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Morgan Stanley-US ETF Weekly Update
May 12, 2014--US ETF Weekly Update
Weekly Flows: $1.4 Billion Net Outflows
ETFs Have Generated Net Inflows 12 of 19 Weeks YTD
ETF Assets Stand at $1.7 Trillion, Up 3% YTD
Two ETF Launches Last Week
ProShares Resumes Acceptance of Creation Units On 11 ETFs
US-Listed ETFs: Estimated Flows by Market Segment
ETFs posted net outflows of $1.4 bln last week
Last week's net outflows were led by US Small- & Micro-Cap ETFs at $1.9 bln; conversely, International - Developed ETFs posted net inflows of $1.6 bln, the most of any category we measured
Nine of the 15 categories we measured posted net inflows last week; ETFs have generated net inflows 12 of the 19 weeks YTD
ETF assets stand at $1.7 tln, up 3% YTD
13-week flows remain positive among asset classes; combined $53.1 bln in net inflows
US Large-Cap ETFs generated $13.0 bln in net inflows over the last 13 weeks, the most of any category we measured; notably, three ETFs that track the S&P 500 Index accounted for $11.5 bln of the net inflows in this category over the past 13 weeks
Over the last 13 weeks, Currency and Commodity ETFs were the only categories to post net outflows (only exhibited a combined $517 mln in net outflows)
US-Listed ETFs: Estimated Largest Flows by Individual ETF
iShares 20+ Year Treasury Bond ETF (TLT) posted net inflows of $437 mln this past week, the most of any ETF
For the second straight week, a Treasury ETF has been the top asset gather in the ETF universe; interestingly, over the last 13 weeks, we've seen more money flow into the iShares 7-10 Year Treasury Bond ETF (IEF), which focuses on 7-10 year Treasuries, than TLT which captures the longer end of the curve
The First Trust North American Energy Infrastructure Fund (EMLP) generated net inflows of $167 mln last week, or 24% of its current market cap; EMLP is an actively managed ETF that focuses on infrastructure securities including MLPs, income trusts, and utilities
The iShares Russell 2000 ETF (IWM) exhibited net outflows of $1.6 bln last week, however for the last 13 weeks has still managed to post net inflows of $766 mln
The PowerShares QQQ (QQQ) had its seventh consecutive week of net outflows ($1.3 bln last week) as investors remain cautious on some of the momentum stocks (i.e., technology and biotech names); over the last seven weeks, QQQ has exhibited net outflows of $6.0 bln
US-Listed ETFs: ETF Dollar Volume
ETF monthly $ volume as a % of listed trading volume decreased in April to 25%, down from 27% the prior month; over the last 5 years, ETF monthly $ volume as a % of listed trading volume averaged 28%
Over the last five years, ETF monthly $ volume as a % of listed trading volume peaked in August 2011 at 36%
ETF $ volume declined to $279 bln last week and is 16% below its 13-week average
Fixed Income ETFs accounted for only 6% of ETF $ volume last week, but make up 15% of ETF market cap share
US-Listed ETFs: Short Interest Data Updated: Based on data as of 4/30/14
iShares Russell 2000 ETF (IWM) had the largest increase in USD short interest at $2.3 bln
IWM's shares short are at their highest level (156 mln shares) since 1/31/13; notably, IWM is up nearly 25% since 1/31/13 on a total return basis
617 ETFs exhibited short interest increases while 656 experienced short interest declines over the last period
Aggregate ETF USD short interest declined by $358 mln over the period ended 4/30/14
The average shares short/shares outstanding for ETFs is currently 4.5%, flat from last period
The SPDR Retail ETF (XRT) is the most heavily shorted ETF as measured by shares short/shares outstanding at 362%
Six of the 10 most heavily shorted ETFs as a % of shares outstanding are industry based (XRT, XOP, IYR, XBI, SMH, RTH)
Based on multiple borrowings and the ability to continuously create new shares, shares short as a % of shares outstanding can exceed 100% (only six ETFs exhibited shares short as a % of shares outstanding greater than 100%)
US-Listed ETFs: Most Successful Recent Launches by Assets
$8.4 bln in total market cap of ETFs less than 1-year old
Over the last year, 36 Fixed Income ETFs have been brought to market, the most of any category; Fixed Income ETFs currently account for 27% of ETF market share measured by market capitalization as investors continue to show interest in the asset class
Similar to some of the trends we've witnessed in the broader ETF universe, recently launched International - Developed ETFs have also gathered new money over the last year; 29 ETFs have been brought to market, accounting for 16% of recently launched ETF market share
68 new ETF listings and 19 closures YTD
The top 10 most successful launches make up 46% of the market cap of ETFs launched over the past year
Seven ETF sponsors and two asset classes (equities and fixed income) represented in top 10 most successful launches
Notably, the ProShares S&P 500 Aristocrats ETF (NOBL) cracked the top 10 most successful launches over the past year last week; NOBL owns US dividend-paying equities that have increased dividends for at least 25 consecutive years
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Source: Morgan Stanley
Bank of Montreal could scrap historic F&C brand
May 11, 2014--Canada's Bank of Montreal could scrap the historic F&C brand, potentially bringing the 146-year history of one of the oldest names in London's fund market to an end.
BMO last week completed its £700m acquisition of F&C with the aim of making it the centrepiece of its European fund management operations.
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Source: FT.com
Pension regulator sees large opportunity in Afore market for global firms
May 9, 2014--The head of the pension fund regulator, the Consar, told Fund Pro Latin America that it is "inevitable and absolutely indispensable" that an increase in the 20% international-investment limit be discussed in Congress.
Meanwhile, the CIO of Afore Banamex shares his bold plan to move the international portfolio to active managers.
