Global ETF News Older than One Year
FTSE Russell-New research: Equal weighting refined
March 12, 2019--Equal weighting: one of the oldest and time-tested approaches to reduce concentration risk and enhance diversification.
FTSE Russell's newest research, "Russell 1000 Equal Weight Index: Equal weighting refined," explores the key differences of equal weighting over its cap-weighted counterparts and examines equal weighting's historically strong long-term performance record as a source of lower volatility as well as downside protection during crises.
Additionally, while most equal weight indexes only equally weight on the stock level, the Russell 1000 Equal Weight Index equally weights on both the sector and stock level, which has typically reduced volatility and drawdowns versus traditional constituent-only approaches.
Source: FTSE Russell
FIA Warns of Increased Market Fragmentation Caused by Regulation
March 12, 2019--FIA President and CEO Walt Lukken today released a white paper that expresses FIA's concerns about increased fragmentation of the global listed and cleared derivatives markets due to inconsistent and duplicative regulatory frameworks.
Further, the paper urges regulators to embrace the principles of reliance and regulatory cooperation and makes recommendations on how to avoid increased fragmentation in the regulation of cross-border activity in the global derivatives markets.
Derivatives markets are global in nature with transactions, clearing and settlement often happening in different countries, time zones and continents. The regulation of derivatives markets, however, is becoming more localized, with divergences in both the content of the rules and the pace of implementation. In addition, FIA observes that a number of national and regional regulators are moving toward more direct regulation of foreign activity and participation.
view the FIA White Paper Mitigating the Risk of Market Fragmentation
Source: FIA
Bassanese Bites: Global slowdown
March 11, 2019--Week in Review
Last week saw the first decent pull back in global equity markets since the impressive V-shaped recovery began just after Christmas. Growing uncertainty over when and if the US and China will actually conclude a trade deal weighted on sentiment, as did more concerns over slowing global economic growth.
Despite Trump's ongoing optimistic tweets, US negotiators appear to be downplaying the chances of any near-term deal with China being finalised, while the Chinese appear to have put off the talked about end-March "Mar-a-Lago" meeting with the US President. With Trump having already postponed the March 1 deadline for higher tariffs, China may well have decided to call Trump's bluff-and is hardening its resolve against making major trade concessions.
Source: BetaShares
Stability heightens flash crash risks-research
March 11, 2019--Liquidity breaks down when latent orders are revealed too slowly, quant firm says
Flash crashes are most likely to occur in stable markets when latent liquidity converts to real orders too slowly, new research from quants at Capital Fund Management suggests.
The firm's research is based on the idea that live prices in an order book represent only a fraction of the liquidity in markets. A much larger layer of latent liquidity- potential bids and offers...
Source: Risk.net
Despite Brexit, investors still believe in the UK real economy
March 8, 2019--In the latest and largest infrastructure investor survey ever undertaken, the UK ranks third for countries with the most potential in the next five years despite looming Brexit.
The 2019 edition of the EDHEC Infrastructure Institute survey, conducted on behalf of the G20, shows that Brexit has barely impacted the UK's top investment destination status for infrastructure investors.
Source: EDHEC Infrastructure Institute
Global regulators launch inquiry into leveraged loans
March 7, 2019-The Financial Stability Board, a top global rulemaker, has launched an examination of parts of the $1.4tn leveraged loan market, as officials intensify scrutiny into potential financial stability risks surrounding corporate debt.
Source: FT.com
World Gold Council-Global gold-backed ETF holdings retreated in February
March 7, 2019--After four straight months of inflows, holdings in global gold-backed ETFs and similar products fell in February by 33 tonnes(t) to 2,479t, equivalent to US$1.3bn in outflows. Global assets under management (AUM) fell by 2% in US dollars to US$105bn over the month.
However, global gold-backed ETF flows remain positive on the year (US$1.7bn, 2% AUM) on the back of strong inflows in January.
Regional flows
North American funds had outflows of 29t (US$1.2bn, 2.3%AUM)
Holdings in European funds were flat (tonnage loss but fund inflows) -0.3t (+US$37mn, 0.1%) **
Funds listed in Asia decreased by 3t (US$147mn, 4.6%) Other regions were virtually flat, falling by 0.1t (US$2.5mn, 0.2%)
Source: World Gold Council
OECD sees global growth slowing, as Europe weakens and risks persist
March 6, 2019--The global economy is slowing and major risks persist, with growth weakening much more than expected in Europe, according to the OECD's latest Interim Economic Outlook.
Economic prospects are now weaker in nearly all G20 countries than previously anticipated. Vulnerabilities stemming from China and the weakening European economy, combined with a slowdown in trade and global manufacturing, high policy uncertainty and risks in financial markets, could undermine strong and sustainable medium-term growth worldwide.
The OECD projects that the global economy will grow by 3.3 per cent in 2019 and 3.4 per cent in 2020.
view the OECD Economic Outlook and Interim Economic Outlook
Source: OECD
Winthrop Capital Management-2019 1Q Investment Strategy-Fixed Income
March 6, 2019--Domestic economic growth continues to slow into 1Q 2019, and there are three key factors impacting the economy in the first quarter: the government shutdown, the threat of increased tariffs with China and Europe, and Brexit.
While we expect the growth rate of corporate earnings to slow through the year, the bright spot remains job growth as the economy consistently creates over 230,000 jobs a month. The threat of increased tariffs with China has had a disastrous effect on China’s economy, and trade balance with both imports and exports fell dramatically in the fourth quarter of 2018.
Source: Winthrop Capital Management
IMF Working Papers-Do Fiscal Rules Cause Better Fiscal Balances? A New Instrumental Variable Strategy
March 5, 2019--Summary:
This paper estimates the causal effect of fiscal rules on fiscal balances in a panel of 142 countries over the period 1985-2015. Our instrumental variable strategy exploits the geographical diffusion of fiscal rules across countries.
The intuition is that reforms in neighboring countries may affect the adoption of domestic reforms through peer pressure and imitational effects. We find that fiscal rules correlate with lower deficits, but the positive link disappears when endogeneity is correctly addressed. However, when considering an index of fiscal rules' design, we show that well-designed rules have a statistically significant impact on fiscal balances. We conduct several robustness tests and show that our results are not affected by weak instrument problems.
Source: IMF
