Global ETF News Older than One Year
Shadow Banking Is a New Culprit in Systemic Risk: Fitch
May 21, 2019--Bank exposure channels, insurance companies and pension funds may be at risk, Fitch said.
Specifically, Fitch pointed to the continued rise of shadow banking as a potential culprit in new systemic risk.
Shadow banking is credit lending and the exchange of liquidity that occurs outside of mainstay financial institutions such as banks and insurance companies
Source: Think Advisor
Investec closes robo-advice
May 20, 2019--Investec's international robo-advice offering, Click & Invest, has been shuttered just two years after it was launched.
Citing low appetite for the service, Investec said "the market itself is growing at a much slower rate than expected."
Investec focusing on improved capital allocation and cost management, it said.
"WWe fully appreciate that this announcement will be of real sadness to both clients and staff of Investec Click & Invest," Investec said.
Source: financialstandard.com.au
Aberdeen Standard Investments Precious Metals Outlook: May 2019 Investors Shy Away From Precious Metals Despite Growing Market Risks
May 20, 2019--Despite continued low real interest rates and unresolved geopolitical tensions investor interest in precious metals remains lackluster in recent months.
Given that the investor complacency appears to be settling in again and that global growth continues to slow, the upside risks to both gold and silver currently appear larger than the downside risks.
Platinum remains at a historic discount to palladium even with the strong return posted in April and still has further room to run. Palladium meanwhile is still digesting the recent sell off likely sparked by profit taking as a loosening physical market, but still remains in a structural supply deficit and may see a recovery back to the $1400/ounce level.
Source: Aberdeen Standard Investments
IMF Working Paper-Pledged Collateral Market's Role in Transmission to Short-Term Market Rates
May 17, 2019--Summary:
In global financial centers, short-term market rates are effectively determined in the pledged collateral market, where banks and other financial institutions exchange collateral (such as bonds and equities) for money.
Furthermore, the use of long-dated securities as collateral for short tenors-or example, in securities-lending and repo markets, and prime brokerage funding—impacts the risk premia (or moneyness) along the yield curve.
In this paper, we deploy a methodology to show that transactions using long dated collateral also affect short-term market rates. Our results suggest that the unwind of central bank balance sheets will likely strengthen the monetary policy transmission, as dealer balance-sheet space is now relatively less constrained, with a rebound in collateral reuse.
Source: IMF
IMF Working Paper-FinTech in Financial Inclusion: Machine Learning Applications in Assessing Credit Risk
May 17, 2019--May 17, 2019--Summary:
Recent advances in digital technology and big data have allowed FinTech (financial technology) lending to emerge as a potentially promising solution to reduce the cost of credit and increase financial inclusion. However, machine learning (ML) methods that lie at the heart of FinTech credit have remained largely a black box for the nontechnical audience.
This paper contributes to the literature by discussing potential strengths and weaknesses of ML-based credit assessment through (1) presenting core ideas and the most common techniques in ML for the nontechnical audience; and (2) discussing the fundamental challenges in credit risk analysis. FinTech credit has the potential to enhance financial inclusion and outperform traditional credit scoring by (1) leveraging nontraditional data sources to improve the assessment of the borrower's track record; (2) appraising collateral value; (3) forecasting income prospects; and (4) predicting changes in general conditions. However, because of the central role of data in ML-based analysis, data relevance should be ensured, especially in situations when a deep structural change occurs, when borrowers could counterfeit certain indicators, and when agency problems arising from information asymmetry could not be resolved. To avoid digital financial exclusion and redlining, variables that trigger discrimination should not be used to assess credit rating.
Source: IMF
IMF Working Paper-Rethinking Fiscal Policy in Oil-Exporting Countries
May 17, 2019--Summary:
We examine the existing fiscal policy paradigm in commodity-exporting countries. First, we argue that its centerpiece—the permanent income hypothesis (PIH)-is not consistent with either intergenerational equity or long-term sustainability in the presence of uncertainty. Policies to achieve these goals need to be more prudent and better anchored than the PIH.
