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DB-Synthetic Equity & Index Strategy-North America-US ETF Market Weekly Review-US ETPs gathered $3.6bn in new cash amid US flat market
July 29, 2013--Data in this report is as of Fri, July 26
Market and Net Cash Flows Review
Markets were flat-to-positive during last week. The US (S&P 500) ended practically flat for the week; while, outside the US, the MSCI EAFE (in USD) and the MSCI EM (USD) rose by 0.31% and 1.20%, respectively.
Moving on to other asset classes, the 10Y US Treasury Yield rose by 8 bps last week; while the DB Liquid Commodity Index was down by 1.22%. Similarly, the Agriculture sector (DB Diversified Agriculture Index) and the WTI Crude Oil pulled back by 1.50% and 3.10%, respectively, meanwhile, Gold and Silver prices rose by 2.87% and 2.54%, respectively. Last but not least, Volatility (VIX) rose by 1.44% during the same period.
The total US ETP flows from all products registered $3.6bn (+0.2% of AUM) of inflows during last week vs. $11.5bn (+0.8%) of inflows the previous week, setting the YTD weekly flows average at +$3.6bn (+$109.2bn YTD in total cash flows).
Equity, Fixed Income and Commodity ETPs experienced flows of +$2.6bn (+0.2%), +$0.9bn (+0.3%) and -$34mn (-0.0%) last week vs. +$11.3bn (+1.0%), +$0.6bn (+0.2%) and -$0.3bn (-0.5%) in the previous week, respectively.
Among US sectors, Financials (+$0.5bn, +0.9%) and Healthcare (+$0.5bn, +3.0%) received the top inflows, while Energy (-$0.4bn, -1.7%) and Materials (-$0.3bn, -3.5%) experienced the largest outflows.
Top 3 ETPs & ETNs by inflows: IWM (+$0.6bn), IEF (+$0.5bn), DIA (+$0.4bn)
Top 3 ETPs & ETNs by outflows: SPY (-$2.0bn), QQQ (-$0.8bn), USMV (-$0.5bn)
New Launch Calendar: China and Dividend Growth
There were two new ETFs listed during the previous week, one of them was listed on the NYSE Arca and the other one on the NASDAQ. KraneShares made its debut with a new Equity ETF (KFYP) that offers thematic exposure to China; meanwhile, WisdomTree launched DGRS, which offers access to growing dividend paying small-cap securities.
Turnover Review: Floor activity increased by 3.1%
Total weekly turnover increased by 3.1% to $253.6bn vs. $245.9bn from the previous week. However, last week's turnover level was 6.0% below last year's weekly average. Equity, Fixed Income and Commodity ETPs turnover increased by $5.8bn (+2.7%), $0.5bn (+2.4%) and $1.7bn (+21.8%) during the same period, respectively.
Assets under Management (AUM) Review: assets increased by $5.5bn
US ETP assets rose by $5.5bn (+0.4%) totaling $1.520 trillion at the end of the week. As of last Friday, US ETPs had accumulated an asset growth of +14.0% YTD. Assets for Equity, Fixed Income and Commodity ETPs moved +$4.0bn, +$0.2bn and +$1.3bn during last week, respectively.
