Americas ETP News
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Minutes of the Federal Open Market Committee, April 30-May 1, 2013
May 22, 2013--The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on April 30-May 1, 2013.
The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board’s Annual Report. The descriptions of economic and financial conditions contained in these minutes are based solely on the information that was available to the Committee at the time of the meeting.
view the Minutes of the Federal Open Market Committee April 30-May 1, 2013
Source: FRB
Arrow Strengthens Focus on Alternatives and ETFs With Key Distribution Hire
John Cadigan to Serve as Arrow's National Sales Manager With Responsibility for Product Distribution and Advisor Education Surrounding Alternative Investments and Exchange Traded Funds (ETFs)
May 22, 2013-Arrow Investment Advisors, LLC, the advisor to Arrow Funds and ArrowShares, is pleased to announce that John Cadigan has joined the firm as National Sales Manager.
Cadigan brings more than 25 years of financial services industry experience to the role, having established effective sales distribution teams for both traditional and alternative investments. Prior to joining Arrow, he most recently served as Managing Director/National Sales Manager for Direxion Funds.
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Source: Arrow Investment Advisors
WisdomTree Launches U.S. Dividend Growth Fund (DGRW)
Fund Launches As U.S. Dividend Growth Accelerates1
DGRW to capture market's dividend growth leaders
May 22, 2013--WisdomTree (NASDAQ: WETF), an exchange-traded fund ("ETF") sponsor and asset manager, today announced the launch of the WisdomTree U.S. Dividend Growth Fund (DGRW) on the NASDAQ Stock Market.
DGRW is designed to provide exposure to dividend-paying stocks with growth characteristics and has an expense ratio of 0.28%.
Jeremy Schwartz, WisdomTree Director of Research, said, “Investors are hungry for income in this low interest rate-, low yield-environment. Rather than relying on historical records of dividend increases, DGRW uses real-time growth and quality metrics focused on companies who are growing their dividends.”
The WisdomTree U.S. Dividend Growth Fund (DGRW) seeks to offer: A diversified basket of dividend-paying securities with growth characteristics
Heavy exposure to technology sector, the sector currently leading the market’s dividend growth
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Source: WisdomTree
Recommendations for Equitable Allocation of Trades in High Frequency Trading Environments
May 21, 2013--Most industry observers and much of the academic research in this area have concluded that High Frequency Trading (HFT) is generally beneficial. Many institutional investors, however, believe that HFT places them at a competitive disadvantage.
Digital computers will always have some structural (speed) advantages over human traders. This is inevitable.
This paper (1) acknowledges and summarizes much of the relevant published research (2) discusses some of the HFT strategies that likely run counter to good public policy and (3) makes six recommendations that, if implemented, would not preclude any current HFT strategies, but would likely restore some competitive advantage to market participants that would be willing to expose their resting orders to market risk for more than fleeting milliseconds.
view the Recommendations for Equitable Allocation of Trades in High Frequency Trading Environments1 paper
Source: John McPartland, Federal Reserve Bank of Chicago
Deutsche Bank-Synthetic Equity & Index Strategy-North America- Markets and $5.2bn inflows push US ETP assets to $1.519 trillion
May 21, 2013--Market and Net Cash Flows Review
Equity markets were mostly higher during last week with the exception of EM markets which ended slightly lower. The US (S&P 500) edged higher by 2.07%; while, outside the US, the MSCI EAFE (in USD) rose by 0.44% and the MSCI EM (USD) dropped by 0.36%.
Moving on to other asset classes, the 10Y US Treasury Yield rose by 5bps last week; In the meantime the DB Liquid Commodity Index was down by 0.34%. Similarly, the Agriculture sector (DB Diversified Agriculture Index), Gold and Silver prices retreated by 1.60%, 6.12% and 6.81%, respectively, while the WTI Crude Oil end flat for the week. Last but not least, Volatility (VIX) dropped by 1.11% during the same period.
