Global ETF News Older than One Year
IMF Working Paper-Gold as International Reserves: A Barbarous Relic No More?
January 27, 2023--Summary:
After moving slowly downward for the better part of four decades, central bank gold holdings have risen since the Global Financial Crisis. We identify 14 "active diversifiers," defined as countries that purchased gold and raised its share in total reserves by at least 5 percentage points over the last two decades.
In contrast to the diversification of foreign currency reserves, which has been undertaken by advanced and developing country central banks alike, active diversifiers into gold are exclusively emerging markets.
We document two sets of factors contributing to this trend. First, gold appeals to central bank reserve managers as a safe haven in periods of economic, financial and geopolitical volatility, when the return on alternative financial assets is low. Second, the imposition of financial sanctions by the United States, United Kingdom, European Union and Japan, the main reserve-issuing economies, is associated with an increase in the share of central bank reserves held in the form of gold. There is some evidence that multilateral sanctions imposed by these, and other countries have a larger impact than unilateral sanctions on the share of reserves held in gold, since the latter leave scope for shifting reserves into the currencies of other non-sanctioning countries.
Source: imf.org
ETFGI reports assets invested in the global ETFs industry extended lead over hedge fund industry to US$4.57 trillion at the end of Q3 2022
January 27, 2023-- ETFGI, a leading independent research and consultancy firm covering trends in the global ETFs and ETPs ecosystem, reported today that assets invested in the global ETFs industry extended its lead over the global hedge fund industry by US$4.57 trillion at the end of Q3 2022, based on data from ETFGI and HFR.
Highlights
Assets invested in global ETFs industry extended lead over assets in global hedge fund industry to $4.57 trillion at the end of Q3 2022.
The global hedge fund industry suffered net outflows of $26 billion during Q3 2022 while global ETFs industry gathered net inflows of $129.9 billion.
Assets invested in the global ETFs industry first surpassed those invested in the global hedge fund industry at the end of Q2 2015, as ETFGI had forecasted. Growth in assets in the ETFs industry has outpaced growth in the hedge fund industry since the financial crisis in 2008.
Source: etfgi.com
Infrastructure, a sector ripe for government efficiencies
January 27, 2023--STORY HIGHLIGHTS
The relative strength or weakness of the governance environment can determine how developed a country's infrastructure is.
Infrastructure is an area where the government of the future can potentially demonstrate its efficacy, in terms of the ideal role of government, how it should deliver, and gain citizen's trust simultaneously.
To make progress governments need to understand the governance constraints to infrastructure management and delivery they face.
Different levels of infrastructure in countries can be explained by unique pre-conditions that every country faces, including geographic traits and financial resources. As the figures below illustrates, huge infrastructure quality and spending gaps remain between countries. Crucially, pre-conditions also include different politicians' and constituencies' perceptions of the ideal policy combination on the one hand, and the right incentives for infrastructure development on the other. In other words, the relative strength or weakness of the governance environment can determine how developed a country's infrastructure is. These governance differences across countries are especially visible in regulated industries where services are essential and the risk of market failure is high, such as in water and electricity utilities, ports, toll roads, and airports.
Source: worldbank.org
Global Economic Uncertainty Remains Elevated, Weighing on Growth
January 26, 2023--January 26, 2023--From Brexit and US-China trade tensions to the pandemic and war, successive shocks have combined to keep uncertainty elevated
The shocks that have shaken the global economy in recent years have introduced a new normal for turbulence, driven in some cases by political fragmentation between countries. These episodes have also lifted uncertainty to exceptionally high levels, which in turn hurts economic growth as our research shows.
To better track the evolution of these conditions, we updated our World Uncertainty Index to show more frequent readings that are monthly, instead of quarterly, and incorporate data for 71 economies dating back to 2008.
As the Chart of the Week shows, the index fell in December, the most recent reading, but has continued to hit elevated levels in recent times on the back of successive shocks, including most recently Russia's invasion of Ukraine and the associated cost-of-living crisis.
