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Mercer study: having up to 5 percent gold in your portfolio considerably reduces the risk of loss
Study on gold as an asset class for institutional investors
May 25, 2011--The Mercer study examines the effect of holding a certain proportion of gold on the performance of a portfolio of large-cap shares and government bonds. To this end, it defines two different scenarios: a normal market environment scenario and a stress scenario. In a nutshell, investment in gold was shown to be a sensible diversification of a portfolio, particularly in times of crisis.
The study also shows that adding gold reduces the risk of loss in achieving any target return or that the expected return for any targeted risk of loss is higher.
"For institutional investors who are not permitted to make direct investments in gold for regulatory reasons, we consider ETPs to be a suitable form of investment for participating as directly as possible in the performance of the gold price," said Dr Heinz Kasten von Mercer. "However, we should take into account whether this ETP is secured by physical gold and its market price is thus directly coupled to the gold price. In addition, investors should ask themselves whether the price of the ETP will perform systematically differently from the gold price over time, for example through a certain fee structure."
"Xetra Gold is the only product on the market that is backed by physical gold and doesn't show a tracking error because the management fees are not taken out of the portfolio," said Martina Gruber, managing director at Deutsche Börse Commodities GmbH. "It is the first choice for institutional investors because it's inexpensive, flexible and very safe."
"Since mid-2010, insurance companies in Germany have also been allowed to purchase Xetra Gold for their restricted assets in the amount of up to 5 percent of their commodities investment," said Steffen Orben, managing director at Deutsche Börse Commodities GmbH. "The Mercer study proves that the risk of loss can be considerably reduced in this way."
Source: Deutsche Börse Commodities
Total end 'unlikely' to bank aid, says Vickers
May 25, 2011--Members of a commission that is proposing a shake-up of the banking industry admitted their reforms might not prevent more failures or free the taxpayer from providing support to the sector.
Sir John Vickers, chairman of the Independent Commission on Banking, told parliamentary members that while its recommendations would reduce the implicit state subsidy for banks it was unlikely they would abolish it totally
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Source: FT.com
BlackRock ETF Landscape: European STOXX 600 Sector ETF Net Flows for Week Ending 20-May-2011
May 25, 2011--For the week ending 20 May 2011, there were US$109.7 Mn net inflows into STOXX Europe 600 sector ETFs. The largest sector ETF net inflows last week were in healthcare with US$143.7 Mn followed by food and beverage with US$49.1 Mn net inflows while oil and gas experienced net outflows of US$149.3 Mn.
Year to date, STOXX Europe 600 sector ETFs have seen US$477.6 Mn net inflows. Healthcare has seen the largest net inflows with US$316.4 Mn, followed by banks with US$279.6 Mn net inflows while basic resources experienced the largest net outflows with US$172.7 Mn.
As of 20 May 2011, there is US$10.8 Bn AUM invested in the STOXX sector ETFs which is almost double the US$6.9 Bn open interest in the sector futures. The ETF AUM is greater than the open interest in the corresponding futures contract in 16 out of 19 sectors.
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Source: Global ETF Research & Implementation Strategy Team, BlackRock
Launch of the Swedish derivatives map 2011 – The Swedish categorization standard for structured products.
May 25, 2011--The instruments are divided into categories by risk and function in four main categories: Leverage product, Participation products, Yield enhancement products and Capital protected products. There are several instrument types included in each category and each type is described through a graphical pay out profile, main characteristics and market expectations.
”The map is a very important tool for a dynamic and growing Swedish investment products market. The work for transparency will benefit both end clients as well as market participants. We are glad that more and more market participants supports this.” says Tommy Fransson, head of NDX, Nordic Growth Market.
The Swedish categorization standard follows the guide lines produced by the European Structured Investment Products Association – Eusipa.
“Transparency is one of the cornerstones to further develop a market. The common work for a harmonized European categorization standard is to the benefit for the whole market".” says Reinhard Bellet, President Eusipa.
The Swedish Exchange Traded Investment Products Association – SETIPA, support the Swedish categorization standard.
“The map is an important part of our work to increase transparency and understanding for exchange traded investment products. SETIPA is a part of the European harmonization work for categorization through the categorization committee of Eusipa.” says Conny Myhrberg, President SETIPA.
You find the Swedish derivatives map on www.ndx.se/education and www.setipa.se.
