Global ETF News Older than One Year
This week from the FTSE Russell Blog: Slowing global growth likely to test risk appetite
February 22, 2019--Fixed income cartography meets index methodology
Cartography, a fancy word to describe the design of maps, is similar to methodology, another fancy word that describes the design of indexes.
Slowing global growth likely to test risk appetite
Easing US financial conditions and progress on US-China trade talks have fueled a strong global equity rally but late-cycle macro challenges are likely to continue testing risk-on momentum.
Source: FTSE Russell
Derivatives Trading Costs Could Double
February 22, 2019--Derivatives trading costs could nearly double if volatility increases, which requires firms to ensure they have an efficient hedging strategy in place.
High volatility could increase initial margin by up to 94% for some portfolios according to derivatives risk analytics provider OpenGamma. These portfolios calculate margin requirements using a standard portfolio analysis of risk (Span) methodology for futures and options.
Source: marketsmedia.com
ETFGI reports assets invested in actively managed ETFs and ETPs listed globally rises to US$112 billion, highest on record
February 21, 2019--ETFGI, a leading independent research and consultancy firm covering trends in the global ETF/ETP ecosystem, reported today that actively managed ETFs and ETPs gathered net inflows of US$1.48 billion in January.
Assets invested in actively managed ETFs/ETPs finished the month up 4.60%, from US$106.90 billion at the end of December, to US$111.83 billion, according to ETFGI's January 2019 Active 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 Actively managed ETFs/ETPs reach US$111.83 Bn in January, the highest on record.
Source: ETFGI
Global ETF Review 2018: Insights into a multi-trillion dollar industry
February 20, 2019--Quick read-Summary:
We launched the first edition of the quarterly BetaShares Global ETF Review-analysing the key trends & developments in the industry outside Australia.
The global ETF industry ended 2018 at US$4.8 trillion in assets under management (AuM), posting a robust annual growth rate of 20% since 2005.
In the US in 2018, passive funds (including traditional unlisted mutual funds and passive ETFs) attracted net inflows of US$431 billion. In comparison, active mutual funds in the U.S. reported net outflows of US$418 billion, the highest level of annual outflows for this category on record.
In the larger and more mature market of the U.S., ETFs represent about 16% of the size of the broader mutual fund industry. Comparatively, in Australia, penetration is at about 1.5%. While recent growth has been fast, we believe Australian investors are just starting to scratch the surface when it comes to ETF usage.
Fears that the popularity of ETFs has fuelled sharemarket volatility are unfounded and data from 2018 assists in debunking this myth.
Source: FT.com
Once hailed as unhackable, blockchains are now getting hacked
February 19, 2019--More and more security holes are appearing in cryptocurrency and smart contract platforms, and some are fundamental to the way they were built.
arly last month, the security team at Coinbase noticed something strange going on in Ethereum Classic, one of the cryptocurrencies people can buy and sell using Coinbase's popular exchange platform.
Its blockchain,the history of all its transactions, was under attack.
An attacker had somehow gained control of more than half of the network's computing power and was using it to rewrite the transaction history. That made it possible to spend the same cryptocurrency more than once-known as "double spends." The attacker was spotted pulling this off to the tune of $1.1 million.
Source: technologyreview.com
Advisory fees push commissions further into the background
February 19, 2019--Fee-based advice is not perfect, but most clients prefer it over a commission-based option
When there's a financial professional in the picture, investors mostly prefer paying fees based on assets under management.
The latest research from Cerulli Associates found that clients seeking investment advice from financial professionals have largely warmed to the idea of their adviser joining them on the side of the table that benefits when portfolios rise and suffers when portfolio balances fall.
Source: investmentnews.com
Price Tag for Sustainable Infrastructure Spending in Developing Countries is 4.5% of GDP
February 19, 2019--A new World Bank report finds that investments of 4.5 percent of GDP will allow developing countries achieve their infrastructure-related Sustainable Development Goals and stay on track to limit climate change to up to 2°C. Beyond the Gap, also finds infrastructure investment compatible with full decarbonization need not cost more than more polluting alternatives.
Source: World Bank
BIS-Over-the-counter market liquidity and securities lending
February 19, 2019--Summary
Focus
This paper studies how securities lending affects over-the-counter market (OTC) liquidity.
Contribution
The financial crisis of 2007-09 kindled a wider interest in studies of liquidity in OTC financial markets, such as the corporate bond market. Buyers and sellers in these markets trade without centralised exchanges. The greater time and resources needed to complete trades can impede market liquidity-the ability to transact efficiently.
Intermediaries, such as broker-dealers, may emerge to maintain an inventory of securities and to match buyers and sellers. Securities lending markets offer dealers a way to mitigate the consequences of frictions inherent in OTC markets. We identify and quantify the importance of securities lending of corporate bonds to market liquidity in the OTC corporate bond market.
Findings
We combine data on corporate bond market trades with data on corporate bond lending transactions and data on the individual corporate bond holdings of US insurance companies. Our empirical design carefully controls for the many confounding determinants of market liquidity.
view the BIS BIS Working Paper-Over-the-Counter Market Liquidity and Securities Lending
Source: BIS
Cryptoassets: Venture into the Unknown
February 18, 2019--Last year, investors watched as the prices of various cryptoassets collapsed. The industry's most famous digital asset, Bitcoin, lost roughly three quarters of its value, as it slid from more than $16,000 a coin to less than $4,000.
The dramatic declines that swept across the crypto space raised questions about the future of these assets and the blockchain technology that underpins them.
Yet, in looking across the investment landscape, we see an industry that is developing, not faltering. Blockchain technology introduces scarcity to the digital world, which can help innovators better monetize their work and foster innovation. It offers the potential to streamline processes across any number of businesses, such as inter-bank settlement. It also holds the hope for a new, more decentralized version of the internet, where users can better manage their privacy.
Source: Cambridge Associates LLC
