Americas ETP News
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Blackrock Canada Announces Changes to Certain iShares Funds
March 24, 2014--BlackRock Asset Management Canada Limited ("BlackRock Canada"), an indirect, wholly owned subsidiary of BlackRock, Inc. BLK +1.43% , has determined to make certain changes to the investment strategy of iShares MSCI Brazil Index ETF ("XBZ"), iShares S&P Global Consumer Discretionary Index ETF (CAD-Hedged) ("XCD"), iShares China Index ETF ("XCH"), iShares J.P. Morgan USD Emerging Markets Bond Index ETF (CAD-Hedged) ("XEB"), iShares MSCI Emerging Markets IMI Index ETF ("XEC"),
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Source: BlackRock
Schwab waging ETF insurgency in US retirement market
March 21, 2014--Charles Schwab sees exchange traded funds as a revolutionary catalyst in US retirement saving, but it has yet to convince the biggest private retirement schemes or the powerful pension consultants patrolling the market. ...
The financial services company last month launched an all-ETF platform for defined contribution private pension plans in the US, known as 401(k)s, touting ETFs' lower expense ratios compared with mutual funds, as well as benefits including intraday trading and increased portfolio transparency.
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Source: FT.com
CFTC’s Division of Market Oversight Provides Extension of Temporary No-Action Relief with respect to Swaps Trading on Multilateral Trading Facilities Overseen by Competent Authorities
Designated by European Union Member States
March 21, 2014--The Commodity Futures Trading Commission's (CFTC or Commission) Division of Market Oversight (DMO) today announced the issuance of a no-action letter extending time-limited relief for (1) Multilateral Trading Facilities overseen by competent authorities designated by European Union Member States (MTFs) from the swap execution facility (SEF) registration requirement set out in section 5h(a)(1) of the Commodity Exchange Act (CEA or Act) and Commission regulation 37.3(a)(1);
and (2) parties executing swap transactions on or pursuant to the rules of MTFs from the trade execution mandate set out in section 2(h)(8) of the Act.
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Source: CFTC.gov
AccuShares Files to Register a New Volatility ETF and 6 New Commodity ETFs
March 20, 2014--AccuShares Commodities Trust I, a newly-formed fund trust ("AccuShares"), has filed a registration statement with the Securities and Exchange Commission to issue shares of 7 exchange traded funds ("ETFs").
Launch dates for the proposed ETFs have not yet been determined. The first ETF expected to be offered, the AccuShares Spot CBOE(R) VIX(R) Fund, is designed to provide exposure to the CBOE Volatility Index.
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Source: AccuShares
Morgan Stanley-ETF Tracking Error: A Modest Rise in 2013
March 20, 2014--Morgan Stanley defines tracking error in this report as the difference in total return
between an ETF's net asset value (NAV) and its underlying index. In our
view,the most common sources of tracking error include fees and
expenses,portfolio optimization,fair value pricing of net asset value
(NAV), ownership restrictions, and index turnover.
Average and weighted average tracking error for US-listed ETFs in our
study was 66 and 45 basis points (bps),respectively, in 2013. This
reflected a modest increase of 7 bps in average tracking error and a 1 bps
increase in weighted average tracking error from 2012 levels.
We attribute the slight uptick in average tracking error to myriad factors
at play in 2013. 1) Increasing complexity of underlying markets; 2) the
effect of compounding amid higher asset prices in relation to expense
ratios; 3) strong performance of MLPs; 4) strong performance and
declining correlations impacting optimization techniques.
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Source: Morgan Stanley
BlackRock ETP Landscape-February 2014
March 10, 2014--Fixed Income ETP flows surged in early February while Equities recovered after a rocky start.
Global ETP inflows finished February at $27.2bn spurred on by Janet Yellen's February 11th address to Congress, which was well received by equity markets.
Fixed Income flows of $19.6bn set a new monthly record amid expectations for continued low interest rates and low inflation.
US Treasuries brought in $11.4bn and Investment Grade Corporate gathered $3.6bn. High Yield Corporate added $1.4bn.
Despite inflows into all duration buckets, Short Maturity funds had a record month taking in $7.4bn.
Overall Equity flows were moderate at $5.8bn with investors continuing to favour non-US Developed Markets exposures.
Japanese Equity inflows reached $4.1bn and Pan-European funds gathered $2.8bn as evidence continues to point toward improving growth in the region.
US Equity outflows totaled ($0.2bn) and Emerging Markets shed ($4.5bn).
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Source: BlackRock ETP Landscape Research
Federal Reserve issues FOMC statement
March 19, 2014--Information received since the Federal Open Market Committee met in January indicates that growth in economic activity slowed during the winter months, in part reflecting adverse weather conditions.
Labor market indicators were mixed but on balance showed further improvement. The unemployment rate, however, remains elevated. Household spending and business fixed investment continued to advance, while the recovery in the housing sector remained slow. Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. Inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.
