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New ETF to Hold Closed-End Shares
March 9, 2010--Invesco PowerShares launched the first ETF whose portfolio consists of closed-end funds last month. The PowerShares CEF Income Composite Portfolio (PCEF) tracks the S-Network Composite Closed-End Fund Index.
Like mutual funds and ETFs, closed-end funds are diversified portfolios, but they differ in the way they sell and price their shares.
Mutual funds and ETFs are open-end funds because they can sell as many shares needed to satisfy investor demand. In addition, they’re priced each night at their net asset value, or NAV. However, a closed-end fund sells a limited number of shares on the stock exchange in an initial public offering. Because closed-end fund shares trade on the stock exchange, demand for the shares determines price not the NAV. Thus, most closed-end funds sell at a discount or premium to the fund’s NAV.
Fund.com Says It is Executing on Its Business Plan Through Its AdvisorShares Subsidiary to Bring Actively Managed ETFs to the Market
March 10, 2010-- Fund.com, Inc. said today that its majority-owned subsidiary, AdvisorShares Investments, LLC, a developer and distributor of actively managed ETFs, is currently on track to have three actively managed ETFs trading on the New York Stock Exchange in April. There are currently 17 actively traded ETFs.
Fund.com CEO Gregory Webster said that AdvisorShares is one of the few firms that has approval from the Securities and Exchange Commission (technically known as exemptive relief from the provisions of the Exchange Act of 1940) to form new actively managed ETFs. Webster noted that a major advantage that AdvisorShares has is its ability to bring to market active manager strategies through an AdvisorShares ETF. An indication of the growing popularity of actively traded ETFs, Webster noted, is that Legg Mason and Eaton Vance recently joined T. Rowe Price and Goldman Sachs in asking for exemptive relief to create actively traded ETFs.
Webster said, "AdvisorShares earns its revenues from sharing in the investment advisors' management fees by providing services to register, list and market actively managed ETFs."
As an originator and distributor of new actively managed ETFs, Fund.com's AdvisorShares has previously announced relationships to develop actively managed ETFs on its patent-pending ETF development platform with WCM Investment Management, Laguna, CA, in conjunction with BNY Mellon, NYC, Peritus Asset Management, Santa Barbara, CA.; and Mars Hill Partners, LLC, Colorado Springs, CO.
DB Index Research -- Weekly ETF Market Review - US
March 10, 2010--Highlights
New Listings and Delistings
There were no new listings in the last week.
Net Cashflows
This week $3.30 bn flowed into ETPs. Equity, Fixed Income and Commodity ETPs had inflows of $1.86 bn, $848 mm and $610 mm respectively, while Currency ETPs had outflows of $144 mm.
In the equity asset class, US sector ETPs had the highest inflows of $1.1 bn followed by Mid Cap ETPs, while Emerging Markets regional ETPs experienced the largest outflows of $439 mm, followed by Leveraged ETPs. Style ETPs (Growth, Value, and Dividend) continued to attract signficant cash flows
In the Fixed Income ETPs landscape, Corporates ETPs contributed the most to the positive cash flows, while Sovereign had the largest outflows
Within Commodity ETPs, those tracking Silver saw the largest outflows. Meanwhile, Gold ETPs and broad commodity benchmark ETPs experienced the largest inflows
Turnover
ETP turnover decreased by 7.7% during last week and totaled $68 bn.
Equity ETP turnover experienced the largest decrease. Turnover decreased significantly for Large Cap and Strategy (Short, Leveraged and Leveraged Short) ETPs
Fixed Income ETPs turnover slightly decreased in the past week.
Commodity ETP turnover decrease was mainly driven by Natural Gas, Oil and Gold
Assets Under Management (AUM)
US ETPs AUM rose by 3.3% totaling $791 bn at the end of last week. Equity ETPs had the lion’s share with $590 bn and 75% of market share, followed by Fixed Income funds with $119 bn and 15% of market share
To request a copy of the report
Proshares files with the SEC
March 10, 2010--Proshares has filed a post-effective amendment, registration statement for
ProShares Trust:
ProShares Ultra Nasdaq Biotechnology;
ProShares Short Basic Materials;
ProShares Short Real Estate;
ProShares UltraShort Nasdaq Biotechnology
ProShares Short FTSE/Xinhua China 25.
