Global ETF News Older than One Year
ISS Insights-Financial Clarity: Passive Investment 2021 Q3 Report-Net Flows Fall to Lowest Level in Years
December 22, 2021--Stock pickers have their work cut out for them; building a portfolio that can beat the market is difficult and competition among other fund managers in the UK is fierce. Competing against passive funds? That makes their job even more difficult. Passive investors don't overwork themselves trying to find the right fund that can beat its benchmark, they'd rather pick a passive fund that closely tracks an index of their choice. Yes, it does remove the chances of outperforming the market, but it also removes the risk of underperforming the market.
On top of this, passive funds charge significantly lower management fees. Judging by the speed at which the passive investment market has grown over the last decade, many retail investors are more than willing to make this performance-fees trade-off. Particularly when most active funds underperform their passive counterparts in short to long-term horizons.
Not everyone is sold on passive investing though, sceptics have long claimed that active fund managers would prove their worth in times of market uncertainty. We heard this a lot at the beginning of the pandemic too. Supposedly, stock pickers are better able to navigate the turmoil of difficult market conditions and can be more nimble than passive funds. Unfortunately for the passive fund sceptics, it appears as though most active funds failed to meet their benchmarks in 2020 according to research by SPIVA[1]. Now there's a new challenge though, one that passive funds haven't faced before, high inflation.
Source: insights.issgovernance.com
Global Debt Reaches a Record $226 Trillion
December 22, 2021--Policymakers must strike the right balance in the face of high debt and rising inflation.
In 2020, we observed the largest one-year debt surge since World War II, with global debt rising to $226 trillion as the world was hit by a global health crisis and a deep recession.
Debt was already elevated going into the crisis, but now governments must navigate a world of record-high public and private debt levels, new virus mutations, and rising inflation.
Global debt rose by 28 percentage points to 256 percent of GDP, in 2020, according to the latest update of the IMF's Global Debt Database.
Borrowing by governments accounted for slightly more than half of the increase, as the global public debt ratio jumped to a record 99 percent of GDP. Private debt from non-financial corporations and households also reached new highs.
Source: imf.org
2021 Year in Review in 11 Charts: The Inequality Pandemic
December 21, 2021--From uneven economic recovery to unequal access to vaccines; from widening income losses to divergence in learning, COVID-19 has had a disproportionate impact on the poor and vulnerable in 2021. It is causing reversals in development and is dealing a setback to efforts to end extreme poverty and reduce inequality. Because of the pandemic, extreme poverty rose in 2020 for the first time in over 20 years and around 100 million more people are living on less than $1.90 a day.
Through this series of charts and graphs, we share select research from the World Bank Group that illustrates the severity of the pandemic as it enters its third year. We also reflect on the Bank's rapid and innovative response to the crisis.
1. Unequal Vaccines Access
The quickest way to end the pandemic is by vaccinating the world. However, with just over 7 percent of people in low-income countries receiving a dose of the vaccines compared to over 75 percent in high-income countries, we need fair and broad access to effective and safe COVID-19 vaccines to save lives and strengthen global economic recovery.
Source: worldbank.org
2021 Year in Review in 11 Charts: The Inequality Pandemic
December 21, 2021-From uneven economic recovery to unequal access to vaccines; from widening income losses to divergence in learning, COVID-19 has had a disproportionate impact on the poor and vulnerable in 2021. It is causing reversals in development and is dealing a setback to efforts to end extreme poverty and reduce inequality.
Because of the pandemic, extreme poverty rose in 2020 for the first time in over 20 years and around 100 million more people are living on less than $1.90 a day.
Through this series of charts and graphs, we share select research from the World Bank Group that illustrates the severity of the pandemic as it enters its third year. We also reflect on the Bank's rapid and innovative response to the crisis.
1. Unequal Vaccines Access
The quickest way to end the pandemic is by vaccinating the world. However, with just over 7 percent of people in low-income countries receiving a dose of the vaccines compared to over 75 percent in high-income countries, we need fair and broad access to effective and safe COVID-19 vaccines to save lives and strengthen global economic recovery.
Source: worldbank.org
Five trends that will dominate industry in 2022
December 21, 2021-Global industry emerged strong in early 2021, following a lacklustre performance the year before. But with a right jab from renewed restrictions, a left hook from deepening supply chain disruptions, and an uppercut from pent-up consumer demand-it has taken a bit of beating recently. So what's in store for 2022?
