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Morgan Stanley-US ETF Weekly Update
March 17, 2014--US ETF Weekly Update
Weekly Flows: $2.3 Billion Net Inflows
Fifth Consecutive Week of Net Inflows Totaling $32.2 Billion
ETF Assets Stand at $1.7 Trillion, Up 1% YTD
Six ETF Launches Last Week
US-Listed ETFs: Estimated Flows by Market Segment
ETFs posted net inflows of $2.3 bln last week, fifth consecutive week of net inflows
Over the last five weeks, ETFs have generated net inflows of $32.2 bln
Last week's net inflows were led by US Small- & Micro-Cap ETFs at $1.7 bln; conversely, International
Emerging ETFs posted net outflows of $1.5 bln, the most of any category we measured
Nine of the 15 categories we measured posted net inflows last week
ETF assets stand at $1.7 tln, up 1% YTD
13-week flows remain positive among asset classes; combined $18.1 bln in net inflows
International - Developed ETFs have generated $16.4 bln in net inflows over the last 13 weeks as money has flocked to Europe and Japan amid improving earnings expectations
International - Emerging ETFs have posted net outflows for four consecutive weeks totaling $3.6 bln, and $15.0 bln in net outflows over the last 13 weeks, as investors flee the space and sentiment remains negative
US-Listed ETFs: Estimated Largest Flows by Individual ETF
SPDR S&P 500 ETF (SPY) posted net inflows of $2.1 bln this past week, the most of any ETF
Despite SPY's net inflows last week, SPY historically exhibits net outflows during the first quarter of the year and this year is no different
The iShares Russell 2000 ETF (IWM) had another strong week of net inflows; IWM took in $1.3 bln in net inflows last week and $3.9 bln over the last 13 weeks
The SPDR Gold Trust (GLD) has now posted net inflows in seven of the last nine weeks totaling $1.0 bln; over the last year, GLD has exhibited net outflows of $18.2 bln
Over the last four weeks, the ProShares Ultra 7-10 Year Treasury (UST) has posted net outflows of $2.8 bln, bringing its market cap to $45 mln
Emerging market equity ETFs continue to experience net outflows; specifically, the iShares MSCI Emerging Markets ETF (EEM) exhibited net outflows of $870 mln last week and over the last 13 weeks, posted net outflows of $9.8 bln
US-Listed ETFs: ETF Dollar Volume
ETF monthly $ volume as a % of listed trading volume remained flat in February at 25%, which is below the five-year average of 28%
Over the last five years, ETF monthly $ volume as a % of listed trading volume peaked in August 2011 at 36%
ETF $ volume last week was $343 bln, down from $393 bln the prior week, however 6% above its 13-week average
Fixed Income ETFs accounted for 4% of ETF $ volume last week compared to 8% the prior week; their 13-week average is 6%
US-Listed ETFs: Short Interest Data Updated: Based on data as of 2/28/14
The iShares Russell 2000 ETF (IWM) had the largest increase in USD short interest at $1.6 bln
The iShares MSCI Emerging Markets ETF (EEM) also had a big jump in short interest ($1.5 bln increase); EEM's shares short (192 mln) are at their highest level of all-time as investors remain cautious about emerging markets
657 ETFs exhibited short interest increases while 588 experienced short interest declines over the last period
Aggregate ETF USD short interest increased by $1.1 bln over the period ended 2/28/14
The average shares short/shares outstanding for ETFs is currently 4.3%, up from 4.1% last period
Six of the 10 most heavily shorted ETFs as a % of shares outstanding are sector/industry related
The CurrencyShares Euro Trust (FXE) is currently the most heavily shorted ETF as measured by shares short/shares outstanding at 266%; notably, FXE's market price is trading near a one-year high
Based on multiple borrowings and the ability to continuously create new shares, shares short as a % of shares outstanding can exceed 100% (only nine ETFs exhibited shares short as a % of shares outstanding greater than 100%)
US-Listed ETFs: Most Successful Recent Launches by Assets
$8.6 bln in total market cap of ETFs less than 1-year old
Fixed Income ETFs account for 25% of the market capitalization of ETFs launched over the past year, the most of any category; 39 Fixed Income ETFs were brought to market over the last year as ETF issuers expand the breadth of fixed income offerings
Over the last 13 weeks, International - Developed ETFs have attracted $541 mln in net inflows, the most of any group; strong International - Developed ETF flows coincide with the ETF universe as a whole
50 new ETF listings and eight closures YTD (10 additional closures announced)
The top 10 most successful launches make up 45% of the market cap of ETFs launched over the past year
Six ETF sponsors and two asset classes (equities and fixed income) represented in top 10 most successful launches
Despite not cracking the top 10, the First Trust Dorsey Wright Focus 5 ETF (FV) generated net inflows of $27 mln last week, the most of any recently launched ETF; FV is an ETF that selects First Trust sector/industry ETFs based on their relative strength
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Source: Morgan Stanley
SEC to take another look at ETF regulation
Rule proposal would touch on active vs. index funds, transparency, flexibility and inverse leverage
March 17, 2014--The Securities and Exchange Commission is poised to dust off a rule proposal on exchange-traded funds that was first released in 2008.
