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Neuberger Berman files for exemptive relief with the SEC
November 19, 2010--Neuberger Berman has filed for exemptive relief with the SEC.
view filing
CalPERS shifts $500m into internally-run environmental index strategy
Fund changes tack from exclusion of big polluters via external mandates
November 18, 2010--CalPERS, the $220.1bn (€162bn) US pensions giant has made a major change of tack in its environmental investment in listed companies by switching from an exclusion-based
strategy to a $500m internally managed investment in environmentally friendly companies using the 380 companies in HSBC’s Global Climate Change Benchmark Index as its universe.
CalPERS’s previous policy, started in 2006, was to exclude big polluters via environmental screens implemented by external fund managers; a strategy which appeared to have dragged on performance. The Californian fund said the new allocation would target companies that work to improve the environment and mitigate the adverse impact of climate change. Rob Feckner, spokesman at CalPERS, said: “Until now, we’ve invested in external managers.
FRBNY Road map that opens up shadow banking
November 18, 2010--The Fed now estimates that in early 2008 shadow banking was $20,000bn in size, dwarfing the $11,000bn traditional banking system. And though this shadow system has now shrunk to a “mere” $16,000bn, this remains bigger than traditional banking, at some $13,000bn. Little wonder, then, that so few people immediately appreciated the significance of the seizing up of shadow banking in 2007.
view the Federal Reserve Bank of New York Staff Report-Shadow Banking
US muni bond funds see record outflows
November 18, 2010--Investors cashed out of the $2,800bn municipal bond market in the last week, withdrawing a record $3.1bn from mutual and exchange traded funds specialising in this type of debt, Lipper, the fund tracker, said late on Thursday.
A mass exodus by retail investors has been a concern since they are the primary buyers of “munis.”
DB Global Equity Index & ETF Research: US ETP Market Weekly Review: Inflows continue, but losing steam
November 17, 2010--Positive ETP flows lose momentum on QE2 implementation concerns
The market began to reconsider the theoretical benefits of QE2 as the FED kicked-off its Treasury purchases last Friday. Last week the S&P 500 pulled back 2.17%, ending the week almost at the same level of the FED’s QE2 announcement date (Nov 3). WTI Crude Oil prices retreated 2.27%, and the US dollar appreciated 2.85% against the Euro. On top of this, longer-term Treasury yields for the 10Y and 30Y maturities ended the week higher than before Bernanke’s Jackson Hole speech (Aug 26).
In addition, Long US Equity ETPs daily flows since the official announcement of QE2 until last Friday have lost momentum with most of last week’s inflows concentrated on Monday, as depicted in Figures 1 and 3.
At the end of last week, concerns around QE2’s outcome had shaved $13.6 billion (or 1.4%) from the US ETP industry, in spite of the $5.5 billion that flowed into the ETP market.
Some background on QE2 and its impact in ETP flows
The genesis of QE2 can be traced back to FED Chairman Bernanke’s Jackson Hole Speech back in late August, after which the markets started to price in a possible QE2. Since then, other events helped to reinforce the probability of the FED’s large-scale asset purchase program underpinning the bullish trend that lead until the awaited official announcement of the FED on Nov 3rd.
QE2 is expected to give a boost to the economy by raising financial and real asset prices. DB Chief US Economist, Peter Hooper, explains that the plan will work via purchases of long-term assets, driving real longer-term Treasury yields lower and so causing asset values to rise, the dollar to depreciate, and inflation expectations to rise.
From August 26th to November 2nd the markets behaved according to theory as depicted in Figure 2. The equity market gained 14.0% (as measured by the S&P 500 index), WTI Crude Oil prices rose 11.6% and the US dollar depreciated 10.5% against the Euro. In addition, a look at ETP flows on Figure 3 during the same period provides further support to the market data. Long US Equity ETP flows added up $17.7 billion.
Steady Investment Trends during Uncertain Times
We believe that the reaction of the markets last Friday is just a reminder that the implementation of QE2 and its desired success will be a daunting task, especially amidst the current stormy global economic weather which features the Irish Sovereign Debt funding woes in the Euro zone, failed trade imbalances discussions, and market speculation of currency war with China.
Although it has been and will be challenging to find consistent investment trends in the current financial market environment, there are a handful of investment trends which have shown steady inflow patterns suggesting that their underlying fundamentals lay beyond the superficial currents of the day.
The following trends have gathered steady inflows since Q3 end, Long Equity EM ($9.8 billion, +7.4% relative to Q3 AUM), Long Commodity Silver ($1.6 billion, +20.5% relative to Q3 AUM), and Long Fixed Income EM ($619 million, +18.3% relative to Q3 AUM). Some of these trends have a longer track record of steady inflows, such as in the case of Equity EM, while other trends go back only for a couple of months, such as in the case of Silver.
Cash Flow Review
Total ETP inflows in the US added up to $5.5 bn last week vs $7.8 bn on the previous week, more than twice this year’s average weekly flow of $2.3 bn. Equity, and Commodity ETPs had inflows of $4.5 bn and $892 mm, respectively. The other asset classes recorded a combined $50 mm inflows.