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Source: FRB
Fundementals-A Preference for Discomfort
March 19, 2014--Yikes is right! Investors continue to underperform the market by a significant margin, as Russ Kinnel of Morningstar reminds us in his 2014 version of "Mind the Gap."1 While many theories try to explain this persistent underperformance, I will focus on one: Too many of today's commentators seem not to notice that our knowledge of investment markets has progressed well beyond the theories of the 1960s.
Today, too many cling to the simple to understand but thoroughly refuted theory of a single market beta. Too many misinterpret today's ongoing debate about market efficiency as supporting the long abandoned theory that all investors should hold an identical portfolio. Too many misinterpret the sound guidance from experts advising individual investors to buy and hold low cost index funds as proof that earning above market returns is unattainable.
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Source: Research Affiliates
DB-Synthetic Equity & Index Strategy-North America-US ETF Market Weekly Review-US ETP assets down by 1.4% amid geopolitical tension
March 18, 2014--Data in this report is as of Friday, March 14
Market and Net Cash Flows Review
Geopolitical tension, China and US economic data weighed on equity markets last week. The US (S&P 500) fell by 1.97%; while, outside the US, the MSCI EAFE (in USD) and the MSCI EM (USD) dropped by 3.06% and 2.98%, respectively. In the meantime, performance was mostly negative across US sectors. The Utilities (+2.29%) sector recorded the only increase.
Moving into other asset classes, the DB Liquid Commodity Index fell by 0.91%; in the meantime, the Agriculture sector (DB Diversified Agriculture Index), Gold and Silver prices rose by 1.03%, 3.21% and 2.58%, respectively; while, the WTI Crude Oil fell by 3.60%.
The 10Y US Treasury Yield dropped by 15bps ending at 2.65%. Lastly, Volatility (VIX) rose by 26.29% during the same period.
The total US ETP flows from all products registered $2.3bn (+0.1% of AUM) of inflows during last week vs. $1.9bn (+0.1%) of inflows the previous week, setting the YTD weekly flows average at +$0.7bn (+$7.9bn YTD in total cash flows). Equity, Fixed Income and Commodity ETPs experienced flows of +$1.8bn (+0.1%), -$0.1bn (-0.0%) and +$0.6bn (+0.9%) last week vs. +$10.7bn (+0.8%), -$8.7bn (-3.1%) and +$0.3bn (+0.4%) in the previous week, respectively.
Among US sectors, Consumer Discretionary (+$0.3bn, +2.7%) and Financials (+$0.3bn, +0.4%) received the top inflows, while Energy (-$1.4bn, -4.5%) and Materials (-$0.3bn, -2.4%) experienced the largest outflows.
Top 3 ETPs & ETNs by inflows: SPY (+$2.1bn), IWM (+$1.3bn), GLD (+$0.5bn)
Top 3 ETPs & ETNs by outflows: QQQ (-$0.9bn), EEM (-$0.9bn), XLE (-$0.7bn)
New Launch Calendar: New smart-beta alternatives
Six new ETFs were listed during the previous week. First Trust listed two new smart-beta ETFs offering exposure to Industrials (AIRR) and access to income (QINC). Global X expanded its Guru family of ETFs listing two new smart-beta ETFs focusing in US Small Caps (GURX) and international equities (GURI). Cambria listed GVAL, which offers exposure to global equities with focus in Value. Last but not least, State Street listed a new ETF (IJNK) focusing in international HY corporate bonds, offering an international alternative to JNK.
Turnover Review: Floor activity decreased by 12.3%
Total weekly turnover decreased by 12.3% to $334.6bn vs. $381.4bn from the previous week. However, last week's turnover level was 16.9% over last year's weekly average. Equity, Fixed Income and Commodity ETPs turnover decreased by $28.2bn (-8.5%), $18.4bn (-52.4%) and $0.5bn (-5.3%) during the same period, respectively.
Assets under Management (AUM) Review: assets decreased by $23.6bn
US ETP assets dropped by $23.6bn (-1.4%) totaling $1.690 trillion at the end of the week. As of last Friday, US ETPs had accumulated an asset growth of +0.7% YTD. Assets for Equity, Fixed Income and Commodity ETPs moved -$26.0bn, +$0.4bn and +$2.1bn during last week, respectively.
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Source: Deutsche Bank-Synthetic Equity & Index Strategy-North America
ETFs key to Nasdaq indexing ambitions
March 18, 2014--Nasdaq OMX, the exchange operator, wants to expand its activities in the exchange traded funds market as its indexing business celebrates the 15th anniversary of the QQQ, one of the most successful ETFs to track one of its benchmarks.
The Invesco PowerShares QQQ, which tracks the Nasdaq 100 index, has grown into one of the world's most popular ETFs. It has assets of $45bn after first being launched in 1999 with $14m.
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Source: FT.com
