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EDHEC-Risk Institute research sees social infrastructure as too small and risky to be attractive to pension funds
March 6, 2012--In a new study entitled "Pension Fund Investment in Social Infrastructure: Insights from the 2012 reform of the private finance initiative in the United Kingdom," EDHEC-Risk Institute has identified two fundamental issues that make social infrastructure potentially unattractive to pension funds: in-built political risk and limited asset pool size.
Social infrastructure investments deliver public assets and services, such as schools and hospital buildings, in exchange for a revenue stream paid directly by the public sector. It is typically opposed to economic infrastructure, which collects revenues from end users and can include toll roads, airports or power generation.
visit www.edhec-risk.com for more info.
view the EDHEC-Risk Publication Pension Investment in Social Infrastructure
Russell Investments Launches Russell Europe SMID 300 Index
March 06, 2012 --Russell Investments today announces the launch of the Russell Europe SMID 300 Index, providing the first index of highly liquid and rapidly tradable small-and mid-cap European stocks designed to be used as the basis of investable products. This is one more in a series of product and service enhancements introduced by Russell Indexes to European clients in the last year as the firm continues to build on its global capabilities.
Scott Stark, head of Russell Indexes Europe, comments, "There is significant demand in Europe for an investable small- and mid-cap index from hedge funds, asset managers and the trading community looking to gain exposure to this area of the European equity market. The Russell Europe SMID 300 Index was developed after lengthy consultations in Europe with a number of large financial institutions including Deutsche Bank, Goldman Sachs and UBS. As a result, the key feature of the new index is its tradability."
The new Russell Europe SMID 300 Index comes at a time of increased focus on European small- and mid-cap equities. At the same time, it builds on the core strengths of Russell Indexes while addressing a critical challenge in European portfolio construction. "The trend we see in small- and mid-cap stocks since the beginning of the year is confirmation that the Eurozone crisis has been steadily abating thanks to policy action by the central bank and the European Union leaders," said James Barber, portfolio manager of European multi-manager funds at Russell Investments Europe. "This progress is tenuous, however, and we could be back at the precipice later in the year. We would expect small- and mid-cap stocks to reflect any changes in the risk outlook in Europe."
DB - Equity Research-ETF Research :Monthly European ETF Market Monitor and ETF month in perspective
MArch 6, 2012--ETF month in perspective:
European ETF Market Monthly Monitor: Fixed income ETFs: Corporate credit benchmarked ETFs take front seat
February was a positive month for the European ETF industry bringing net inflows of €1.5 billion. This level of flows is at par with the comparable month last year that brought in €1.4 billion at the time. Equities accounted for €1.2 billion, fixed income €80 million, commodities €27 million and alpha driven strategies added €254 million in February.
In terms of direction, February marked a solidification of the trend we have observed in January, with investors continuing to return to the market selectively, after the long drought of the second half of 2011.
The size of February flows was satisfactory but by no means exceptionally high and it was not what left the stronger mark on this year's ETF investment calendar. It is the focus and directionality of flows that are the big news this month. Both equity and fixed income flows showed strong directionality, even though the surface might point to a flat-line, especially for fixed income ETFs.
European ETF total assets also continued to rise in February, reaching €228.1 billion and adding 3.1% over January month end levels. Asset price rises contributed 2.4% while new money accounted for 0.7% of the growth.
General equity theme: Re-emergence of EMs
Equity inflows clearly had an emerging markets flavor, with total emerging market inflows totaling €1.2 billion for February. MSCI Emerging Markets benchmarked ETFs receiving €760 million, the month's biggest equity trend, while BRIC countries received an additional €367 million. LATAM broad index benchmarked ETFs also received €112 million. Within BRIC, all countries saw positive flows, with China [€153 million] and Russia [€100 million] attracting the highest levels.
The largest single ETF recipients were the iShares MSCI EM ETF [€243 million], the Credit Suisse MSCI EM ETF [€197 million] and the db x-trackers MSCI EM ETF [€126 million].
The emerging markets theme continues from January, when emerging markets benchmarked equity ETFs received €903 million. Interest in January was somewhat different than February, when broad EM benchmarked ETFs [€385 million] received less than country and region specific ETFs [€518 million].
European equity benchmarked ETFs continue to lose assets
Developed market equity benchmarked ETFs in February presented the opposite picture when compared to emerging markets. They continued to lose assets, with US and France leading the outflows, registering €285 million and €235 million respectively.
The overall outflows from Europe represent a continuing – albeit slowing - trend from January, when European developed equity market benchmarked ETFs experienced outflows of €663 million. Germany was the leading source of outflows in January, with €400 million of outflows.
US high-tech, energy and dividends get preference over broad blue chip indices
European domiciled US equity market benchmarked ETFs experienced strong inflows in January, totaling €569 million. They however experienced outflows in February totaling €285 million, largely driven by S&P500 benchmarked ETFs.