Second, we point out the presence of a volatility tradeoff between government spending and wealth and re-assess long-held views on the appropriate fiscal anchors, the vice of procyclicality, and the (im)possibility of simultaneously smoothing consumption and ensuring intergenerational equity and sustainability. Finally, we propose what we call a prudent wealth stabilization policy that would be more consistent with long-term fiscal policy goals, yet relatively simple to implement and communicate.
view the IMF Working Paper-Rethinking Fiscal Policy in Oil-Exporting Countries
Source: IMF
ETFGI reports assets invested in the Global ETF and ETP industry reached a record $5.57 trillion at the end of April 2019
May 17, 2019--ETFGI, a leading independent research and consultancy firm covering trends in the global ETF/ETP ecosystem, reported today that ETFs and ETPs listed Globally gathered net inflows of US$45.94 billion in March, bringing year-to-date net inflows to US$145.74 billion.
Assets invested in the Global ETF/ETP industry finished the month up 3.2%, from US$5.4 trillion at the end of March, to US$5.57 trillion, according to ETFGI's April 2019 Global ETF and ETP industry landscape insights report, an annual paid-for research subscription service. (All dollar values in USD unless otherwise noted.)
Highlights
Assets invested in the Global ETF/ETP industry reach a new record US$5.57 Tn.
Assets invested in the Global ETF/ETP industry increased 3.2% in April.
During April 2019, ETFs/ETPs listed Globally attracted $45.94 Bn in net inflows.
Source: ETFGI
Firms see risks on the horizon as LIBOR disappears
May 16, 2019--LIBOR and other interbank rates will disappear in 2021
Banks and other financial firms are bracing for a host of risks that may accompany the move away from interbank offered rates (IBORs), such as the London IBOR, to alternative financial benchmarks, Moody’s Investors Service reports.
The rating agency says that financial firms are expecting financial, operational, legal, regulatory and technological risks when the IBORs are replaced in 2021.
view more
Source: investmentexecutive.com
BetaShares-Global ETF Review Q1 2019: Fixated on Fixed Income
Within equities, North American exposures topped the charts, while, at a sector level, it was real estate that grew strongly as investors sought out high yield sectors to combat the lack of rate increases by the Fed. Financials and Technology ETFs were sold off, the first due to increased earnings pressure in the Banking industry and the latter due to profit taking as technology markets continued to rally.
The global ETF industry ended the first quarter of 2019 at a record high of US$5.4 trillion in assets under management (AUM), posting a strong quarterly growth rate of 12%.
Source: BetaShares
Oil Market Report: Markets remaining calm
At the time of writing, there is no disruption to oil supplies and prices are little changed. The IEA is monitoring the situation, particularly in view of the proximity of Fujairah to the strategically vital Strait of Hormuz. We are also monitoring the impact of the contamination of Russian crude oil passing through the 1.4 mb/d Druzhba pipeline system. The issue will be resolved in due course, eased by commercial and government stock draws by Russia’s customers. One consequence could be a loss of confidence in the quality of the crude flows and thus a search, where feasible, for alternative supplies that could intensify price pressures for heavy/medium sour crude oil.
Source: International Energy Agency
May 15, 2019--The first quarter of 2019 saw investors continue to preference investing via the ETF structure compared to traditional mutual funds, which continued to sustain net outflows. Fixed income was most definitely the flavour of the quarter, as investors moved to a decidedly risk-off position in their portfolios.
May 15, 2019--The theme we identified in last month's Report of "mixed signals" is appropriate again this month, with geopolitics and industry disruptions confusing the supply outlook, and the first change to our 2019 demand outlook for several months. The ongoing geopolitical supply concerns around Libya, Iran, and Venezuela have been joined in the past few days by the attacks on shipping off Fujairah and on two pumping stations in Saudi Arabia.
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