Global ETF News Older than One Year
IMF Working Paper-Why Some Don't Belong-The Distributional Effects of Natural Disasters
January 6, 2022--Summary:
When and how do natural disasters worsen within-country income inequality? We highlight the channels through which natural disasters may have distributional effects and empirically analyze when and which type of disasters affect inequality in advanced economies (AEs) and in emerging and developing economies (EMDEs).
We find that in AEs inequality increases after severe disasters. We also find that inequality increases if severe disasters are associated with growth slowdowns or there are multiple disasters in a year in AEs and in EMDEs. Descriptive evidence for the US also suggests that adverse labor market effects of disasters are likely to fall on vulnerable groups.
Source: imf.org
These are trends shaping the future of food
January 3, 2023--An FAO report warns of the risks and challenges facing global agrifood systems.
It calls for urgent action to address these issues.
The World Economic Forum's Annual Meeting in Davos will explore food security as one of a series of interconnected global problems.
Our ability to feed a growing global population is under threat, according to a new report from the Food and Agriculture Organization of the United Nations (FAO).
The future of food and agriculture: Drivers and triggers for transformation, released in December 2022, warns that without broader changes on a socioeconomic and environmental level, we will not be able to build and maintain sustainable agrifood systems.
"Many of the SDGs (UN Sustainable Development Goals) are not on track and will only be achieved if agrifood systems are transformed properly to withstand ongoing global adversity that undermines food security and nutrition due to growing structural inequalities and also regional inequalities," FAO Director-General QU Dongyu said at a launch event.
Source: weforum.org
Clutch of emerging markets bucks trend with huge ETF outperformance
December 28, 2022--Chile, India, Mexico and South Korea record year-on-year growth even as global assets fell
Financial markets may have slumped across most of the world in 2022, but a handful of countries are on track to see growth in exchange traded fund assets despite the headwind of plummeting valuations.
The resilience attests to the growing adoption of ETFs around the globe-particularly in some emerging market economies where uptake has lagged behind more developed countries-as well as some pockets of resistance in financial markets themselves.
Source: ft.com
How Do Rising U.S. Interest Rates Affect Emerging and Developing Economies ? It Depends
December 21, 2022--This paper examines the implications of different types of interest rate shocks in the United States for emerging market and developing economies (EMDEs). It first classifies changes in U.S. interest rates into those caused by changes in inflation expectations ("inflation" shocks), changes in perceptions of the Federal Reserve's reaction function ("reaction" shocks), and changes in real activity ("real" shocks).
The analysis attributes this year's sharp increases in U.S. interest rates almost exclusively to inflation and reaction shocks. These types of shocks are found to be associated with especially adverse effects: EMDE financial conditions tighten, consumption and investment fall, and governments cut spending to improve budget balances. By comparison, rising U.S. interest rates stemming from real shocks are not only associated with benign outcomes for EMDE financial conditions but also improvements in budget balances that reflect higher revenues as well as lower expenditures. Finally, this paper documents that rising U.S. interest rates driven by reaction shocks are especially likely to push EMDEs into financial crisis.
Source: worldbank.org
The hidden costs of investing in US equity ETFs
December 22, 2022--Experts point out that it is not all about the fees. There are also currency, trading costs, spreads and tax considerations
Checking your investments too often can be a good way to end up out of pocket.
This wisdom, gained from behavioural finance experiments showing that too much information leads to "myopic loss aversion", could lead investors to believe they should just "set it and forget it". However, experts insist you should know what you own, and even if you want to retain the same exposure, you should check to see if there is now a cheaper way of doing so.
In the fast-evolving investment fund industry, this can often be the case. First, exchange traded funds usually offer much lower fees than their mutual fund counterparts, and this partly explains why they continue to grab market share.
Source: ft.com
WTO-Services trade activity likely to weaken with slowing growth in major economies
December 22, 2022--World services trade activity appears to have weakened in the fourth quarter of 2022 and is likely to remain soft in the opening months of 2023, with slowing growth in major economies weighing on the post-pandemic recovery, according to the latest WTO Services Trade Barometer released on 22 December.
The Barometer index reading for the month of October fell to 98.3, slightly below its baseline value of 100 and well below the previous reading of 105.5 from the last release in June. The findings are line with the Goods Trade Barometer issued in late November which indicated slowing merchandise trade volume growth in the closing months of 2022 and into 2023
Source: WTO (World Trade Organization)
Metaverse storms ETF charts to become industry's hottest concept
December 19, 2022--A total of 35 vehicles have now launched since the first was unveiled in June last year
The metaverse has become the hottest concept ever in the history of exchange traded funds-despite steady media coverage suggesting there has been little interest in the "sub-theme".
A total of 35 metaverse-badged ETFs have launched globally since the first rolled off the conveyor belt in June 2021, according to data from Morningstar.
Source: ft.com
IMF Working Paper-Macroeconomic Effects of Climate Change in an Aging World
December 16, 2022--Summary:
Climate and demographic changes are two major long-term trends that are evolving simultaneously. The global population is aging, while climate change is increasing the frequency and severity of weather-related disasters and lowering productivity.
This paper examines the macroeconomic effects of these three changes in a common framework.
Simulation results suggest that while aging drags down the real interest rate, climate change puts upward pressure on the real interest rate and inflation. As climate change intensifies, it will be the dominant factor shaping the macroeconomic variables. This results in higher inflation and a higher debt-to-GDP ratio, requiring tighter fiscal and monetary policies. The results further suggest that economic uncertainty induced by climate change amplifies these effects of climate change.
Source: imf.org
Riding the Global Debt Rollercoaster
December 12, 2022--The weaker growth outlook and tighter monetary policy call for prudence in managing debt and conducting fiscal policy
Global debt remained above pre-pandemic levels in 2021 even after posting the steepest decline in 70 years, underscoring the challenges for policymakers.
Total public and private debt decreased in 2021 to the equivalent of 247 percent of global gross domestic product, falling by 10 percentage points from its peak level in 2020, according to the latest update of the IMF's Global Debt Database. Expressed in dollar terms, however, global debt continued to rise, although at a much slower rate, reaching a record $235 trillion last year.
Source: imf.org
Can financial markets make a difference to natural assets?
December 12, 2022--The challenge
Three decades on from the Rio Earth Summit, almost two decades since the coinage of the term ESG (environment, social, and governance issues), and seven years on from the dual launch of the Paris Climate Agreement and UN Sustainable Development Goals (SDGs), mainstream economic and financial systems can no longer ignore their dependence and impact on the planet's ecological systems.
Business models need to change to better account for the full range of costs and benefits that they generate. The sheer scale of that change requires a pivotal role of private enterprise and private capital, complementing and multiplying public sector efforts at national and international levels.
The challenge is one of execution. How do we create and deepen markets for ecological solutions when the origin of the problem lies in externalities and market failure? How do we create financial markets where previously--unbankable projects can be securitised into investable assets?
Source: LSE Business Review