US domiciled ETFs benchmarked to the US equity market experienced flows inflows of $11.2 billion in January 2012 and outflows of $186 million in February 2012. This is a trend that is similar to that observed for European domiciled ETFs that track the US equity market. However, looking below the surface, US domiciled ETF investors took much more targeted positions, than the respective European investors, when making decisions about the US equity market.
US domiciled S&P500 benchmarked ETFs experienced outflows of $4.8 billion in the first two months of 2012 [January: $30 million, February: $4.7 billion]. In fact, S&P500 benchmarked ETFs outflows represent the largest US equity trend, when looked at by benchmark.
The non S&P500 US domiciled ETF inflows into US equity market benchmarked ETFs were driven by targeted views on specific sectors. The top ten US equity ETF benchmark flows YTD, totaling $9.8 billion, represent 87% of the total US equity market ETF flows. These flows were received by ETFs that are benchmarked to high-tech, energy and selective dividends.
Fixed income theme: Corporate bonds attract strong interest
Overall European domiciled fixed income funds have received net inflows of €501 million since the beginning of the year. Corporate & credit benchmarked ETFs have received total inflows of €1.7 billion, while sovereign benchmarked ETFs have experienced outflows totaling €976 million.
Decisive switch into Euro corporate bonds as spread levels decline
February marked a decisive change in directional activity for fixed income, in the non-sovereign fixed income part of the European ETF market. Historically in Europe, fixed income ETF trends had been driven [and often dominated] by sovereign flows, which due to the size of the sovereign part of the fixed income ETF market [55%] dictated overall fixed income activity. Sovereign driven trades are generally defensive in nature, while the recent fixed income ETF flows signal investors using corporate and credit benchmarked ETFs to more actively to draw returns.
In developed market issued debt, there has been a clear shift from European sovereigns [outflows of €976 million] and money markets [outflows of €528 million] towards – mainly European issued – corporates [inflows of €1.5 billion]. Both corporate as well as emerging market and high yield benchmarked ETFs started to see positive flow activity since the beginning of 2012. This activity is characterized by clear trending, both with regards to size as well as direction.
The outflows from sovereign and into corporate and credit is a theme that has held since the beginning of the year. Sovereign benchmarked ETFs had outflows of €144 and €833 million for each January and February 2012, while corporate and credit benchmarked ETFs had inflows of €627 million and €1.0 billion over the same respective months.
These fixed income market components have been active in the US fixed income ETF market for the past three years, but European investors stayed largely out. This move points to European domiciled investors continuing to come out of their shell [a state prevalent over the second half of 2011] and focusing on corporate credit and high yield debt.
Declining spreads accompany inflows into corporate benchmarked ETFs higher
Cash flows into corporate & credit benchmarked ETFs has followed a steady and upward trend since the beginning of the year, with cash flows exhibiting acceleration in February 2012 [totaling €1.0 billion]. This trend took place as corporate bond asset swap spreads declined.
A similar positive cash flow trend materialized in the high yield component of the European fixed income ETF market, however, its cash flow impact was much smaller [2012 YTD €358 million].High yield benchmarked ETFs comprise 3.9% of the European fixed income market.
ETF comparatives: Mutual Funds, cash equity turnover
European ETF turnover, declined to 7.2% [from 8.0%] as of the end of February 2012. The equivalent number for the US market stands at 24.2% for the same period, down by 0.3% from the end of January 2012.
European ETFs comprised 2.7% of the continent's mutual fund industry as of December 2011. European domiciled ETFs registered outflows of €3.3 billion over the fourth quarter of 2011, while UCITS mutual funds registered over 17x higher outflows, totaling €55.3 billion.
Mutual fund industry data as per the European Fund Management Association [EFAMA] and are currently available until the end of 2011.
US ETFs comprised 8.4% of the mutual fund industry as of the end of January 2012, up from 8.1% at the end of December 2011.
US domiciled ETFs registered inflows of $27.0 billion in January 2012, while US mutual funds registered inflows of $35.6 billion over the same period.
Mutual fund industry data as per the Investment Company Institute [ICI].
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Second estimates for the fourth quarter of 2011-Euro area and EU27 GDP down by 0.3%
+0.7% and +0.9% respectively compared with the fourth quarter of 2010
March 6, 2012--GDP decreased by 0.3% in both the euro area1 (EA17) and the EU271 during the fourth quarter of 2011, compared with the previous quarter, according to second estimates released by Eurostat, the statistical office of the European Union. In the third quarter of 2011, growth rates were +0.1% in the euro area and +0.3% in the EU27.
Compared with the fourth quarter of 2010, seasonally adjusted GDP rose by 0.7% in the euro area and by 0.9% in the EU27, after +1.3% and +1.4% respectively in the previous quarter.
Variation in components of GDP During the fourth quarter of 2011, household2 final consumption expenditure decreased by 0.4% in the euro area and by 0.2% in the EU27 (after +0.3% and +0.2% respectively in the previous quarter). Gross fixed capital formation fell by 0.7% in both zones (after -0.3% in both zones). Exports dropped by 0.4% in the euro area and by 0.1% in the EU27 (after +1.4% and +1.3%). Imports decreased by 1.2% in the euro area and by 0.8% in the EU27 (after +0.7% in both zones).