Source: imf.org
UN World Economic Situation and Prospects 2023
January 25, 2023--Multiple shocks to the world economy
The world continues to confront multiple, inter-connected crises. Amid a slow recovery from the impact of the COVID-19 pandemic, the world is facing a food and energy crisis exacerbated by the war in Ukraine, with record high inflation unleashing a cost-of-living crisis.
Developing countries are struggling over the costs of imports and debt servicing, and a climate crisis continues to wreak havoc on the most vulnerable countries and populations.
Amid monetary tightening, subdued consumption and private investments, judicious government spending will remain critical for steering economic recovery worldwide. The UN World Economic Situation and Prospects 2023 will underscore the imperative of supportive and accommodative fiscal measures to lift growth and accelerate progress towards the Sustainable Development Goals.
Source: un.org
IMF-The Costs of Misreading Inflation
January 24, 2023--The 2021 surge in global shipping costs was a canary in the coal mine for the persistent rise in inflation
It bears remembering that, as recently as the second half of 2021, the Federal Reserve considered that the surge in consumer price inflation would dissipate, with price increases returning to the Fed’s 2 percent target in 2022.
In testimony before Congress, Fed Chair Jerome Powell affixed the now infamous "transitory" moniker to the ongoing price increases, which he ascribed to temporary supply bottlenecks and price declines in the early stages of the pandemic.
Source: imf.org
BlackRock's iShares regains pole position from rival Vanguard
January 24, 2023--Last year's net ETF flows at $221bn were lower than in 2021, but Vanguard's $214bn marked a far steeper decline.
BlackRock's iShares exchange traded fund arm dethroned arch-rival Vanguard at the top of the global ETF net flows leaderboard last year, returning to pole position after two years in second place.
But the big two also entrenched their duopoly in the ETF industry, with nearest rivals State Street Global Advisors and Invesco suffering deeper wounds from souring market sentiment.
Source: ft.com
Smart beta rewards discerning devotees in 2022
January 20, 2023-Momentum, value and 'low investment' rack up returns of 11-15% while broad markets lost a fifth of their value
Smart beta strategies, which aim to outperform traditional broad market capitalisation-weighted indices by filtering them according to certain factors, delivered returns as high as 15 per cent last year even as major markets fell by a fifth.
Research by Scientific Beta, a factor-based data provider and consultancy, has found that value strategies- investing in global stocks deemed to be inexpensive- delivered returns of 11 per cent compared to losses of between 17 and 18 per cent for global cap-weighted indices such as the Scientific Beta Global Cap-Weighted index, FTSE All-World index and MSCI ACWI index.
Source: ft.com
Sustainable central banking: clear green water between the Fed and the ECB?
January 18, 2023--All major central banks recognise that the climate crisis and nature loss pose material threats for the financial system. But central bank mandates and political environments vary. Action on sustainability is a bipartisan issue in Europe, while in the US parts of the Republican Party are leading an ant-ESG campaign that is out of line with science and at odds with a prudent view on financial management.
Nick Robins writes that a second phase of sustainable central banking is needed to minimise the environmental threats to banks' core mandates, as well as the other goals they are set.
One of the big sustainable finance priorities for 2023 is how central banks will grapple with deepening climate and nature risks alongside high inflation and rising interest rates. One thing is clear: all major central banks recognise that the climate crisis and nature loss pose material threats for the financial system, requiring them to act to understand and address these challenges. Where they diverge depends very much on the mandates they are given by legislators, the interpretations they make and the political environment in which they operate. These differences were clearly on display in January in interventions from US and European central bankers.
Source: blogs.lse.ac.uk
Crypto Contagion Underscores Why Global Regulators Must Act Fast to Stem Risk
January 18, 2023--Stronger financial regulation and supervision, and developing global standards, can help address many concerns about crypto assets
The already volatile world of crypto has been upended anew by the collapse of one its largest platforms, which highlighted risks from crypto assets that lack basic protections.
The losses punctuated an already perilous period for crypto, which has lost trillions of dollars in market value.
Bitcoin, the largest, is down by almost two-thirds from its peak in late 2021, and about three-quarters of investors have lost money on it, a new analysis by the Bank for International Settlements showed in November.
Source: imf.org