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Passive attack-How index investing is reshaping the asset-management industry
November 12, 2020--THE STORY of a quiet revolution in asset management begins with Jack Bogle. Actually, it starts in 1974 when Paul Samuelson, an economist and Nobel prizewinner, published an article in the Journal of Portfolio Management arguing that the bulk of mutual-fund managers should go out of business. Most failed to beat the market average and those that did could not be relied upon to repeat the trick.
An archetype was required. Someone should set up a low-cost, low-churn fund that would do nothing more than hold the constituents of the S&P 500. Mr Bogle decided that Vanguard, the mutual-fund group he founded in 1975, should take up the challenge. His index fund was denounced on Wall Street as unAmerican. It received only a trickle of inflows. But by the time of Bogle's death last year, Vanguard was one of the world's biggest asset managers, largely on the strength of its index funds.
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Source: economist.com
Direxion Launches Moonshot ETF
November 12, 2020--First ETF Focused on Exposure to Early-Stage Innovation
Direxion announced today the launch of the Direxion Moonshot Innovators ETF. MOON invests in 50 early-stage companies, with the highest allocation of resources to research and development, along with the degree to which firms stress an innovative culture and mission.
While President John F. Kennedy first inspired the idea of a moonshot in 1962, many companies continue to drive further innovative development. A combination of factors, such as resources spent on research and development, along with corporate cultures focused on breaking new ground, support the path towards creating the future in their respective sectors and industries.
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Source: Direxion
Global X ETFs Further Expands Thematic Offering with Launch of Emerging Markets Internet & E-commerce ETF (EWEB)
October 11, 2020--Global X ETFs, the New York-based provider of exchange-traded funds (ETFs), today announced the launch of the Global X Emerging Markets Internet & E-commerce ETF (EWEB). The fund is a furtherance of Global X's funds offering targeted access to powerful disruptive trends around the world.
In 2018, 74% of global growth was attributable to emerging market economies, driven in large part by a rapidly growing middle class of internet-connected consumers.1 These rising digital consumers are forming new consumption patterns, driving the growth of emerging market e-commerce platforms. In 2019, for example, Amazon celebrated that over $7 billion worth of goods were sold through its platform on Prime Day, a testament to consumer's adoption of e-commerce in developed markets.2 But in China, this number was dwarfed by Alibaba’s 2019 estimated sales totaling $38.4 billion recorded on the nation's Single's Day.3
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Source: Global X ETFs
Solactive develops with Goldman Sachs Asset ManagementanARTIS(R)-basedGlobal Equity Index for new Goldman Sachs ETF
November 10, 2020--Technological innovation is the core element of structural growth. Solactive and Goldman Sach both aimed to develop an index, the Solactive Innovative Global Equity Index, which takes into account five key disruptive themes that are redefining the business world, the global economy and society, and, therefore, the investment landscape.
The Solactive Innovative Global Equity Index will serve as the underlying for Goldman Sachs' new Goldman Sachs Innovate Equity ETF. The Goldman Sachs Innovate Equity ETFcombinesfive established Goldman Sachs ETFs that previously tackled technological innovations separately.From the 9th of November, the legacy ETFs will be reorganized and merged in the Goldman Sachs Innovate Equity ETF.
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Source: Solactive AG
ETF investors set to perform volte-face on US Senate uncertainty
November 10, 2020--Recent move into value equities was based on having a clear path to fiscal stimulus
ETF investors, caught out by the result of the US presidential election, look set to reverse a months-long move out of pricey US growth stocks.
The move into beaten-up value equities since July was, at least in part, in expectation that a Democratic "blue wave," giving the party control of all US legislative bodies, would lead to massive fiscal stimulus. This in turn might have turbocharged economic growth, potentially bolstering cyclical value stocks most of all.
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Source: FT.com
State Street Global Advisors Expands ESG Lineup With Launch of New Fixed Income SPDR(R)ETF
November 10, 2020--State Street Global Advisors, the asset management business of State Street Corporation, today announced the launch of the SPDR Bloomberg SASB(R) Corporate Bond ESG Select ETF. The newest SPDR ETF was developed to meet the demand for core fixed income ESG aware exposure, providing access to US dollar-denominated Investment Grade corporate bonds.
One of the durable trends reshaping the investment management industry over the past decade has been that investors want more choice. However, when it comes to ESG investing, equity ETFs have dominated the market, while choices for ESG-minded fixed income investors have been limited.
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Source: State Street Global Advisors
OCC Reports Key Risks, Effects of COVID-19 in Federal Banking System
November 9, 2020--The Office of the Comptroller of the Currency (OCC) today reported the key issues facing the federal banking system and the effects of the COVID-19 pandemic on the federal banking industry in its Semiannual Risk Perspective for Fall 2020.
Banks remain in strong financial condition but profitability is stressed due to low interest rates and increasing levels of provisions for problem loans. The OCC reported credit, strategic, operational, and compliance risks, among the key risk themes in the report.
Highlights from the report include:
Credit risk is increasing as the economic downturn impacts customer ability to service debts.
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Source: Office of the Comptroller of the Currency (OCC)
U.S. still faces possible default wave, asset declines due to pandemic: Fed
November 9, 2020--The United States may still face a wave of debt defaults and "significant declines" in asset prices because of the coronavirus pandemic and recession, the Federal Reserve warned on Monday, in a stark reminder the economy is far from out of the woods.
"As many households continue to struggle, loan defaults may rise, leading to material losses" for lenders, the Fed said in its latest biannual Financial Stability Report. Business debt "has risen sharply as businesses increased borrowing to weather the period of weak earnings. The general decline in revenues associated with the severe reduction in economic activity has weakened the ability of businesses to services these obligations."
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Source: reuters.com
In first for Fed, U.S. central bank says climate poses stability risks
November 9, 2020--The U.S. Federal Reserve for the first time called out climate change among risks enumerated in its biannual financial stability report, and warned about the potential for abrupt changes in asset values in response to a warming planet.
"Acute hazards, such as storms, floods, or wildfires, may cause investors to update their perceptions of the value of real or financial assets suddenly," Fed Governor Lael Brainard said in comments attached to the report, released Monday.
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Source: reuters.com
Federal Reserve publishes latest version of its supervision and regulation report
November 6, 2020--The Federal Reserve Board on Friday published the latest version of its supervision and regulation report, which summarizes banking conditions and information about the Federal Reserve's bank regulatory and supervisory activities.
The current edition includes detailed information on the strength of the banking system in light of the economic and financial stresses from the COVID--19 containment measures. Additionally, it describes current areas of supervisory focus from the Federal Reserve as well as how banks and bank supervisors have adapted to a largely remote working environment.
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Source: federalreserve.gov