The total US ETP flows from all products registered $5.24bn (+0.30% of AUM) of inflows during last week vs. $13.79bn (+0.90%) of inflows the previous week, setting the YTD weekly flows average at +$4.2bn (+$84.46bn YTD in total cash flows).
Equity, Fixed Income, and Commodity ETPs experienced flows of +$6.57bn (0.58%), -$0.76bn (-0.27%), -$0.75bn (-0.89%) last week vs. +$11.76bn (1.06%), +$2.59bn (0.93%), -$0.69bn (-0.79%) in the previous week, respectively.
Among US sectors, Information Technology (+$0.32bn, +1.57%) and Financials (+$0.32bn, + 1%) received the top inflows, while Energy (-$0.51bn, -2.05%) and Industrials (-$0.15bn, -1.87%) experienced the largest outflows.
Top 3 ETPs & ETNs by inflows: SPY (+$1.5bn), DXJ (+$1.4bn), EWJ (+$0.6bn)
Top 3 ETPs & ETNs by outflows: IWM (-$1bn), GLD (-$0.6bn), HYG (-$0.4bn)
New Launch Calendar: Income
Turnover Review: Floor activity rose by 14%
Total weekly turnover increased by 13.9% to $275.16bn vs. $241.62bn from the previous week. Last week's turnover level was 2.0% over last year's weekly average. Equity, Fixed Income and Commodity ETPs turnover increased by $27.7bn (13.3%), $3.4bn (19.1%) and $2.5bn (20.3%), respectively.
Assets under Management (AUM) Review: assets rose by $16bn
US ETP assets rose by $15.7bn (+1.0%) totaling $1.519 trillion at the end of the week. As of last Friday, US ETPs had accumulated an asset growth of 13.9% YTD. Assets for Equity, Fixed Income and Commodity ETPs moved +$20.6bn, -$1.6bn, -$3.5bn during last week, respectively.
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Source: Deutsche Bank-Synthetic Equity & Index Strategy-North America
The Too Big To Fail: Federal Reserve Bank At 100 Years Of Age
May 20, 2013--As the markets reach new highs, and scandal dominates the nation's capitol, I am compelled to examine the still unresolved challenges about whether our 100 year old central bank-the Federal Reserve-will be capable of warding off another potential systemic financial crisis like the one that almost toppled the economy in 2008.
And secondarily, whether the continuation of QE2 in lesser or greater degree will continue to foster a bull market in stocks– which have gained value in 16 of the last 20 weeks.
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Source: Forbes
Morgan Stanley-ETF Weekly Update
May 20, 2013--Weekly Flows: $4.9 Billion Net Inflows
ETF Assets Stand at $1.5 Trillion, up 14% YTD
One ETF Launch Last Week
Guggenheim to Close Chinese Yuan Bond ETF
US-Listed ETFs: Estimated Flows by Market Segment
ETFs posted net inflows of $4.9 bln last week; 4th consecutive week of net inflows
- ETFs have posted net inflows in 17 out of 20 weeks YTD, including $28.2 bln in net inflows over the last four weeks
- Last week’s net inflows were led by International-Developed Equity ETFs ($2.4 bln); conversely, US Small- & Micro-Cap ETFs
had net outflows of $847 mln, the most of any category we measured
ETF assets stand at $1.5 tln, up 14% YTD; $82.9 bln net inflows YTD
13-week flows were mostly positive among asset classes; combined $46.5 bln in net inflows
Despite exhibiting net outflows last week, Fixed Income ETFs have generated $15.1 bln in net inflows over the last 13 weeks, the
most of any category we measured
Commodity ETFs have posted net outflows of $16.1 bln over the last 13 weeks; in particular, one ETF, the SPDR Gold Trust
(GLD), has exhibited net outflows of $13.8 bln over this period (GLD accounts for 58% of Commodity market cap)
US-Listed ETFs: Estimated Largest Flows by Individual ETF
The SPDR S&P 500 ETF (SPY) posted net inflows of $1.5 bln last week, the most of any ETF
SPY’s net inflows over the last 4- ($4.9 bln) and 13-week ($6.8 bln) periods were also the most of any ETF
The WisdomTree Japan Hedged Equity Fund (DXJ) and iShares MSCI Japan Index Fund (EWJ) generated a combined $2.0 bln in
net inflows last week; over the last 13 weeks, the two funds have posted a combined $9.9 bln in net inflows
Three of the largest pure corporate bond ETFs (HYG, LQD, JNK) posted aggregate net outflows of $1.0 bln last week
