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Federal Debt and the Statutory Limit, September 2013
September 25, 2013--The Congress has traditionally placed a limit on the total amount of debt that the Department of the Treasury can issue to the public and to other federal agencies. Law-makers have enacted numerous increases to the debt limit-commonly known as the debt ceiling-some of which have been temporary but many of which have been permanent.
The Treasury's borrowing has been at the current limit since May, although it has employed a well-established toolbox of so-called extraordinary measures that allow it to borrow additional funds without breaching the debt ceiling.
On September 25, 2013, the Treasury estimated that its ability to borrow under those extraordinary measures will be exhausted no later than October 17, leaving a cash balance of approximately $30 billion. CBO currently projects that the Treasury will exhaust all of the borrowing authority created by those measures, as well as its cash balance, between October 22 and the end of the month. (It is possible, however, that the date could fall outside of that range.)
view the Federal Debt and the Statutory Limit, September 2013
Source: Congressional Budget Office (CBO)
ETF providers position funds for rising interest rate environment
September 24, 2013--Exchange-traded fund companies are coming to market with a rash of new products and strategies designed to protect income investors from the dangers of rising interest rates.
Even though the Federal Reserve deferred the start of a rising rate era when it held policy steady last week, "the narrative still holds," said Matt Tucker, head of fixed income strategy at BlackRock's iShares.
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Source: Reuters
American Independence Launches Risk-Managed Allocation Fund, an ETF-Based Asset Allocation Strategy Focused on Long Term Growth
JAForlines will sub-advise a new fund, designed to appeal to investors concerned about volatility
September 24, 2013--American Independence Financial Services, LLC (American Independence), a New York-based investment advisory firm and manager of mutual funds and separate accounts, today announced the launch of the American Independence Risk-Managed Allocation Fund (A: AARMX C: ACRMX I: RMAIX) (the "Fund"), an actively managed, ETF-based global asset allocation strategy.
The sub-advisor for the Fund is J.A. Forlines, LLC, a leading asset manager specializing in risk-managed, ETF-based global allocation investment solutions. The Fund will be marketed to financial intermediaries throughout the U.S.
The Risk-Managed Allocation Fund seeks to achieve long-term capital appreciation while providing lower than average risk. The Fund is an actively managed, multi-asset class portfolio that uses ETFs to take advantage of market trends globally.
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Source: American Independence Financial Services, LLC
Horizons ETFs Management (USA) LLC Appoints Head of Sales
September 24, 2013--Horizons ETFs Management (USA) LLC ("Horizons USA"),a subsidiary of Mirae Asset Global Investments Co., Ltd. ("MAGI") is pleased to announce the appointment of Michael Fardy as Executive Vice President and Head of Sales for Horizons USA.
Mr. Fardy is an investment industry executive with nearly two decades of experience in business development and strategic relationship management. Previously, Mr. Fardy was a Director at BlackRock responsible for expanding the presence of the iShares exchange traded funds across the northeastern United States. Prior to that, he was a Regional Vice President with Dreyfus Mutual Funds and a Regional Marketing Director with Putnam Investments.
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Source: Horizons Exchange Traded Funds Inc
Chicago upstart takes on Vix 'fear gauge'
September 24, 2013--There's a fearsome battle brewing in Chicago.
For two decades, the Vix index run by the Chicago Board Options Exchange has been the financial industry's go-to method for measuring expectations of volatility in the wider marketplace. But in recent years, with the Vix trading persistently low, some critics have proclaimed Wall Street's "fear gauge" to be seriously outdated.
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Source: FT.com
CFTC Certifies Futures Contract on S&P BSE 100 Index Submitted by BSE Ltd (BSE)
September 24, 2013--Contract May be Offered to U.S. Persons Effective September 24, 2013
The Commodity Futures Trading Commission's (CFTC) Division of Market Oversight issued a letter advising the BSE that its S&P BSE 100 Index futures contract submitted for review on August 8, 2013 is deemed certified.
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Source: CFTC.gov
T. Rowe Price Asks SEC to Approve Actively Managed ETF
September 24, 2013--T. Rowe Price Group Inc. (TROW) has asked the U.S. Securities and Exchange Commission for permission to offer actively managed exchange-traded funds that wouldn't disclose their holdings daily.