State Street files with the SEC
March 10, 2010--State Street has filed a amended registration statement for
SPDR S&P Russia ETF
view filing
US ETF Snapshot: February 2010-State Street Global Advisors
March 10, 2010--As of February 28, 856 ETFs in the US—with assets totaling approximately $752BN—were managed by 31 ETF managers.
ETF industry assets rose $21.5BN for the month, or 2.9%.
Asset Classes — Overall
The S&P 500® Index rose 3.1% in February. MSCI EAFE® Index fell 0.7% for the month in USD terms. Both the Barclays Capital U.S. Treasury Index and the Barclays Capital U.S. Aggregate Index rose 0.4%. Gold rose to $1,108.25 an ounce, a gain of 2.8% from last month’s close.
All 13 categories gained in absolute terms, with the Size category accounting for 43% of the $22BN gain.
Size/Style
Large Cap had by far the largest gain in assets, climbing $6.7BN, followed by Small Cap, up $1.7BN.
Sector
Gains were spread evenly among nine of the ten Sectors for a cumulative gain of $3.4BN.
Treasury, Energy Announce Guidance for Tax Treatment of Smart Grid Investment Grants
March 10, 2010--The Department of Treasury and the Department of Energy announced today new guidance on the tax treatment for grantees receiving Recovery Act funding under the $3.4 billion Smart Grid Investment Grant program. Under the guidance released today, the Internal Revenue Service is providing a safe harbor under section 118(a) of the Internal Revenue Code for corporations receiving funding under the program.
With the determination that Smart Grid Investment Grants to corporations are non-taxable, corporate utilities will be able to launch their investments with a clear indication of the tax status for their projects. This decision will allow the Department of Energy to move forward quickly to finalize grant agreements over the coming weeks.
"Smart Grid Investment Grants help encourage innovation in the way we power our homes and businesses," said Treasury Assistant Secretary for Management Dan Tangherlini. "By clarifying the tax treatment of Smart Grid Investment Grants, we are ensuring that their full impact is felt in the communities where these investments are being made.
High-Frequency Pause: PDQ Changes Paradigm
March 10, 2010--After operating fornearly a year, the PDQ alternative trading system is betting it can attract more liquidity from high-frequency trading firms by requiring those frenetic market participants to pause.
Pause?
That's right: Pause executions for up to 20 milliseconds so liquidity-providing algorithms can compete for orders.
Twenty thousandths of a second on hiatus may seem like a lifetime for traders who compete in millionths and even billionths of a second to beat competitors to quotes. But even such a short pause can determine which side of the fence market participants position themselves.
"By changing the paradigm slightly with a pause, we get high-frequency algorithms to declare what the market is for a stock," said Keith Ross, CEO of PDQ since 2005.
Although a novel concept in the electronic trading world, that pause was long present when specialists provided liquidity on the floors of the New York Stock Exchange and other exchanges.
Newedge Starts OTC Interest Rate Swap Product Clearing with International Derivatives Clearinghouse
March 10, 2010--ewedge USA,
LLC, a global leader in multi-asset brokerage and clearing, and the
International Derivatives Clearing Group, LLC (IDCG) announced today
that Newedge has finalized its membership with the International
Derivatives Clearinghouse LLC (IDCH), a derivatives clearing
organization regulated by the U.S. Commodity Futures Trading Commission
(CFTC).
With this membership, Newedge can offer central counterparty clearing
of Interest Rate Swap products (IRS), the largest of the OTC derivative
markets with an over $400 trillion notional amount outstanding*.
Interest rate swaps are an important financial risk management tool for
corporations and investors worldwide.