US-Listed ETFs: Short Interest Data Unchanged: Based on data as of 4/30/13
Energy Select Sector SPDR (XLE) had the largest increases in USD short interest at $972 mln
XLE’s 46.6 mln shares short are at their highest level since 5/31/12
GLD’s shares short increased for the second consecutive period and are at their highest level since 8/31/11
Aggregate ETF USD short interest increased by $1.2 bln over the period ended 4/30/13
The average shares short/shares outstanding for ETFs is currently 4.3%
The SPDR Retail ETF (XRT) had the most shares short as a % of shares outstanding at 355% for the period ended 4/30/13; despite
consistently being one of the most heavily shorted ETFs since we began tracking the data, XRT has outpaced the S&P 500 Index
from a total return standpoint YTD and over the past 1-, 3-, and 5-year periods
Based on multiple borrowings and the ability to continuously create new shares, shares short as a % of shares outstanding can
exceed 100% (only seven 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 5/17/13 based on daily change in share counts and daily NAVs.
$6.5 bln in total market cap of ETFs less than 1-year old
Newly launched International - Emerging Equity ETFs accounted for 24% of the market cap of ETFs launched over the past
year, the most of any category; iShares Core MSCI Emerging Markets ETF (IEMG) is the largest recently launched ETF with a
market cap of $1.3 bln
Issuance has been light in 2013 relative to the past three years; 44 new ETF listings and 27 closures/delistings YTD
Out of the 101 ETFs launched over the past year, 66 had no net flows last week; many newer listing are simply not gaining
traction and 41 have market caps less than $10 mln
The top 10 most successful launches make up 67% of the market cap of ETFs launched over the past year
Eight different ETF sponsors and two asset classes represented in top 10 most successful launches
Seven out of the 10 most successful launches over the past year have an income orientation
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Morgan Stanley
CFTC.gov Financial Data for Futures Commission Merchants Update
May 20, 2013--Selected FCM financial data as of March 31, 2013 (from reports filed by April 30, 2013) is now available.
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Source: CFTC.gov
H.R. 992, Swaps Regulatory Improvement Act
May 20, 2013--As ordered reported by the House Committee on Financial Services on May 7, 2013
H.R. 992 would allow certain financial firms to retain financial portfolios containing swaps while remaining eligible for assistance from the Federal Reserve and Federal Deposit Insurance Corporation (FDIC).
A swap is a contract between two parties to exchange payments based on the price of an underlying asset or change in interest, exchange, or other reference rate. Swaps can be used to hedge or mitigate certain risks associated with a firm’s traditional activities, such as interest rate risk, or to speculate based on expected changes in prices and rates.
Enacting this legislation could affect direct spending and revenues; therefore, pay-as-you-go procedures apply. However, CBO estimates that any impact on the net cash flows of the Federal Reserve or the FDIC over the next 10 years would not be significant.
view the H.R. 992
Swaps Regulatory Improvement Act
Source: Congressional Budget Office (CBO)
VTL Associates Closes Growth Capital Investment
Suzhou Industrial Park Kaida Venture Capital Investment will fuel expansion of RevenueShares Family of ETFs
May 20, 2013--VTL Associates, LLC, an independent investment advisory and consulting firm, has received an investment from Suzhou Industrial Park Kaida Venture Capital, an international venture capital firm based in Dalian, China.
The growth capital will be used to support the expansion of RevenueShares, a division of VTL that provides revenue-weighted exchanged-traded funds (ETFs).
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Source: VTL Associates