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Source: FundPro Latin America
New Jersey Backs Off $3.2 Billion Emerging-Markets Bet
April 9, 2014--No other U.S. pension, endowment or foundation manager has invested as heavily in emerging-market ETFs as the New Jersey Pension Fund, a $3.2 billion gamble at its height. Now the state's reversing course.
The $76.8 billion fund, the 12th largest public pension manager in the U.S., has cut its holding of developing-nation exchange-traded funds to less than $1.8 billion, according to filings through March 31 compiled by Bloomberg. The fund's managers had boosted the position from just $115 million in 2009 to more than $3 billion by the end of 2012.
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Source: Bloomberg
According to ETFGI: Assets of ETFs and ETPs listed in the United Sates reached 1.76 trillion US dollars, a new record high, at the end of April 2014
April 8, 2014--ETFs and ETPs listed in the United States gathered US$19.9 billion in net new assets in April which, when combined with a small positive market performance in the month, pushed assets in the US ETF/ETP industry to a new record high of $1.76 trillion, according to preliminary data from ETFGI’s April 2014 Global ETF and ETP industry insights report. At the end of April 2014, the US ETF/ETP industry had 1,577 ETFs/ETPs, from 57 providers listed on 3 exchanges.
The ETF/ETP industry globally hit a record high of US$2.49 trillion in assets at the end of April 2014.
"In April, as was the case in March, investors continued to show a strong preference to equity allocations. Equity markets were again choppy in April-the S&P 500 closed at an all-time high on April 2nd but ended the month up less than 1%. The DJIA closed the month at an all-time high of 16,581. Outside the U.S., developed markets improved slightly; European equities continued to strengthen, while emerging markets remained flat for the month.” according to Deborah Fuhr, Managing Partner at ETFGI.
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Source: ETFGI
According to ETFGI: Assets of ETFs and ETPs listed globally reached US$2.49 trillion, a new record high, at the end of April 2014
May 8, 2014--ETFs and ETPs listed globally gathered US$34.0 billion in net new assets in April which, when combined with a small positive market performance in the month, pushed assets in the global ETF/ETP industry to a new record high of US$2.49 trillion, according to preliminary data from ETFGI's April 2014 Global ETF and ETP industry insights report.
At the end of April 2014 there were 5,241 ETFs/ETPs, with 10,238 listings, from 221 providers listed on 59 exchanges around the world.
The ETF/ETP industry in many countries and regions also hit record highs in assets at the end of April 2014 including: the United States at US$1.76 Trn, Europe at US$449.7 Bn, Japan at US$82.4 Bn, Canada at US$61.1 Bn, and the Middle East/Africa at US$41.4 Bn.
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Source: ETFGI
Horizons ETFs Launches Canada's First Swap-Based Bond Index ETF
May 8, 2014--Horizons ETFs Management (Canada) Inc. ("Horizons ETFs") is pleased to announce the launch of the Horizons Cdn Select Universe Bond ETF ("HBB"), which will provide investors with low-cost and tax-efficient exposure to the Canadian investment grade bond universe.
HBB will begin trading today on the Toronto Stock Exchange ("TSX") under the symbol HBB.
HBB seeks to replicate the performance of the Solactive Canadian Select Universe Bond Index (the "Index"), net of expenses.
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Source: Horizons ETFs Management (Canada) Inc.
BlackRock faces lawsuits over "disproportionately large" fees
Powerball-winning Florida adviser with stake in fund accuses firm of breaching fiduciary obligations
May 8, 2014--BlackRock Inc. is facing a potential class-action lawsuit by investors - and a lottery-winning Florida adviser-who assert the firm has breached its fiduciary obligations by charging exorbitant fees.
In the fourth legal complaint this year asserting similar claims, Florida investment adviser Timothy C. Davidson claims the world's largest money manager keeps too much of the value generated by one of its funds even as it gets larger and cheaper to maintain.
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Source: Investment News
CBO-Monthly Budget Review for April 2014
May 7, 2014--The federal government ran a budget deficit of $301 billion for the first seven months of fiscal year 2014, CBO estimates-$187 billion less than the shortfall recorded in the same span last year.
Revenues were about 8 percent higher and outlays about 3 percent lower.
Total Receipts: Up by 8 Percent in the First Seven Months of Fiscal Year 2014
Receipts for the first seven months of fiscal year 2014 totaled $1,735 billion, CBO estimates-$132 billion more than receipts in the same period last year. That increase is $10 billion to $20 billion less than what CBO expected when it published its most recent projections in its April 2014 report Updated Budget Projections: 2014 to 2024.
view the CBO-Monthly Budget Review for April 2014
Source: Congressional Budget Office (CBO)
WisdomTree Launches International Hedged Dividend Growth Fund (IHDG) and Europe Dividend Growth Fund (EUDG)
Demonstrating Continued Leadership in Currency Hedged ETFs
Expanding Forward-Looking Dividend Growth Screens To Key Regions
Expanding Suite of Europe-Focused Funds
May 7, 2014--WisdomTree (Nasdaq:WETF), an exchange-traded product ("ETP") sponsor and asset manager, today announced the launch of the WisdomTree International Hedged Dividend Growth Fund (IHDG), and the WisdomTree Europe Dividend Growth Fund (EUDG) on the NYSE Arca.
Expanding The WisdomTree Currency Hedged Equity and Dividend Growth Families Jeremy Schwartz, WisdomTree Director of Research, commented, "During the past year, we continue to see investor interest in currency hedged strategies, including the WisdomTree Japan Hedged Equity Fund (DXJ) and the WisdomTree Europe Hedged Equity Fund (HEDJ). We believe that a currency-hedged exposure to the broader-based developed world may be attractive to certain investors."
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Source: WisdomTree