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Source: Deutsche Bank-Synthetic Equity & Index Strategy-North America
Morgan Stanley-US ETF Weekly Update
July 29, 2013--US ETF Weekly Update
Weekly Flows: $3.6 Billion Net Inflows
ETF Assets Stand at $1.5 Trillion, up 14% YTD
Two ETF Launches Last Week
Direxion Announces Share Splits on Nine ETFs
US-Listed ETFs: Estimated Flows by Market Segment
ETFs posted net inflows of $3.6 bln last week, the fifth consecutive week of net inflows
Over the last five weeks, ETFs have generated net inflows totaling $41.0 bln
International - Developed ETFs posted net inflows of $1.4 bln, the most of any category we measured last week
ETF assets stand at $1.5 tln, up 14% YTD; $107.2 bln net inflows YTD
13-week flows remain mostly positive among asset classes; combined $47.8 bln in net inflows
US Sector & Industry ETFs have posted $11.2 bln in net inflows over the last 13 weeks, only trailing US Large-Cap ETFs; over this
period, meaningful money has flowed into Financials, specifically the Financials Select Sector SPDR (XLF) had $4.1 bln
Commodity ETFs continue to exhibit large net outflows ($8.2 bln over the last 13 weeks); Commodity ETF market share has
declined to 5% from 9% over the last year
US-Listed ETFs: Estimated Largest Flows by Individual ETF
iShares Russell 2000 ETF (IWM) posted net inflows of $565 mln, the most of any ETF
IWM has generated net inflows nine of the last 10 weeks for a combined $5.1 bln in net inflows
Despite recent interest rate volatility, the iShares 7-10 Year Treasury Bond ETF (IEF) posted net inflows of $510 mln last week;
over the last 13 weeks, IEF has generated $318 mln in net inflows while the yield on the 10-year Treasury is up nearly 100 basis
points
Notably, the iShares MSCI USA Minimum Volatility ETF (USMV) has exhibited net outflows nine of the last 13 weeks; similarly, its
closest competitor, the PowerShares S&P 500 Low Volatility Portfolio (SPLV) has also struggled recently, posting net outflows
eight of the last 13 weeks
US-Listed ETFs: Short Interest Data Updated: Based on data as of 7/15/13
United States Oil Fund (USO) had the largest increase in USD short interest at $299 mln
USO’s shares short are at their highest level since 10/31/11 and more than 100% above their one-year average
Shares short for the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) have declined for the second straight period amid a
renewed bid for the high yield asset class
Aggregate ETF USD short interest decreased by $3.7 bln over the period ended 7/15/13
The average shares short/shares outstanding for ETFs is currently 4.1%, down from 4.6% the prior period
Three of the 10 most heavily shorted ETFs as a % of shares outstanding are currency based; interestingly, over the last month
(6/14-7/15), all three have posted negative returns
Based on multiple borrowings and the ability to continuously create new shares, shares short as a % of shares outstanding can
exceed 100% (only five ETFs exhibited shares short as a % of shares outstanding greater than 100%)
US-Listed ETFs: Most Successful Recent Launches by Assets
Source: Bloomberg, Morgan Stanley Wealth Management ETF Research. Data estimated as of 7/26/13 based on daily change in share counts and daily NAVs.
$8.3 bln in total market cap of ETFs less than 1-year old
International Equity ETFs account for 43% of ETFs launched over the past year; specifically, the iShares Core MSCI
Emerging Markets ETF (IEMG) and the iShares Core MSCI EAFE ETF (IEFA) have a combined market cap of $2.8 bln
76 new ETF listings and 30 closures/delistings YTD relative to 119 new listings and only 17 closures at this point last year
The top 10 most successful launches make up 68% of the market cap of ETFs launched over the past year
Six ETF sponsors and two asset classes represented in top 10 most successful launches; we note that the representation of funds
with an income orientation has declined (currently six)
Notably, the iShares MSCI USA Quality Factor ETF (QUAL) generated net inflows of $99 mln last week, the most of any
recently launched ETF; QUAL tracks an index of US large- and mid-cap stocks that are selected based on high return on equity,
stable earnings growth, and low financial leverage
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Source: Morgan Stanley
AltaVista Research- 2Q13 Reporting Monitor, Week Three: Financials, Health Care & Industrials Lead Surprises
July 29, 2013--Highlights:
With just over half of S&P firms having reported, earnings look like they rose 4.3% YoY. The largest contributor to growth by far was Financials (XLF). Excluding the sector, S&P earnings would have been down fractionally. Five sectors saw annual declines...
Sales growth was a lackluster 1.2% overall, but without the drag from Energy (XLE) revenue would have grown a respectable 2.7% YoY. Financials showed real improvement in margins vs. Q2 2012, but Utilities (XLU), Tech (XLK) and Materials (XLB) all saw significant declines...
