Global ETF News Older than One Year
New EDHEC survey on equity factor investing calls risk techniques into question
January 23, 2018--In a new survey conducted among investment professionals between June and September 2017, EDHEC-Risk Institute and ERI Scientific Beta have analysed the interests and motivations for investing in new forms of equity factor strategies.
The 114 respondents together have at least USD 2.5 trillion in AUM and span all regions of the world (52% from Europe, 28% from North America and 20% from other parts of the world). In one of the more striking findings in the survey, there is a contradiction between score-based factor design choices and the statistical beta-based risk analysis. Analysis of the extreme risk of factor portfolios is still fairly basic and does not really allow the extreme risks to be appreciated.
Source: EDHEC-Risk Institute
World Bank-Blockchain & Distributed Ledger Technology (DLT)
January 23, 2018--The rapid development and spread of new technologies has been significantly transforming the financial sector.
The World Bank Group published the first fintech note that looks at Distributed Ledger Technology and Blockchain, and analyzes its potential relevance for international development.
Fintech---a relatively newly-coined term which combines 'finance' and 'technology'--describes companies or innovations that use new technologies to improve or innovate financial services.
What is a blockchain and a distributed ledger?
Distributed ledgers (DL) use independent computers---referred to as nodes---to record, share and synchronize transactions in their respective electronic ledgers, instead of keeping data centralized as in a traditional ledger.
view the World Bank Distributed Ledger Technology (DLT) and Blockchain Note
Source: World Bank
IMF-World Economic Outlook Update, January 2018-Brighter Prospects, Optimistic Markets, Challenges Ahead
January 23, 2018--Global economic activity continues to firm up. Global output is estimated to have grown by 3.7 percent in 2017, which is 0.1 percentage point faster than projected in the fall and 1⁄2 percentage point higher than in 2016. The pickup in growth has been broad based, with notable upside surprises in Europe and Asia. Global growth forecasts for 2018 and 2019 have been revised upward by 0.2 percentage point to 3.9 percent.
The revision reflects increased global growth momentum and the expected impact of the recently approved U.S. tax policy changes.
The U.S. tax policy changes are expected to stimulate activity, with the short-term impact in the United States mostly driven by the investment response to the corporate income tax cuts. The effect on U.S. growth is estimated to be positive through 2020, cumulating to 1.2 percent through that year, with a range of uncertainty around this central scenario. Due to the temporary nature of some of its provisions, the tax policy package is projected to lower growth for a few years from 2022 onwards. The effects of the package on output in the United States and its trading partners contribute about half of the cumulative revision to global growth over 2018-19.
Source: IMF
All-Night ETF Trading Arrives for TD Ameritrade Customers
January 22, 2018--Asian clients of TD Ameritrade can trade during their day
List of equities that can be traded after-hours to grow
Stock traders who want to pull all-nighters can now do so through TD Ameritrade Holding Corp.
The second-biggest discount broker now lets customers buy and sell 12 U.S. exchange-traded funds 24 hours a day on weekdays. Clients in Asia will be among the beneficiaries, gaining the ability to trade U.S. products during their daylight hours. But Americans wanting to key off late-breaking news can participate, too.
Source: Bloomberg
DTCC Outlines Vision for Modernizing U.S. Equity Market Structure
January 22, 2018--January 22, 2018--Looking beyond T+2, DTCC examines ways to optimize and accelerate securities settlement to free up liquidity, reduce risk, and improve straight-through processing
The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, today announced its vision for the evolution of the U.S. equities market structure, unveiling a series of proposals to provide seamless access to new shortened settlement processing options, both pre-and post-trade.
Following the successful transition from trade date-plus-three days (T+3) to trade date-plus-two days (T+2) settlement last year, one of the last remaining exposures in the settlement system today is time. Time increases the risk of an unpredictable event that could significantly affect the transfer of cash or ownership of securities from the point of execution through settlement.
Source: Depository Trust & Clearing Corporation (DTCC)
Index Industry Association Surveys the Index Universe-First Annual Survey Reveals 3.288 Million Indexes Globally
January 22, 2018--Index Industry Association (IIA), a global organization of index administrators, today announced the results of a revealing new survey of its fourteen member firms that quantifies the total number of indexes available globally for the first time ever.
According to the survey, there are 3.288 million indexes globally with equity indexes representing over 95 percent of benchmarks calculated.
The survey, which was conducted as of June 30, 2017, sought information only about the total number of indexes administered by each IIA member. It is estimated that these indexes represent approximately 98 percent of all indexes globally available.
Source: Index Industry Association (IIA)
FTSE Russell 2018 smart beta survey
January 22, 2018--The 2018 FTSE Russell advisor smart beta survey shows a bright future for smart beta among financial advisors in the US, UK and Canada, yet a long way to go toward broad-based knowledge and usage of smart beta strategies.
Notable findings:
A bright future
Outlook on future usage is strong in all three countries (more than half of financial advisors surveyed in the UK & Canada and 40% of those surveyed in the US expect to increase usage).
Show me don't tell me
Financial advisors in the US & Canada are looking for more information about smart beta before increasing their usage while UK advisors are skeptical as to the benefit. Notably, UK advisors express concern about smart beta strategy performance and short track records. In the US, 47% of advisors say they "don’t know enough about" smart beta strategies.
Source: FTSE Russell
The Current Economic Sweet Spot Is Not the "New Normal"
January 22, 2018--As the year 2018 begins, the world economy is gathering speed. The new World Economic Outlook Update revises our forecast for the world economy's growth in both 2018 and 2019 to 3.9 percent.
For both years, that is 0.2 percentage points higher than last October's forecast, and 0.2 percentage points higher than our current estimate of last year's global growth.
This is good news. But political leaders and policymakers must stay mindful that the present economic momentum reflects a confluence of factors that is unlikely to last for long. The global financial crisis may seem firmly behind us, but without prompt action to address structural growth impediments, enhance the inclusiveness of growth, and build policy buffers and resilience, the next downturn will come sooner and be harder to fight.
Source: IMF
DECPG Global Weekly
January 19, 2018--TAKING STOCK
U.S. consumer sentiment fell slightly in January; industrial production rose in December
Euro Area headline inflation edged down in December; trade surplus widened.
Japan's machinery orders accelerated in November
China's economic growth picked up in 2017
Nigeria's consumer price inflation decelerated in December
U.S. consumer sentiment fell slightly in January; industrial production rose in December. The preliminary reading for the index of U.S. consumer sentiment in January came in at 94.4, slightly below December's reading of 95.9. This decline reflected a less favorable assessment of current economic conditions by consumers than in December, while the future outlook assessment was broadly unchanged.
Source: World Bank
New research paper-When Size Doesn't Matter: Equal Weighting vs Market Cap Weighting
January 18, 2018--Solactive publishes new research paper on equally weighted versus market cap weighted index strategies
When Size Doesn't Matter: Equal Weighting vs Market Cap Weighting provides a detailed overview of the equal weighting method, comparing this to the more traditional market cap weighting scheme.
the former case, all securities are weighted equally, regardless of their market capitalization, whereas in the latter one, securities are weighted proportionally to their market capitalization.
The paper finds that equally weighted portfolios outperform market cap weighted ones over a period of evaluation running from 2000 to 2017 ,falling more during bear markets, but recovering faster after downturns.
view the Solactive When Size Doesn't Matter: Equal Weighting vs Market Cap Weightingwhite paper
Source: Solactive AG