US and Japanese GDP
In the United States GDP increased by 0.7% during the fourth quarter of 2011, after +0.5% in the third quarter of 2011. In Japan GDP dropped by 0.6% in the fourth quarter of 2011, after +1.7% in the previous quarter.
Compared with the fourth quarter of 2010, GDP gained 1.6% in the United States (after +1.5% in the previous quarter) and fell by 1.0% in Japan (after -0.6%).
Eurozone in 'mild recession': EU commissioner
March 6, 2012--The eurozone is currently going through a mild recession, the European Union's Economic Affairs Commissioner Olli Rehn said on Tuesday.
"The euro area is currently in a mild recession," he said.
Rehn had said in January that he expected eurozone activity to contract in the first half of this year.
Greek euro exit would be 'a disaster', says Barroso
March 6, 2012--A Greek exit from the eurozone would be "a disaster" for the Greek people, European Commission head Jose Manuel Barroso told Tuesday's edition of Austria's Die Presse newspaper.
"For the Greek people, it would be a disaster. We know what happened to the people of Latin America when they went bust," he said.
It would also have dire consequences for other eurozone members, "it would provoke a domino effect," he added.
SPDR ETFs, the exchange traded funds (ETF) platform of State Street Global Advisors (SSgA), has cross-listed new ETFs on the London Stock Exchange (LSE)
March 5, 2012--SPDR ETFs, the exchange traded funds (ETF) platform of State Street Global Advisors (SSgA), has cross-listed new ETFs on the London Stock Exchange (LSE) including SPDR S&P Euro Dividend Aristocrats ETF (EUDC (GBP), EUDI (EUR), SPDR S&P UK Dividend Aristocrats ETF (UKDV) and SPDR FTSE UK All Share ETF (FTAL).
Like all SPDR ETFs globally, these new products are physically replicated.
With the increasing need for income in a low interest rate environment, dividend ETFs are potentially an attractive option for investors looking for diversified access to dividend-paying stocks. The two new dividend ETFs join the recently launched SPDR S&P US Dividend Aristocrats ETF, which gained over $350 million* in assets since its launch last October.
iShares launches two ETFs to expand fixed income range and enhance emerging market equity exposure
March 5, 2012--iShares, the Exchange Traded Funds (ETF) platform of BlackRock, Inc, has launched two funds on the London Stock Exchange (LSE), expanding its range of emerging market products across fixed income and equities.
These products meet the needs of investors searching for a steady stream of income available via the iShares Barclays Capital EM Asia Local Govt Capped Bond fund, and those looking for single country emerging market exposure through the iShares MSCI Mexico IMI Capped fund.
The iShares Barclays Capital EM Asia Local Govt Capped Bond fund is the first ETF in Europe to offer exposure to fixed rate government bonds that are issued by emerging market countries in Asia and denominated in their local currencies. It offers cost efficient and diversified access to a basket of bonds from countries including Thailand, South Korea, Philippines, Malaysia and Indonesia in a single trade. The fund is physically-replicating, with full transparency into the underlying bonds and has a total expense ratio (TER) of 0.50%.
Moody's downgrades Greece to C from Ca
March 5, 2012--On March 2, 2012, Moody's Investors Service downgraded Greece's local-and foreign-currency bond ratings to C from Ca and has not assigned an outlook to the ratings.
Today's rating decision was prompted by the recently announced debt exchange proposals for Greece, which imply expected losses to investors in excess of 70%, which is consistent with Moody's criteria for a C rating.
RATINGS RATIONALE
The announced debt exchange proposal implies that private creditors that participate will incur substantial economic losses on their holdings of Greek government debt. Moody's estimates that the percentage difference between the value of the coupon and principal promised by existing Greek government bonds and the value of the package investors will receive in the exchange exceeds 70%, which is consistent with a C rating. After the Eurogroup's assessment of Greece's adherence to bailout conditions has been finalised, debt exchanges have been completed and a new Memorandum of Understanding between the EU and the Greek government has been finalized and published, Moody's will re-assess the credit risk profile and ratings of any outstanding or new securities issued by the Greek government.
The Europe Dow Rose 6.04% In February, According To Dow Jones Indexes
Novo Nordisk Topped All 30 Europe Dow Components With 18.99% Gain For The Month
March 5, 2012--The Europe Dow, an equal-weighted index that measures 30 of the region's leading blue-chip stocks, gained 6.04% in February, according to data compiled by Dow Jones Indexes, a leading global index provider.
The index’s top component performer for February was Novo Nordisk A/S Series B of Denmark, which closed up 18.99%. Shares of BNP Paribas S.A. (France) and BASF SE (Germany), up 15.65% and 14.57%, respectively, were the second- and third-leading stocks on The Europe Dow. Rio Tinto PLC (Great Britain), which fell 4.65%, was The Europe Dow’s worst-performing stock in February.