Services will outpace industry early in the year. Industrial production will lag services growth globally going into 2022 as supply chain pressures continue to bite and the post-pandemic recovery in household spending on services continues. The new, more transmissible Omicron Covid-19 variant, however, remains a key downside risk to our outlook.
Source: oxfordeconomics.com
Bond ETF inflows slump to lowest level since start of pandemic
December 17, 2021--Fixed income ETFs attracted global net inflows of just $14bn in November on inflation fears
Bond ETFs saw global net inflows of just $14bn in November, according to data from BlackRock's iShares arm, the weakest reading since March 2020
Source: ft.com
IMF-Drivers of Emerging Market Bond Flows and Prices
December 16, 2021--Summary:
An interesting disconnect has taken shape between local currency-and hard currency-denominated bonds in emerging markets with respect to their portfolio flows and prices since the start of the recovery from the COVID-19 pandemic. Emerging market assets have recovered sharply from the COVID-19 sell-off in 2020, but the post-pandemic recovery in 2021 has been highly uneven.
This note seeks to answer why. Yields of local currency-denominated bonds have risen faster and are approaching their pandemic highs, while hard currency bond yields are still near their post-pandemic lows.
Portfolio flows to local currency debt have similarly lagged flows to hard currency bonds. This disconnect is closely linked to the external environment and fiscal and inflationary pressures. Its evolution remains a key consideration for policymakers and investors, since local markets are the main source of funding for emerging markets. This note draws from the methodology developed in earlier Global Financial Stability Reports on fundamentals-based asset valuation models for funding costs and forecasting models for capital flows (using the at-risk framework). The results are consistent across models, indicating that local currency assets are significantly more sensitive to domestic fundamentals while hard currency assets are dependent on the external risk sentiment to a greater extent. This suggests that the post-pandemic, stressed domestic fundamentals have weighed on local currency bonds, partially offsetting the boost from supportive global risk sentiment. The analysis also highlights the risks emerging markets face from an asynchronous recovery and weak domestic fundamentals.
Source: IMF
IMF-Multi-Sector Bond Funds in Emerging Markets-Easy Come, Easy Go
December 16, 2021--Summary:
Unconstrained multi-sector bond funds (MSBFs) can be a source of spillovers to emerging markets and potentially exert a sizable impact on cross-border flows. MSBFs have grown their investment in emerging markets in recent years and are highly concentrated-both in their positions and their decision-making.
They typically also exhibit opportunistic behavior much more so than other investment funds. Theoretically, their size, multisector mandate, and unconstrained nature allows MSBFs to be a source of financial stability in periods of wide-spread market turmoil while others sell at fire-sale prices.
However, this note, building on the analysis of Cortes and Sanfilippo (2020) and incorporating data around the COVID-19 crisis, finds that MSBFs could have contributed to increase market stress in selected emerging markets. When faced with large investor redemptions during the crisis, our sample of MSBFs chose to rebalance their portfolios in a concentrated manner, raising a large proportion of cash in a few specific local currency bond markets. This may have contributed to exacerbating the relative underperformance of these local currency bond markets to broader emerging market indices.
Source: IMF.org
2021: The Year in Climate in 5 Numbers
December 16, 2021--5X--The order of magnitude by which climate change is making intense heat waves more likely
"Since 1850, the earth has warmed by 1 degree Celsius. It looks small, but it's enough to multiply by 5 the frequency of extreme heat waves: what used to be an exceptional heat wave happening once every 50 years, now happens every 10 years," says World Bank Senior Climate Advisor, Stéphane Hallegatte.
What may the future hold? Dive into the data with Hallegatte.
216-million --The number of people who could migrate within their own countries by 2050 because of climate change
New research by the World Bank projects that millions of people could be on the move in the next decades, leaving places that can no longer sustain them and going to areas that offer better opportunities. But Groundswell finds that the world's collective actions taken today to lower greenhouse gas emissions and help people adapt could reduce future internal climate migration by as much as 80%.
Source: worldbank.org
5 Key Issues in Agriculture in 2021
December 16, 2021-As 2021 ends, we take a retrospective look at five topics that were covered in our analytical work this year. These issues represent just a fragment of the Bank's work, but they are key to reducing poverty and hunger while slowing climate change.
Food Security
Like the previous year, news in agriculture and food in 2021 was dominated by deteriorating food security. Approximately 30 percent of the world’s population lacked access to adequate food in 2020 and into 2021.
Farming Insects for Food and Feed
This December, the Bank released a ground-breaking report looking at the valuable role farming insects can play in both food security and climate-smart agriculture, Insect and Hydroponic Farming in Africa: The New Circular Food Economy.
worldbank.org