Newedge clients and their swap market makers can continue to execute interest rate swaps in the well-established OTC market. Then, counterparties can reduce counterparty risk by simultaneously novating their positions to IDCH, with Newedge as their clearing firm. Counterparties will benefit from the clearinghouse performance guarantee and the proven segregated funds protections of the U.S. futures market.
"We've seen considerable demand from buy-side clients and liquidity providers for the clearing service we can offer via IDCG's structure," said Nicolas Breteau, Newedge's Global Head of Sales and Front Office. "In addition, compared to the incumbent bi-lateral exposure model, we believe there is potential for considerable cost savings and risk reduction for market participants using central clearing through Newedge and IDCH."
"Furthermore, the opportunity for clearing IRS at Newedge is an important enhancement to our leading position in the execution and clearing of listed derivative products. Newedge can provide clients with a central clearing platform supporting both interest rate swaps and interest rate futures, which are often employed complementarily by our clients," added Breteau.
Garry N. O'Connor, Chief Executive Officer of IDCG, said, "We are excited to have Newedge as a member of IDCH. Newedge, with its knowledge of the marketplace and established client relationships, gives us a solid partner to continue building this business, while offering the market the transparency, normalized valuation data, and risk mitigation necessary for interest rate swaps."
IDCG is an independently operated, majority owned subsidiary of The NASDAQ OMX Group. Inc. (NDAQ).
* According the Bank of International Settlements, globally, interest
rate swaps net asset outstanding were over $400 trillion as of June
2009.
China: US assets should not be ‘politicized’
March 10, 2010--An official in charge of China’s foreign reserves tried to ease American concern on Tuesday about the political impact of its huge holdings of US government debt and indicated Beijing has no plans for a big increase in its gold stockpile.
“This is a purely market-driven investment behavior. I would hope not to see this matter politicized,” the chief foreign exchange regulator, Yi Gang, said at a news conference. He was responding to a question about concerns among some American lawmakers that Beijing’s holdings of US debt pose a political threat to the United States. “China is a responsible investor and we fully believe such investments can be mutually beneficial,” Yi said.
Pimco files with the SEC
March 5, 2010--Pimco has filed a prospectus with the SEC for the following
PIMCO 0-3 Year Banking Sector Corporate Bond Index Fund
PIMCO 1-5 Year High Yield Corporate Bond Index Fund
PIMCO Emerging Markets Aggregate U.S.$ Denominated Bond Index Fund
PIMCO High Yield Corporate Bond Index Fund
PIMCO Investment Grade Corporate Bond Index Fund
Wisdom Tree files with the SEC
March 10, 2010--Wisdom Tree has filed a prospectus with the SEC for
WisdomTree Emerging Markets Local Debt Fund. The fund is an actively managed exchange-traded fund (“ETF”).
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J.P. Morgan Investment Management files with SEC
March 10, 2010--J.P. Morgan Investment Management has filed for exemptive relief from the SEC.
JP Morgan Investment Manager files with the SEC
March 9, 2010--JP Morgan has filed a request for exemptive relief for actively managed ETFs.
Chief Economist James Overdahl to Leave SEC
March 9, 2010--The Securities and Exchange Commission announced today that Chief Economist James A. Overdahl will leave the agency to rejoin the private sector after serving since July 2007 as principal economic advisor to the Commission on policy, rulemaking, and litigation support.
As Director of the Commission's Office of Economic Analysis, Mr. Overdahl supervised the agency's economics program, advising policymakers on a wide variety of topics affecting securities markets including the role of securities lending and short selling, market structure issues, money market mutual funds, credit rating agencies, and litigation matters. The Office of Economic Analysis is part of the SEC's new Division of Risk, Strategy, and Financial Innovation.
"Given the importance of rigorous economic analysis to the Commission, we truly appreciate Jim's dedication and his many contributions during a time of extraordinary challenges in our financial markets," said SEC Chairman Mary L. Schapiro.