Financials, Health Care (XLV) and Industrials (XLI) are beating expectations handily so far, while Tech and Materials are falling short...
Looking ahead to Q3, S&P profits are forecast to increase 3% sequentially, with the large Tech sector rebounding from the sequential decline it saw this quarter...
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Source: AltaVista Research
ETFs should be available from fund dealers, Luukko
Once mutual fund dealers can sell ETFs, their clients will gain access to more investment choices and lower fees.
July 27, 2013--It's strange but true: There are mutual funds that mutual fund dealers aren't allowed to sell. The products that are off-limits to them are exchange-traded funds.
ETFs, most of which charge low fees and track indexes, fall within the definition of mutual funds under securities legislation. And while there are some minor differences in how ETFs and traditional mutual funds are regulated, these differences are narrowing.
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Source: The Star
JPMorgan Mulls Physical Commodities Exit Amid U.S. Review
July 27, 2013--JPMorgan Chase & Co. (JPM) said it plans to get out of the business of owning and trading physical commodities ranging from metals to oil, three days after a U.S. Senate panel questioned whether banks are abusing their ownership of raw materials to manipulate markets.
The announcement also comes as JPMorgan negotiates a settlement with the Federal Energy Regulatory Commission that may include a $400 million fine and other penalties, according to a person familiar with the negotiations.
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Source: Bloomberg
Fidelity's early ETF strategy leans heavily on BlackRock
July 26, 2013-Fidelity Investments disclosed on Friday its plans to use U.S. money manager BlackRock Inc as subadviser on a slate of 10 new sector-oriented exchange-traded funds.
The disclosure follows up a previously stated plan to have BlackRock help Fidelity develop its own line of equity sector ETFs.
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Source: Reuters
Schwab pushing fee-based programs
Problem is, the move is pushing up compensation expenses
July 26, 2013--The Charles Schwab Corp, is running full steam ahead with its long-term plan to build fee-based revenue.
In a meeting with analysts today, chief executive Walt Bettinger said that his goal is to move Schwab away from transactional business to the point where “the vast majority of revenue” is from fee-based managed assets and interest revenue.
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Source: Investment News
Bond fund fears over poor liquidity
July 26, 2013--Real-money investors are becomingly increasingly concerned about their ability to enter and exit bond positions, following the violent sell-off in risk markets in June that led to an evaporation of liquidity across a wider-than-expected range of asset classes.
Regulation has led banks to shrink their bond inventories to a fraction of their former sizes, making them less vulnerable to sell-offs, but also reducing their ability to buffer flows between buyers and sellers.
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Source: Reuters
WisdomTree Announces Second Quarter 2013 Results
$5.0 Billion Net Inflows in Quarter
Net Inflow Market Share 29% in Second Quarter, 15% First Half
Record Revenues, Up 83% From Year Ago Quarter
Record Net Income $12.2 Million, Up 56% From Prior Quarter
July 26, 2013--WisdomTree Investments, Inc. (Nasdaq:WETF), an exchange-traded fund ("ETF") sponsor and asset manager, today reported net income of $12.2 million for the second quarter of 2013, or $0.09 per share on a fully diluted basis.
This compares to $0.1 million in the second quarter of 2012 and $7.9 million in the first quarter of 2013.
WisdomTree CEO and President Jonathan Steinberg commented, "With $5.0 billion in net inflows for the quarter and nearly $11 billion in the first half of 2013, we continued our positive momentum from the first quarter to achieve a strong second quarter with record market share gains. WisdomTree was the third best asset gatherer across all U.S. mutual fund and ETF complexes in the second quarter according to Morningstar."
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Source: WisdomTree
CFTC.gov Commitments of Traders Reports Update
June 26, 2013--The updated current reports for the week of July 23, 2013 are now available.
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Source: CFTC.gov