The first of the funds, if approved by regulators, would aim to beat the Standard & Poor’s 500 Index, according to the request, filed yesterday with the SEC. T. Rowe Price, based in Baltimore, joins BlackRock Inc. (BLK) and Eaton Vance Corp. (EV) among money managers seeking the go-ahead to offer so-called non-transparent active ETFs.
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Source: Bloomberg
DB-Synthetic Equity & Index Strategy-North America-US ETF Market Weekly-US ETP assets reach new record high amid Fed's no-taper
September 23, 2013--Data in this report is as of Fri, Sep 20
Market and Net Cash Flows Review
Global markets rose on Wednesday's news that the Federal Reserve will maintain its $85bn-a-month bond-buying program. The US (S&P 500) rose by 1.30%; while, outside the US, the MSCI EAFE (in USD) and the MSCI EM (USD) soared by 2.81% and 2.72%, respectively.
In the meantime, performance was positive across US sectors. Industrials (+1.94%) and Utilities (+1.82%) recorded the biggest gains; moving into other asset classes, the DB Liquid Commodity Index fell by 1.10%. Similarly, the Agriculture sector (DB Diversified Agriculture Index), the WTI Crude Oil, Gold and Silver prices fell by 1.26%, 3.27%, 0.03% and 1.99%, respectively; The 10Y US Treasury Yield dropped 15bps ending at 2.75%. Meanwhile on the FX side the USD strengthened against all major currencies.
The Euro, the British Pound, the Swiss Franc and the Japanese Yen depreciated 1.73%, 0.82%, 2.09% and 0.02%, respectively. Last but not least, Volatility (VIX) dropped by 7.34% during the same period.
The total US ETP flows from all products registered $21.9bn (+1.4% of AUM) of inflows during last week vs. $17.6bn (+1.2%) of inflows the previous week, setting the YTD weekly flows average at +$3.4bn (+$129.7bn YTD in total cash flows).
Equity, Fixed Income and Commodity ETPs experienced flows of +$21.3bn (+1.8%), +$0.5bn (+0.2%) and -$0.1bn (-0.1%) last week vs. +$17.0bn (+1.5%), +$0.9bn (+0.3%) and -$0.4bn (-0.5%) in the previous week, respectively.
Top 3 ETPs & ETNs by inflows: SPY (+$5.9bn), IWM (+$1.5bn), EEM (+$1.5bn)
Top 3 ETPs & ETNs by outflows: DIA (-$0.7bn), IDU (-$0.4bn), TLT (-$0.2bn)
New Launch Calendar: income
There was one new ETN listed during the previous week on the NYSE Arca. UBS launched a new product (DVHI) that offers access to income through a diversified basket of securities.
Turnover Review: Floor activity increased by 36%
Total weekly turnover increased by 35.9% to $350.1bn vs. $257.7bn from the previous week; Furthermore, last week's turnover level was 29.9% over last year's weekly average. Equity, Fixed Income and Commodity ETPs turnover increased by $79.8bn (+35.1%), $6.2bn (+34.2%) and $5.7bn (+55.6%) during the same period, respectively.
Assets under Management (AUM) Review: assets reach new record high
US ETP assets rose by $44.4bn (+2.9%) totaling $1.567 trillion at the end of the week. As of last Friday, US ETPs had accumulated an asset growth of +17.5% YTD. Assets for Equity, Fixed Income and Commodity ETPs rose by $40.0bn, $2.9bn and $1.3bn during last week, respectively.
visit https://eqindex.db.com/etf/ for more info
Source: Deutsche Bank-Synthetic Equity & Index Strategy-North America
S&P Capital IQ Introduces New ETF Style Classification System
Over 2,500 North American ETFs and ETNs classified
September 23, 2013--Building on its success as the developer of the GICs industry classification structure, S&P Capital IQ has introduced a new system called Exchanged Traded Funds (ETF) Style Classifications. This comprehensive classification system classifies ETFs and ETNs with over 40 standardized descriptive characteristics to reveal the true exposure being provided by over 2,500 North American ETFs and ETNs
"ETFs are fast growing investment vehicles and the market is finding it difficult to classify them," said Rui Carvalho, Managing Director of Product and Content at S&P Capital IQ. "They want supporting information that provides a complete, accurate, and objective profile of the exposures of ETFs. In addition to portfolio exposure and classification, institutions and other investors will also use the system for ETF selection and reporting purposes."