Within Equity ETPs, Large Cap ETPs received the largest inflows ($1.8 bn), followed by US Sector products ($1.4 bn). While Small Cap ETPs experienced the largest outflows ($540 mm).
The Fixed Income ETPs inflows to Corporates, broad benchmark and Foreign Sovereign ETPs were mostly offset by outflows from Sovereign funds, resulting in a flat week for Fixed Income flows.
Commodity ETPs’ flows highlights for the week went to Silver ETPs with $536 million in fresh money, outpacing all of its precious metals peers by 10 times or more.
New Launch Calendar
There were two new products added to the ETP lineup over the previous week, both of them were listed on NYSE Arca.
This week’s launches came with European flavor. Global X Funds launched one ETF offering access to the Norwegian Economy, while BlackRock listed an ETF tracking the MSCI Russia Capped index. (See Figure 12 for further details.)
Turnover Review
Avg. Daily Turnover rose by 4.7% and totaled $66 bn at the end of the week. Commodity ETPs turnover experienced the largest relative increase ($713 mm or 18.5%)
Assets Under Management (AUM) Review
US ETPs AUM decreased by 1.4%, backing down to $955 bn at the end of the week. This pullback was mainly driven by a retreat in the equity market amidst of QE2 implementation concerns and other global financial issues.
Global X Funds Reaches $1 Billion in Assets Under Management
November 17, 2010--Global X Funds, the New York-based provider of exchange traded funds, announced it crossed the $1 billion mark in assets under management as of Nov. 5, 2010. Global X Funds provide efficient access to innovative opportunities across the global markets.
Global X Funds began the year with $88 million in assets across seven NYSE-listed ETFs, and has grown over 1000% in assets now managed across 17 ETFs. BlackRock's ETF Industry Landscape ranks Global X as one of the fastest growing ETF providers in the world.
"Our growth reflects our ability to bring innovative products to market that thoughtfully respond to investor needs and illuminate new ways to view the global landscape," Global X CEO Bruno del Ama said.
Global X currently offers China, Latin America, Global Commodities, and Cleantech Resources fund suites. The largest Global X ETFs as of Nov. 14 are:
Silver Miners ETF (ticker: SIL) with $251M in assets
FTSE Colombia 20 ETF (GXG) with $198M in assets
China Consumer ETF (CHIQ) with $192M in assets
Global X ETFs that have garnered some of the highest trading volumes on launch day this year include the Uranium ETF (URA), Gold Explorers ETF (GLDX), Lithium ETF (LIT) and a family of Brazil ETFs (BRAZ, BRAQ, BRAF).
"Global X ETFs are highly accessible and agile tools for capturing a distinct slice of the market, and many times provide exposure where it would otherwise be expensive or difficult to access," said del Ama. "We remain focused on delivering targeted exposure, timely themes, and dynamic offerings for investors."
Dow Jones Indexes Launches Golden Crossover U.S. Large-Cap Total Stock Market Index
November 17, 2010-- Dow Jones Indexes, a leading global index provider, today announced the launch of the Dow Jones Golden Crossover U.S. Large-Cap Total Stock Market Index. This is the first index within the Dow Jones Golden Crossover Indexes family.
“This index is among the first to take systemic risk into consideration - a risk that cannot be diversified away,” said Michael A. Petronella, president, Dow Jones Indexes. “Since risk is such a vital factor to investing, this index is an excellent tool to provide investors information that may indicate changing market conditions,” added Petronella.
The Dow Jones Golden Crossover U.S. Large-Cap Total Stock Market Index applies the “Moving Average Crossover System,” as it is commonly known, to U.S. large-cap equity securities. The index itself uses rebalancing signals based on two simple moving averages: trailing 50 business days and trailing 200 business days. The “Golden Cross” signal occurs when the 50-day moving average of the closing prices of the components of the underlying index crosses above the 200-day moving average. This signal may be considered to indicate the end of a “down” trend and the start of the new “up” trend. The “Dead Cross” signal occurs when the 50-day moving average of the closing prices of the components of the underlying index crosses below the 200-day moving average. This signal may be considered to indicate the end of the “up” trend and the start of the new “down” trend.
The Dow Jones Golden Crossover Indexes are designed to dynamically reallocate component weights between an underlying equity index and a cash index according to the occurrence of Golden Cross and Dead Cross signals. During Golden Cross periods, the indexes track only the underlying equity index. During Dead Cross periods, a portion of the index is allocated toward the underlying equity index, and a portion toward the cash index. The Dow Jones Golden Crossover Index is monitored on a daily basis and rebalanced when a signal is triggered.
The Dow Jones Golden Crossover U.S. Large-Cap Total Stock Market Index is calculated in U.S. dollars and is published daily. Calculation of the index began on November 17, 2010. Estimated daily back-tested history is available back to December 31, 1999.1
Based on back-tested estimated historical data, as of November 15, 2010, the Dow Jones Golden Crossover U.S. Large-Cap Total Stock Market Index is up 2.16% YTD.
