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European Weekly ETP Review: Another quiet week as the Summer draws to an end
Weekly European ETP Market Roundup
August 19, 2010--Highlights
Net Cash flows
Major European market indices largely reversed last week’s gains. The Euro Stoxx 50 index was down 2.6%, the CAC 40 index fell by 2.8%, the DAX fell by 2.4% and the FTSE 100 index dropped by 1.1%. The Euro was down 3.6% against the US dollar and the price of gold (USD/oz) rose by 0.8%.
The somber mood carried in the European ETF market and it almost entirely silenced flows. Total Inflow for the week amounted to just €56 million, compared to €1.1 billion of inflow last week. False start or warm-up, not clear, reality is that investors are still proving to be cautious with the mood clearly undefined.
European ETP cash flow activity was subdued across all asset classes. Equity net inflows totaled: €17 million (€825 million in previous week), fixed Income net inflows totaled €48 million (€210 million last week) and commodity ETPs netted €23 million of outflow ($1 million inflow last week). There were no meaningful cash flow trends within assets classes during the week that ended August 13 2010.
New Listings
Source listed one ETF targeting the Merrill Lynch Factor Model Index. The Merrill Lynch Factor Model is an index designed to track the performance of alternative investments, including hedge funds, funds of hedge funds and hedge fund indices, as represented by the HFRI Fund Weighted Composite Index.
Turnover
On-exchange daily average ETP turnover rose up by 1.8% to €1.73 billion, for the week that ended August 13 2010. This is the first rise in daily turnover in the past three weeks.
More analytically, equity ETF turnover rose by 0.9% to €1.26 billion, fixed income turnover rose by 1% to €203 million and commodity turnover rose by 7.1% to €251 million.
Assets Under Management (AUM)
European ETP AUM remained unchanged finishing the week at €198.1. Year to date, European AUM are up by 18.4%.
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Source: DB Global Equity Index & ETF Research
German pension funds 'absurd' to ditch equities, academics say
August 19, 2010--Equities are vital to maintaining return opportunities in second-pillar pensions, according to a study into the effects of the crisis on the German pension system
The research, commissioned by Union Investment, was carried out by Bernd Raffelhüschen and Johannes Vatter from the centre for intergenerational contracts at the University Freiburg.
In their paper, the academics said: "To deduce a general reduction of risky investments like funds or equities seems absurd because, with those asset classes especially, the return potential has to be taken into account."
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Source: IP&E
Status of the STOXX Sustainability Indices
August 19, 2010--STOXX Limited, a global index provider and creator of the leading European equity indices, today clarified that it will continue to calculate and publish the STOXX Sustainability Indices, contrary to what was implied in a media statement issued by SAM Group on August 18.
While STOXX Ltd. and SAM Group will end their cooperation, the Sustainability Indices - among them the well-known STOXX Europe Sustainability Index and the EURO STOXX Sustainability Index - will of course be continued to be calculated by STOXX.
The quality and thoroughness with which the STOXX Sustainability Indices are calculated will remain unchanged, and the indices will be provided under the established brand of the index provider STOXX. Going forward, the scope and depth of the research previously provided by SAM – merely the ranking of index components by sustainability standards – will be improved, and delivered by another data provider.
Details on this will be released shortly, but for the users of the indices nothing will change.
Further information on the STOXX Sustainability Indices can be found on www.stoxx.com.
Source: STOXX
Option contracts to double transaction volume at VOB
August 19, 2010--Options contracts, which are set to begin trading in February of next year, are expected to double the transaction volume at the Turkish Derivatives Exchange (VOB), Çetin Ali Dönmez, the general manager of the bourse, has said.
Speaking to the Anatolia news agency yesterday, Dönmez emphasized that the volume of forward foreign exchange transactions will increase significantly once the banking and insurance transaction tax (BSMV) and withholding tax on derivative products are removed. “We hope the BSMV and withholding tax will be lifted on Sept. 1 and Oct. 1, respectively. Once the system settles, daily forward foreign exchange transaction volume might increase to around $0.5 billion,” he said.
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Source: Todays Zaman
Platinum and palladium ETCs with currency hedging from DB ETC Index plc launched on Xetra
August 18, 2010-- Two new exchange traded commodities issued by DB ETC Index plc, the ETC platform of Deutsche Bank, are tradable on Xetra.
The two new db ETCs enable investment in exchange traded commodities on platinum and palladium with currency hedging for the first time. Both db ETCs are physically backed by the respective metal in allocated form.
ETC name: db Physical Palladium Euro Hedged ETC
Asset class: commodities
ISIN: DE000A1EK3B8
Total expense ratio: 0.75 percent
Benchmark: Palladium spot price (London)
ETC name: db Physical Platinum Euro Hedged ETC
Asset class: commodities
ISIN: DE000A1EK0H1
Total expense ratio: 0.75 percent
Benchmark: Platinum spot price (London)
Deutsche Börse’s ETC segment product range currently comprises 176 instruments. The monthly trading volume of ETCs on Xetra averages around 550 million euros.
Source: Deutsche Börse
New Credit Suisse Equity Index ETF Launched on Xetra
August 18, 2010-- Since Wednesday, a new exchange-traded equity index fund from the issuer Credit Suisse Fund Management S.A. has been tradable in Deutsche Börse’s XTF segment.
