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Bond markets are slumping. It sends a key message about global debt levels
October 10, 2022-- Global bond funds faced a total outflow of $175.5 billion in January-September -the highest level in 2 decades.
This is because high debt levels and rising interest rates have reduced investors' confidence in the ability of governments to pay back debt.
Governments and companies have borrowed heavily in the past few years to take advantage of ultra-low interest rates, but now face higher interest payments.
Global bond funds saw the biggest outflows in two decades in the first three quarters of this year as hefty interest rate increases by central banks to tame inflation sparked fears of a recession.
According to Refinitiv Lipper, global bond funds faced a cumulative outflow of $175.5 billion in the first nine months of this year, the first net sales in that period since 2002.
Market jitters spur September flight to Treasury ETFs
October 7, 2022--Government bonds including Treasuries accounted for 60 per cent of inflows, up from 20 per cent in August
Global investors pumped more than $35bn into exchange traded funds in September, but the bulk went to US Treasury funds as investors battened down the hatches and sought the safest of safe havens.
A total of $22.1bn - more than double the total for all government bonds in August -was squirrelled away into Treasuries in September, according to data from BlackRock. The lower total of $21.9bn in inflows for all government bonds indicate that Treasuries were the star of September's show.
Rethinking How We Measure Companies on Social and Environmental Impact
October 6, 2022--A new framework offers a broader, more effective approach to assessing both the internal and external aspects of a company's social and sustainability performance.
The COVID-19 pandemic, the war in Ukraine, and the ongoing climate crisis have put a spotlight on the central role businesses can play in tackling global challenges.
We need companies to step up and help solve social and environmental problems at scale- for the sake of the economy as well as people and the planet .
One of the incentives companies have for being more socially and environmentally active-shareholder influence- is limited by existing approaches for assessing a company's social and environmental performance. The predominant frameworks are too narrow and fail to fully address key stakeholder concerns on their own. Environmental, social, and governance (ESG) assessments focus on internal operational matters, such as labor relations and supply chain sustainability, but don't fully consider the impact that a company's products or services can have on outside stakeholders.
WTO-Trade growth to slow sharply in 2023 as global economy faces strong headwinds
October 5, 2022--World trade is expected to lose momentum in the second half of 2022 and remain subdued in 2023 as multiple shocks weigh on the global economy. WTO economists now predict global merchandise trade volumes will grow by 3.5% in 2022-slightly better than the 3.0% forecast in April. For 2023, however, they foresee a 1.0% increase-down sharply from the previous estimate of 3.4%.
Import demand is expected to soften as growth slows in major economies for different reasons. In Europe, high energy prices stemming from the Russia-Ukraine war will squeeze household spending and raise manufacturing costs. In the United States, monetary policy tightening will hit interest-sensitive spending in areas such as housing, motor vehicles and fixed investment. China continues to grapple with COVID-19 outbreaks and production disruptions paired with weak external demand. Finally, growing import bills for fuels, food and fertilizers could lead to food insecurity and debt distress in developing countries.
Further Delaying Climate Policies Will Hurt Economic Growth
October 5, 2022--The transition to a greener future has a price-but the longer countries wait to make the shift, the larger the costs.
The world must cut greenhouse gas emissions by at least a quarter before the end of this decade to achieve carbon neutrality by 2050.
Progress needed toward such a major shift will inevitably impose short-term economic costs, though these are dwarfed by the innumerable long-term benefits of slowing climate change.
In our latest World Economic Outlook, we estimate the near-term impact of different climate mitigation policies on output and inflation. If the right measures are implemented immediately and phased in over the next eight years, the costs will be small. However, if the transition to renewables is delayed, the costs will be much greater.
To assess the short-term impact of transitioning to renewables, we developed a model that splits countries into four regions-China, the euro area, the United States, and a block representing the rest of the world.
IMF-How Illiquid Open-End Funds Can Amplify Shocks and Destabilize Asset Prices
October 4, 2022--Mutual funds holding hard-to-sell assets but offering daily redemptions can spark volatility and magnify the impact of shocks, especially in periods of market stress
utual funds that allow investors to buy or sell their shares daily are an important component of the financial system, offering investment opportunities to investors and providing financing to companies and governments.
Open-end investment funds, as they are known, have grown significantly in the past two decades, with $41 trillion in assets globally this year. That represents about one-fifth of the nonbank financial sector's holdings.
These funds may invest in relatively liquid assets such as stocks and government bonds, or in less-frequently-traded securities like corporate bonds. Those with less-liquid holdings, however, have a major potential vulnerability. Investors can sell shares daily at a price set at the end of each trading session, but it may take fund managers several days to sell assets to meet these redemptions, especially when financial markets are volatile.
Crypto inflows defy crash in fund values
October 3, 2022--Investor interest in bitcoin and other alternatives remains strong despite a torrid market performance.
In the eyes of many, cryptocurrencies defy convention merely by existing, backed as they are by nothing more substantive than lines of computer code.
But, despite a crash in their value in recent months, the digital tokens have continued to attract investment via exchange traded products.
Typically, humans, being herd animals, will often show a tendency to pile into financial assets that are rising in value, and to run for the hills when valuations are falling - ignoring the logic of arguments to buy in at low prices.
Thematic funds pause for breath after market setbacks
October 3, 2022--Product launches are becoming more esoteric but inflows have slowed for many special categories
By supporting investment in areas such as healthcare, technology and clean energy, a growing number of exchange traded funds promote themselves as delivering rewards to both society and investors.
But the chequered recent performance of many thematic funds has provoked a reappraisal of investor commitment to this expanding investment space.
Russia crisis challenges ETF sector's 'cockroach' status
October 3, 2022--ETFs have built a reputation for being able to operate through any emergency-until now
Just days after Russia launched a full-scale invasion of Ukraine on February 24, stock exchanges around the world called time on the trading of Russia-focused exchange traded funds.
As Vladimir Putin's missiles hit and his ground troops advanced, one by one the major exchanges halted dealing activity. First came the bourses in Europe, quickly followed by the US. By March 3, the market for Russia ETFs was effectively closed.
ETFGI reports ESG ETFs listed globally gathered net inflows of 2.74 billion US dollars during August 2022
September 29, 2022--ETFGI, a leading independent research and consultancy firm covering trends in the global ETFs/ETPs ecosystem, reported today that Environmental, Social, and Governance (ESG) ETFs listed globally gathered net inflows of US$2.74 billion during August, bringing year-to-date net inflows for 2022 to US$54.15 billion which is much lower than the US$99.84 billion in year-to-date net inflows gathered in 2021.
During the month, total assets invested in ESG ETFs and ETPs decreased by 3.1% from US$478.89 billion at the end of July 2022 to US$463.95 billion, according to ETFGI's August 2022 ETF and ETP ESG industry landscape insights report, the monthly report which is part of an annual paid-for research subscription service. (All dollar values in USD unless otherwise noted.)
Highlights
ESG ETFs listed globally gathered net inflows of $2.74 Bn during August 2022.
YTD net inflows of $54.15 Bn in 2022 are the 3rd highest on record, after YTD net inflows of
$99.84 Bn in 2021 and YTD net inflows of $66.05 Bn in 2020.
3rd month of consecutive net inflows.
Assets of $464 Bn invested in ESG ETFs and ETPs industry at the end of August 2022.