For more information on the Dow Jones Golden Crossover U.S. Large-Cap Total Stock Market Index, please visit http://www.djindexes.com.
Core US inflation slowest on record
November 17, 2010--Core consumer prices in the US are rising at their slowest pace since records began, bolstering the case for the Federal Reserve to complete its planned $600bn in asset purchases and extend the programme to buy more.
Excluding volatile food and energy prices, the consumer price index rose by only 0.6 per cent on a year ago according to the Bureau of Labor Statistics,....
Federal Reserve Board requests comment on a proposed rule to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act
November 17, 2010--The Federal Reserve Board on Wednesday requested comment on a proposed rule to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act that give banking firms a defined period of time to conform their activities and investments to the so-called Volcker Rule.
The Volcker Rule generally prohibits banking entities from engaging in proprietary trading in securities, derivatives, or certain other financial instruments, and from investing in, sponsoring, or having certain relationships with a hedge fund or private equity fund. The statute generally provides banking entities two years to bring their activities and investments into compliance with the Volcker Rule, and allows the Board to extend this conformance period for specified periods under certain conditions. The Dodd-Frank Act requires that the Board issue rules implementing the Volcker Rule's conformance period.
In developing the proposed rule, the Board consulted with the Department of the Treasury, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, and the Commodity Futures Trading Commission.
Comments on the proposal must be submitted within 45 days after publication in the Federal Register, which is expected shortly.
Republicans seek reform of Federal Reserve
November 16, 2010--Political opposition to the US Federal Reserve’s new $600bn round of quantitative easing – nicknamed QE2 – is becoming a push by some Republicans for a change in the Fed’s mandate, dropping its goal of maximum employment and making it focus only on inflation.
“It is time that we work to clarify the mandate of the Federal Reserve.
US muni bonds see biggest drop since 2008
November 16, 2010--Municipal bonds had their biggest one-day sell-off yesterday since the height of the financial crisis, prompting some borrowers to delay financing plans.
The yields on triple A 10-year bonds rose 18 bps to 2.93 per cent, the largest one-day rise since October of 2008, according the MMD index, which is owned by Thomson Reuters.
Van Eck files with the SEC
November 16, 2010--Van Eck has filed an application for exemptive with SEC.
view filing
PowerShares files with the SEC
November 16, 2010--PowerShares has filed a post effective amendment, registration statement with the SEC for
PowerShares KBW Premium Yield Equity REIT Portfolio (KBWY)
PowerShares KBW High Dividend Yield Financial Portfolio (KBWD)
PowerShares KBW International Financial Portfolio (KBWX)
PowerShares KBW Property & Casualty Insurance Portfolio (KBWP)
Esposito Securities Expands its ETF Seeding with Capital Commitment
November 16, 2010--Esposito Securities has successfully expanded its foray into seeding ETFs, having recently seeded several ETFs. Esposito's recent seeding activity includes three Advisor Shares products - the Cambria Investment Management, Inc. (NYSE: GTAA), WCM Investment Management (NYSE: AADR), and Mars Hill Partners, LLC (NYSE: GRV).
A commitment to addressing the underserved needs of clients drove Esposito's activity in this sector. The Firm regularly evaluates market opportunities and seeding ETFs proved timely. Recently a White Paper was authored by Esposito regarding the seeding process. "Sprouting an ETF" can be viewed on the Company website at http://www.espositoglobal.com/downloads/EspositoWhitePaper-SeedCapital.pdf
"Esposito Securities has been evaluating the process of seeding ETFs and we are pleased to amplify our activity in this arena. We have assembled a valuation team to assess opportunities to seed a wide variety of ETF products and asset classes and urge issuers to contact Esposito for partnership discussions, as we are committed to expanding our participation". -Mark Esposito
visit www.espositoglobal.com for more information.
Treasury International Capital Data for September 2010
November 16, 2010--The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for September 2010. The next release, which will report on data for October 2010, is scheduled for December 15, 2010.
Net foreign purchases of long-term securities were $81.0 billion.
Net foreign purchases of long-term U.S. securities were $91.4 billion. Of this, net purchases by private foreign investors were $83.8 billion, and net purchases by foreign official institutions were $7.6 billion. U.S. residents purchased a net $10.4 billion of long-term foreign securities. Net foreign acquisition of long-term securities, taking into account adjustments, is estimated to have been $58.3 billion.
Foreign holdings of dollar-denominated short-term U.S. securities, including Treasury bills, and other custody liabilities decreased $24.9 billion. Foreign holdings of Treasury bills decreased $24.6 billion.
Banks' own net dollar-denominated liabilities to foreign residents increased $48.3 billion.
Monthly net TIC flows were $81.7 billion. Of this, net foreign private flows were $70.4 billion, and net foreign official flows were $11.3 billion.