ETF name: CS ETF (Lux) on MSCI EMU Mid Cap
Asset class: equity index ETF
ISIN: LU0312694234
Total expense ratio: 0.54 percent p.a.
Distribution policy: distributing
Benchmark: MSCI EMU Mid Cap
The CS ETF (Lux) on MSCI EMU Mid Cap enables investors to track the performance of the MSCI EMU Mid Cap Index. The index comprises a total of 150 mid-cap companies from the following eleven euro-area countries: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal and Spain.
The product offering in Deutsche Börse’s XTF segment currently contains a total of 680 exchange-listed ETFs, making it the largest offering of all European stock exchanges. This selection, together with an average monthly trading volume of around 14 billion euros, makes Xetra Europe’s leading trading venue for ETFs.
Source: Deutsche Börse
ETF Landscape: STOXX Europe 600 Sector ETF Net Flows, week ending 13-Aug-10
August 18, 2010--Last week saw US$181.4 Mn net outflows from STOXX Europe 600 sector ETFs. The largest sector ETF outflows last week were in Basic Resources with US$163.1 Mn and Banks with US$64.6 Mn while Utilities experienced net inflows of US$48.5 Mn.
Year-to-date, STOXX Europe 600 sector ETFs have seen US$35.3 Mn net outflows. Basic Resources sector ETFs have seen the largest net outflows with US$171.9 Mn, followed by Food & Beverage with US$75.4 Mn while Media has experienced the largest net inflows with US$235.7 Mn YTD.
The US$8.6 Bn AUM invested in the ETFs is greater than the US$3.7 Bn open interest in the sector futures. The ETF AUM is greater than the open interest in each of the corresponding futures contract in all 19 sectors.
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Source: Global ETF Research & Implementation Strategy Team, BlackRock
SAM Deepens Cooperation With Dow Jones Indexes
World’s Leading Index Provider And SAM Intensify Partnership To Expand Joint Offering In The Field Of Sustainability Indexes - Dow Jones Indexes Will Serve As Calculation Agent For European Sustainability Indexes - Collaboration With STOXX Terminated Amicably
August 18, 2010--SAM, the investment boutique focused exclusively on Sustainability Investing, is to deepen its successful eleven-year-old collaboration with Dow Jones Indexes by expanding its worldwide Sustainability Index offering. Under this joint marketing agreement, Dow Jones Indexes will be responsible for calculation, marketing and distribution of the indexes including the European indexes, while SAM remains responsible for the component selections. As a result, SAM’s collaboration with STOXX Ltd., which had previously calculated the European STOXX Sustainability Indexes, has been terminated.
Rodrigo Amandi, Managing Director SAM Indexes: “Over the past eleven years, the Dow Jones Sustainability Indexes have been successfully developed and expanded worldwide. Through what is now an exclusive global collaboration with Dow Jones Indexes, we are taking account of the growing significance of sustainability benchmarks by offering investors around the world a homogeneous index family. We extend our thanks to partner STOXX for the positive cooperation to date and look forward, in partnership with Dow Jones Indexes, to continuing our pioneering work in the field of sustainability and shaping the segment’s future growth.”
SAM retains responsibility for component selection
The Dow Jones Sustainability Indexes (DJSI) are the oldest benchmarks for Sustainability Investing. Aggregate investment volumes in DJSI-based portfolios now total more than USD 8bn. Starting September 10, 2010, Dow Jones Indexes will be the calculation agent for the new Dow Jones Sustainability Europe Indexes. Construction and methodology are consistent with those of the existing Dow Jones Sustainability Indexes family. For interested investors, this means more consistency and greater comparability right across the entire index family. The index composition and the development of the Corporate Sustainability Assessment will, as in the past, be the responsibility of SAM.
Source: Online News
Dublin forced to pay high yields
August 17, 2010--Investors demanded big premiums from Ireland to buy government bonds on Tuesday, prompting worries over the health of the eurozone debt markets.
Dublin was forced to pay high yields to attract investors, which will put more pressure on already stretched Irish government finances.
Investors also warned that the eurozone was entering “a difficult period” with a funding threat hanging over many single-currency economies.
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Source: FT.com
Nordic and Baltic Ministries, Central Banks and Supervisory Authorities sign Agreement on Financial Stability
August 17, 2010--A co-operation agreement on cross-border financial stability, crisis management and resolution between the finance ministries and other relevant ministries, central banks and financial supervisory authorities of Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden has been signed.
The agreement enhances preparedness to handle cross-border financial stability concerns in the financially integrated Nordic-Baltic region. It also establishes the first European cross-border stability group.
The financial integration between the Nordic and Baltic countries warrants deeper cooperation between public authorities in the area of financial stability. In response to this, an agreement has over the past year been designed to enhance cooperation in financial crisis prevention, management and resolution. By signing the agreement, the public authorities in the Nordic and Baltic countries increase their preparedness to handle problems in cross-border banks. These authorities are the first to implement the provisions of the EU-wide Memorandum of Understanding on cross-border financial stability of June 2008.
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Source: government.fi
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