"This is a rule the staff would love to do," Diane Blizzard, associate director of the SEC's Division of Investment Management, said at the Investment Company Institute’s Mutual Fund and Investment Management Conference in Orlando, Fla., on Monday. "We’re looking at issues that really weren’t addressed in '08 but are issues now."
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Source: Investment News
CFTC.gov Commitments of Traders Reports Update
March 14, 2014--The current reports for the week of March 11, 2014 are now available.
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Source: CFTC.gov
Latin America: Increase in Number of Retirees with the Right to a Pension
March 13, 2014--STORY HIGHLIGHTS
Around 11 million adults over age 65 who had been excluded from pension systems were able to receive benefits.
In Latin America there are approximately 290 million people of working age.
Fifty-five percent of them do not contribute to any pension system
One solution to this problem would be to improve labor market formality to ensure that workers make regular contributions.
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Source: World Bank
Making Mining Deliver on Development in Latin America
March 13, 2014--Mining investment has grown exponentially in Latin America over the past decade. In Peru, investment grew from $109 million in 2003 to $3.5 billion in 2013. In Colombia, from 2009 to 2012 the share of public revenues generated by mining doubled from 12% to 25%.
This influx of investment has been a welcome economic stimulant but it also poses challenges for governments to manage these investments:
responsibly, in relation to environment and communities;
transparently, in relation to revenues collected and distributed;
equitably, to stimulate local economic development and share benefits with communities.
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Source: World Bank
CFTC.gov Swaps Report Update
March 12, 2014--CFTC's Weekly Swaps Report has been updated, and is now available
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Source: CFTC.gov
Active fund managers are closet index huggers
Study finds 'closet indexing' is rife in US active funds
March 12, 2014--
How active is your fund manager, and what chance do they really have of beating the market?
These questions are linked. A crude measure of how much fund managers deviate from their benchmark can help predict which funds will outperform. That measure is "active share"- the percentage of a fund's portfolio that differs from its benchmark. Thus a well-managed index fund will have an active share of 0 and an esoteric fund that holds no stocks in its index has an active share of 100.
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Source: FT.com
SEC Proposes Rules for Systemically Important and Security-Based Swap Clearing Agencies
March 12, 2014 — The Securities and Exchange Commission voted today to propose new rules to enhance the oversight of clearing agencies that are deemed to be systemically important or that are involved in complex transactions, such as security-based swaps.
"Clearing agencies that have been designated as systemically important or that clear security-based swaps are a backbone of the U.S. financial markets," said SEC Chair Mary Jo White. "The enhanced regulatory regime proposed today reflects the importance of effective regulation of these entities."
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Source: SEC.gov
SEC Proposes Rules for Systemically Important and Security-Based Swap Clearing Agencies
March 12, 2014--The Securities and Exchange Commission voted today to propose new rules to enhance the oversight of clearing agencies that are deemed to be systemically important or that are involved in complex transactions, such as security-based swaps.
"Clearing agencies that have been designated as systemically important or that clear security-based swaps are a backbone of the U.S. financial markets," said SEC Chair Mary Jo White. "The enhanced regulatory regime proposed today reflects the importance of effective regulation of these entities."
view the Standards for Covered Clearing Agencies-proposed rule
Source: SEC.gov
Specialist ETF managers attract strong inflows
March 11, 2014-Highly sophisticated investment portfolios constructed cheaply with exchange traded funds are winning more attention from cost conscious investors and financial advisers.
A growing band of US specialists are tapping into this interest and seeing a rapid growth in assets.
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Source: FT.com
