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Solving The Bond ETF Discount Problem
June 27, 2013--Bond exchange-traded funds can be tricky to trade at times. Although these securities trade within a reasonable range of their net-asset value (NAV) most days, there are those periods when the ETF market just doesn't want to cooperate.
Last week was a good example. Here are two ways to solve this problem.
I have been writing about pricing issues with bond ETFs for quite some time, first in The ETF Book and later in articles such as Why We Don’t By Corporate Bond ETFs. Most of the time, there’s nothing wrong with bond ETFs or how they’re priced, as long as you’re not in a big hurry to trade during a big selloff in the market.
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Source: Forbes
Mind the (Expectations) Gap: Demographic Trends and GDP
June 27, 2013--A large body of research in psychology and economics shows that human beings tend to form their expectations by relying on past experiences-especially recent ones.
Malmendier and Nagel (2011), for instance, talk about investors who live through long periods of poor stock market performance and how this experience affects their risk-taking propensities… for life. The most famous example comes from the “Depression Babies,” an entire generation that was scarred for life by the financial and macroeconomic shocks of the Great Depression. Of course the opposite effect also exists: periods of economic ebullience give rise to more intrepid investors, entrepreneurs, and so on.
Those times might feel like a distant past now, but until recently 3–4% growth in real GDP was considered “normal.” So it should come as no surprise that the economic performance of the past few decades has strongly influenced expectations about economic growth. However, when optimistic expectations get detached from reality we risk creating a significant expectations gap—a disconnect between what we take for granted given our recent experiences and what we should anticipate given simple arithmetic.
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Source: Research Affiliates
CFTC's Division of Swap Dealer and Intermediary Oversight Issues Time-Limited No-Action Relief from Certain Swap Trading Relationship Documentation Standards with Foreign Exchange Counterparties
June 27, 2013--The Commodity Futures Trading Commission's Division of Swap Dealer and Intermediary Oversight ("DSIO") today announced the issuance of a no-action letter relating to requirements imposed on Swap Dealers ("SDs") and Major Swap Participants ("MSPs") pursuant to Commission regulation
§23.504 in connection with (i) foreign exchange transactions that are swaps , and (ii) physically-settled foreign exchange forwards and swap agreements that have been exempted from the definition of swap by the Secretary of the U.S. Department of the Treasury.
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Source: CFTC.gov
CFTC's Division of Market Oversight Issues Extension of Time-Limited, No-Action Relief for Swap Dealers and Major Swap Participants from the Reporting Requirements of Part 45 for CDS Clearing-Related Swaps
June 27, 2013--The Commodity Futures Trading Commission's ("Commission") Division of Market Oversight ("Division") today issued a no-action letter providing an extension of time-limited relief to Swap Dealers ("SDs") and Major Swap Participants ("MSPs") from the obligation to report swap data under part 45 of the Commission's regulations for cleared credit default
swaps ("CDS") that are entered into pursuant to a derivatives clearing organization’s ("DCO") rules related to its price submission process for determining end-of-day settlement prices for cleared CDS ("CDS Clearing-Related Swaps").
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Source: CFTC.gov
CFTC's Division of Market Oversight Issues Extension of Time-Limited No-Action Relief Concerning Bespoke or Complex Swaps
June 27, 2013--The Commodity Futures Trading Commission's (CFTC) Division of Market Oversight (DMO) today announced the issuance of a time-limited no-action letter granting relief,
for bespoke or complex swaps, from certain reporting obligations under Parts 43 and 45 of the Commission’s regulations.
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Source: CFTC.gov
Vanguard CIO on benchmark change: Mission complete
June 27, 2013--With Vanguard Emerging Markets Stock Index Fund's transition to the FTSE Emerging Index in June, the shift of 22 Vanguard funds and their ETF Shares to new target benchmarks was brought to a successful close.
We spoke with Tim Buckley, Vanguard's chief investment officer, to get his take on Vanguard's move to benchmark indexes developed by FTSE and the University of Chicago's Center for Research in Security Prices (CRSP).
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Source: Vanguard
ISE ETF Ventures Partners with BlueStar Indexes
Jointly Developed BlueStar Israeli Global Index is the Basis for a new ETF
June 27, 2013--The International Securities Exchange (ISE) announced today the launch of their partnership with BlueStar Indexes to develop a family of indexes and use them as the basis for exchange traded products (ETPs) and other index-linked vehicles.
The BlueStar Israel Global Index (ticker: BLS), the first index developed through the partnership, provides a comprehensive benchmark for investors to track Israeli and Israeli-linked public companies and serves as the basis for the Market Vectors® Israel ETF (NYSEArca: ISRA®). Such well-known Israeli companies as Teva Pharmaceutical Industries (TASE: TEVA), Perrigo Co. (NDAQ: PRGO), Checkpoint (Nasdaq: CHKP), Amdocs (NYSE: DOX) and Mellanox (Nasdaq: MLNX) are included in the index.
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Source: International Securities Exchange (ISE)
BM&FBOVESPA and Chi-X Global Certify Chi-FX
June 26, 2013--Chi-X(R) Global Holdings LLC today announced that BM&FBOVESPA S.A., Bolsa de Valores, Mercadorias'e Futuros has completed the formal acceptance of its Chi-FX(TM) platform for commercial use.
Chi-FX powers BM&FBOVESPA's BEI (Brazil Easy Investing).
BEI will allow registered Brazilian brokers to provide retail and institutional investors based outside of Brazil quotes of Brazilian exchange-listed stocks in their local currency. By leveraging the Chi-FX technology, BEI integrates market data from BM&FBOVESPA stock quotes with FX rates offered by Brazilian banks.
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Source: BM&FBOVESPA
Bond funds see record outflows in June: TrimTabs
June 26, 2013--Investors pulled a record $61.7 billion from bond mutual funds and exchange-traded funds in the period through June 24, data from TrimTabs Investment Research showed Wednesday.
That beats the previous record outflows of $41.8 billion pulled from funds in October 2008. Investors have put $1.21 trillion into those funds between 2009 and 2012 as the bond markets rallied. But outflows in June come as bond prices have fallen, pushing yields higher, on the potential that the Federal Reserve could begin winding down its bond-purchase program.
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Source: MarketWatch
S&P Dow Jones Indices Announces Changes To The S&P/TSX Canadian Indices
A Deletion From The S&P/TSX Composite Index
June 26, 2013--S&P Dow Jones Canadian Index Services will make the following changes in the S&P/TSX Canadian Indices:
BCE Inc. (TSX:BCE) has announced that all necessary approvals have been received to close its acquisition of Astral Media Inc. (TSX:ACM.A).
Astral Media Non-Voting Class A shareholders will receive $CDN50.00 cash for each share held. Astral Media will be removed from the S&P/TSX Composite, Capped Composite and Composite Equal Weight, the S&P/TSX Completion and the S&P/TSX Capped Consumer Discretionary Indices after the close of trading on Monday, July 8, 2013.
Source: S&P Dow Jones Canadian Index Services
