-Term Government Bond Index ETF (VGLT) |
U.S. Long Government Float Adjusted Index |
Vanguard Short-Term Corporate Bond Index ETF (VCSH) |
U.S. 1–5 Year Corporate Index |
Vanguard Intermediate-Term Corporate Bond Index ETF (VCIT) |
U.S. 5–10 Year Corporate Index |
Vanguard Long-Term Corporate Bond Index ETF (VCLT) |
U.S. Long Corporate Index |
Vanguard Mortgage-Backed Securities Index ETF (VMBS) |
U.S. MBS Float Adjusted Index |
"Vanguard's expanded fixed income lineup provides greater choice and more price competition in the market and offers financial advisors and institutions more flexibility to tailor the credit quality and duration of their bond exposure," said Gus Sauter, Vanguard's chief investment officer.
The new bond ETFs will be Vanguard's first to trade on the NASDAQ stock exchange. Vanguard's 39 other ETFs will continue to trade on the NYSE Arca exchange; some products are cross-listed in Australia and Mexico.
Vanguard is a pioneer in bond index investing, having introduced the first no-load bond index mutual fund, Vanguard Total Bond Market Index Fund, in 1986. In April 2007, the company launched four bond ETFs: Vanguard Total Bond Market ETF (BND), Vanguard Short-Term Bond ETF (BSV), Vanguard Intermediate-Term Bond ETF (BIV), and Vanguard Long-Term Bond ETF (BLV). Vanguard Extended Duration Treasury ETF (EDV) began trading in December 2007.
Vanguard is among the ETF industry leaders in net cash flow this year, with $21 billion through October 31, 2009, according to Bloomberg data. Vanguard's ETF assets are up nearly 95% in 2009 to $78 billion. In total, Vanguard's U.S.-based mutual funds (including ETFs) experienced cash flows of $85 billion through October. The firm manages $1.3 trillion in U.S. fund assets, including $600 billion in index funds.
The new bond index funds will be managed by the Vanguard Fixed Income Group, which oversees nearly $485 billion in assets, including $114 billion in bond index fund assets and $10.4 billion in bond ETF assets.
Source: Vanguard
SPDR Index Shares Fund files with SEC
November 24, 2009--
485APOS - SPDR INDEX SHARES FUNDS (Formerly streetTRACKS Index Shares Funds) has filed a Post-effective amendment with the SEC.
view filing
Source: SEC.gov
Sector SRDR Trust files with SEC
November 24, 2009-- A post effective registration has been filed with the SEC by the Sector SPDR Trust.
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Source: SEC.gov
Texas Pension to Invest $200 Million in Asia Funds
November 23, 2009--Teacher Retirement System of Texas, the seventh-largest U.S. public pension fund, will invest $200 million in private equity in Asia, whose economies are leading the world out of a recession.
The Austin, Texas-based fund has assigned $100 million each to Squadron Capital and Morgan Creek Capital Management LLC to help it invest with private-equity firms that focus on emerging Asian economies such as China, spokesman Howard Goldman said in an e-mailed response to questions.
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Source: Bloomberg
U.S. International Reserve Position
November 23, 2009--The Treasury Department today released U.S. reserve assets data for the latest week. As indicated in this table, U.S. reserve assets totaled $136,107 million as of the end of that week, compared to $136,019 million as of the end of the prior week.
I. Official reserve assets and other foreign currency assets (approximate market value, in US millions)
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November 20, 2009 |
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A. Official reserve assets (in US millions unless otherwise specified) 1 |
Euro |
Yen |
Total |
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(1) Foreign currency reserves (in convertible foreign currencies) |
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136,107 |
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(a) Securities |
10,561 |
14,614 |
25,174 |
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of which: issuer headquartered in reporting country but located abroad |
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0 |
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(b) total currency and deposits with: |
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(i) other national central banks, BIS and IMF |
15,316 |
7,127 |
22,422 |
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ii) banks headquartered in the reporting country |
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0 |
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of which: located abroad |
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0 |
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(iii) banks headquartered outside the reporting country |
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0 |
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of which: located in the reporting country |
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0 |
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(2) IMF reserve position 2 |
13,661 |
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(3) SDRs 2 |
58,414 |
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(4) gold (including gold deposits and, if appropriate, gold swapped) 3 |
11,041 |
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--volume in millions of fine troy ounces |
261.499 |
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(5) other reserve assets (specify) |
5,374 |
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--financial derivatives |
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--loans to nonbank nonresidents |
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--other (foreign currency assets invested through reverse repurchase agreements) |
5,374 |
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B. Other foreign currency assets (specify) |
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--securities not included in official reserve assets |
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--deposits not included in official reserve assets |
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--loans not included in official reserve assets |
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--financial derivatives not included in official reserve assets |
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--gold not included in official reserve assets |
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--other |
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view report
Source: U.S. Department of the Treasury.
Newedge forms a new ETF Team
November 23, 2009--Newedge has formed a new ETF execution and facilitation team in New York, led by Bill Ahmuty, senior v.p and head of USA ETF sales and trading. Briton Ryan joined as v.p. responsible for fixed income ETFs, as well as ETF creations and redemptions.
He was most recently ETF specialist and finance trader at Macquarie. Kevin Nichols joined as v.p. focusing on trading and ETF strategy. He had previously been a Dow Jones columnist and v.p. in the principal strategies group at Morgan Stanley. Matt Koop joins as v.p. focused on ETF trading from Van der Moolen Capital Markets, where he was director of ETF Trading. The team reports to Mark Viani, senior v.p. and head of equities sales and trading.
Source: Newedge
Claymore files with the SEC
November 23, 2009-Claymore has filed an amended application for exemptive relief with the SEC.
read filing
Source: SEC.gov
iShares files prospectus with the SEC
November 23, 2009--iShares has filed a prospectus with the SEC for
iSHARES FTSE CHINA (HK LISTED) INDEX FUND-Ticker:FCHI
Stock Exchange: NASDAQ
INVESTMENT OBJECTIVE
The Fund seeks investment results that correspond generally to the price and
yield performance, before fees and expenses, of the FTSE China (HK Listed)
Index
Total Annual Fund Operating Expenses: 0.72%
view filing
Source: SEC.gov