Source: Nordic Growth Market
NYSE Euronext announces new ETF - Lyxor ETF CAC MID 60
May 25, 2011--NYSE Euronext is pleased to announce that Lyxor has listed 1 new ETF on NYSE Euronext's Paris market today:
Name:Lyxor ETF CAC MID 60
Trading name:LYXOR CACM 60
ISIN: FR0011041334
Symbol:CACM
Reuters RIC:CACM.PA
BBG Ticker:CACM FP
Underlying index: CAC Mid 60
TER:0,50%
NYSE Euronext has now 653 listings of 562 ETFs based on more than 360 indices.
Source: NYSE Euronext
Pension funds win reprieve from European derivatives regulation
May 25, 2011--Pension funds have won a reprieve from the derivatives regulation passing through Brussels, at least for a period of three years, with further extension possible.
This follows acceptance of a relevant amendment that cleared through the European Parliament's Economic and Monetary Affairs Committee (Econ) yesterday.
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Source: IP&E
All German banks have passed EU stress tests: report
May 25, 2011--All 13 German banks submitted to European stress tests have passed, the weekly Die Zeit said in its edition to appear on Thursday, citing financial sources.
Hypo Real Estate, which failed tests last year, is in better shape since it transferred toxic assets to an external entity known as a "bad bank," with government help.
Two state-owned regional banks that came close to failing last time, Nord/LB and Helaba, have taken measures to ensure their capital meets criteria set out by the European Banking Authority.
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Source: EUbusiness
Strong demand for EU bail-out bond sale
May 24, 2011--The European Union enjoyed strong demand for its third bond to raise money for the rescues of Portugal and Ireland, in a sign of investors’ confidence that the eurozone can survive the debt crisis.
Despite rising concern over contagion, and the single currency coming under pressure this week, banks, pension funds, insurers and other investors from Europe and Asia, including some big sovereign wealth funds, bought the debt.
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Source: FT.com
EFAMA replies to FSB: The UCITS framework provides high levels of risk mitigation and investor protection for ETFs
May 24, 2011--EFAMA’s reply to the Financial Stability Board’s Note on potential financial stability issues arising from recent trends in Exchange-Traded Funds (ETFs) stresses that a large majority of European ETFs are UCITS, and the UCITS Directive provides a robust regulatory framework for investment funds, with strong risk mitigation provisions.
The UCITS Directive is one of the world’s most respected and widely recognized regulatory regimes for investment funds, and it largely addresses the concerns expressed by the FSB. Asset segregation, risk management, conflict of interest rules, investment limits, collateral rules for OTC derivatives and disclosure requirements are key elements of the UCITS regime, and will be even further strengthened by the UCITS IV Directive from 1 July 2011.
EFAMA fully supports initiatives to increase the understanding of ETFs, but the areas of concern in the Note are not unique to ETFs, and regulators should look at other products as well, especially when focusing on systemic risks.
Eurex to launch new access point in Hong Kong
May 24, 2011--Eurex announced today that it will launch its new access point in Hong Kong in June. This will be the second Eurex access point in Asia. Access points offer Eurex member firms direct, high-speed and cost-effective network access to Eurex’s highly liquid trading platform. Currently, Eurex has five members based in Hong Kong – the newest member is Nanhua Futures (Hong Kong) Co. Ltd., which joined as a trading participant in April 2011.
Michael Peters, member of the Eurex Executive Board, commented: “We are pleased to offer our customers a high-performance connection to our exchange in this fast-growing region. The launch of our new access point in Hong Kong underpins our strategy of expanding in one of the most important Asian market.”
One of Eurex’s core strategic objectives is the expansion of its business activities in the Asia-Pacific region. Eurex has been operating an access point in Singapore since 2006. Representative offices in Hong Kong, Singapore and Tokyo were opened in 2009. Altogether, there are 19 members connected from the Asia-Pacific region, and several companies are in the admission process. The volume generated by members located in Asia has increased by 50 percent in the first quarter of 2011 compared to 2010.
With the launch of this new access point, Deutsche Börse and Eurex operate 14 access points in major international financial centers around the world: Amsterdam, Chicago, Frankfurt, Gibraltar, Helsinki, Hong Kong, London, Madrid, Milan, New York, Paris, Singapore, Vienna and Zurich.
Source: Eurex
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