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Source: S&P Capital IQ
Morgan Stanley-US ETF Weekly Update
September 23, 2013--Weekly Flows: $21.9 Billion Net Inflows
Second Consecutive Week of Net Inflows
ETF Assets Stand at $1.6 Trillion, up 17% YTD
No ETF Launches Last Week
NYSE Arca Gold Miners Index Undergoes Changes
US-Listed ETFs: Estimated Flows by Market Segment
ETFs exhibited net inflows of $21.9 bln last week, the second consecutive week of net inflows
Last week’s take was the largest weekly net inflow of the year and the largest since we began tracking weekly flows in 2010; over the last
two weeks ETFs have generated net inflows of $39.5 bln
For the second straight week ETF net inflows were led by US Large-Cap ETFs ($6.4 bln in net inflows last week)
Seven of the 15 categories we measure posted net inflows greater than $1 bln last week
ETF assets stand at $1.6 tln, up 17% YTD; $127.8 bln net inflows YTD
13-week flows remain mostly positive among asset classes; combined $61.6 bln in net inflows
International - Developed ETFs generated net inflows of $16.0 bln over the last 13 weeks, the most of any category we measured
Notably, International - Developed ETF market share is up to 12% from 10% at the beginning of the year while International - Emerging
ETF market share dropped to 9% from 12% over the same period
US-Listed ETFs: Estimated Largest Flows by Individual ETF
SPDR S&P 500 ETF (SPY) posted net inflows of $5.9 bln this past week, the most of any ETF
Given SPY’s size and institutional use, it is not surprising to see weekly flows in excess of $5 bln; YTD SPY has exhibited weekly net in/out flows of more than $5 bln eight times
Seven out of the 10 ETFs to generate the largest net inflows last week were US equity-based
The iShares MSCI Emerging Markets ETF (EEM) has regained traction, posting $1.5 bln in net inflows last week and $4.8 bln the last 13 weeks; EEM’s net inflows over the last 13 weeks lag only SPY
US-Listed ETFs: ETF Dollar Volume
ETF monthly $ volume increased to 27% of listed trading volume in August (up from 26% in July)
Over the past 5 years, ETFs peaked at 36% of listed trading volume in November 2008
ETFs traded $349 bln last week, up 36% from the prior week and 27% greater than their 13-week average
US Large-Cap ETFs accounted for 42% of volume last week, however, make up only 24% of ETF market cap
US-Listed ETFs: Short Interest Data Unchanged: Based on data as of 8/30/13
SPDR S&P 500 ETF (SPY) had the largest increase in USD short interest at $7.4 bln
SPY’s shares short are at their highest level since 5/31/12 and 19% above their one-year average
Shares short of iShares MSCI EAFE ETF (EFA) declined to 30.8 mln from 41.2 mln on 8/15/13 and are now roughly in-line with the average shares short over the past year
Aggregate ETF USD short interest decreased by $10.2 bln over the period ended 8/30/13
The average shares short/shares outstanding for ETFs is currently 4.5%
The SPDR Retail ETF (XRT) exhibited the highest shares short as a % of shares outstanding at 360%, surpassing the CurrencyShares Euro Trust (FXE), which had exhibited the highest shares short as a % of shares outstanding for seven consecutive periods
Based on multiple borrowings and the ability to continuously create new shares, shares short as a % of shares outstanding can exceed 100% (only eight ETFs exhibited shares short as a % of shares outstanding greater than 100%)
US-Listed ETFs: Most Successful Recent Launches by Assets
$8.8 bln in total market cap of ETFs less than 1-year old
International Equity ETFs account for 45% of market capitalization of ETFs launched over the past year
Newly launched Fixed Income ETFs generated net inflows of $771 mln the past 13 weeks, the most of any category
91 new ETF listings and 31 closures/delistings YTD (12 additional closures announced)
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The top 10 most successful launches make up 69% of the market cap of ETFs launched over the past year
Four ETF sponsors and two asset classes represented in top 10 most successful launches; we note that the representation of funds with an income orientation is currently five (down from seven at the end of the second quarter)
Despite not cracking the top 10 most successful launches last week, the VelocityShares Equal Risk Weighted Large Cap ETF (ERW) generated net inflows of $28 mln, the most of any recently launched ETF; ERW owns large-cap stocks weighted by expected risk with stocks with lower expected risk making up a larger percentage
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Source: Morgan Stanley
