Global ETF News Older than One Year
The impact of Asia on the changing global energy map
As demand shifts eastward, IEA advises countries in region on key reforms
January 14, 2013--Asia is a major focus of IEA activity amid the vast international reordering of energy supply and demand patterns. The region is at the centre of the changes that will alter the global map of energy trade over the next five years, particularly as Asia's economic surge alters regional gas and power sectors.
To adapt securely and sustainably, as IEA Executive Director Maria van der Hoeven explained during a visit to Singapore this autumn, Asia must pursue further reforms to liberalise its markets and mobilise capital for sufficient investment. “That is why the IEA is stepping up cooperation with IEA partner countries in Asia,” she told the Singapore International Energy Week forum in October.
Demand is shifting to the East while production is rising in the West. Increasing output of oil and gas in the Americas from the use of unconventional methods is freeing up supply for Asia, where rising demand comes not just from economic growth but also from increased refining in the region. But the shift in trade also highlights potential problems for Asia, particularly in terms of distribution and pricing.
Source: IEA
Beware the dangers of overinflated egos
January 13, 2013--The verdict is out. Again. Another round of academic research from UK professors suggests that for US fund managers, overconfidence is like a ghastly virus.
Those who catch it, risk making poor investment calls and reporting some shrinkage in their investment returns in the year following the publication of a fund’s annual report.
Indeed, Arman Eshraghi, a researcher at the University of Edinburgh’s Business School, and Richard Taffler, a professor working at Warwick Business School, argue that over-optimism among fund managers based across the Atlantic Ocean is rife. And as a result, investors are seeing a slowdown in returns on active funds run by overconfident fund managers.
Source: FT.com
EPFR Global Fund Data News Release-Equity fund flows soar as retail investors jump in; EM and Global Funds enjoy record inflows
January 11, 2013--Whatever its flaws, the recent deal to stop the US going over the so-called fiscal cliff in early January lit a fire under investors already primed by central bank easing and China's economic recovery.
Flows into EPFR Global-tracked Equity Funds hit a five year high during the first full week of January as retail commitments hit their highest level since late 3Q09 and actively managed funds recorded their biggest inflow --- in US dollar terms – since they were first tracked weekly in 1Q00. Emerging Markets and Global Equity Funds also posted weekly inflow records as investors continued the rotation towards equities that started in mid-December.Visit http://www.epfr.com for more info
Source: EPFR
IMF Working paper-Banks' Foreign Credit Exposures and Borrowers' Rollover Risks Measurement, Evolution and Determinants
January 11, 2013--Summary: The recent crises highlighted the role of cross-border banking linkages. This paper proposes two new measures for better capturing creditor banking systems' foreign credit exposures and borrower countries' reliance on foreign bank credit, by combining BIS data with bank-level data.
The results indicate that the proposed refinements matter, especially when foreign bank affiliates’ funding relies heavily on local deposits. In addition, after developing novel and necessary break-in-series and exchange rate variation adjustments, estimations looking at the driving factors of both measures during 2006-2012 highlight: (i) the role of systemic banking crises and global financial conditions in the evolution of banks’ foreign credit exposures; (ii) the role of a larger set of factors in the case of the evolution of borrower countries’ reliance on foreign bank credit—how countries borrowed, from whom they borrowed, and global financial and domestic demand conditions.
Source: IMF
CS deal to boost iShares' Asia insto, private bank biz
January 11, 2013--BlackRock's agreement to buy Credit Suisse's exchange-traded funds arm may be a Europe-centred deal, but the international nature of the ETF industry gives the move global implications.
The deal was announced yesterday, is subject to regulatory approvals and is expected to complete within the first half of 2013. The terms were not disclosed.
Source: Kalikajaros.com
DB-Synthetic Equity & Index Strategy-Global-2012 ETF Review & 2013 Outlook-Record inflows drive global ETP assets to near $2 trillion
January 11, 2013--Global ETFs cross $1.7 trillion mark and ETC/Vs reach $157bn in assets
Global ETF assets up by 30% and beyond the $1.7 trillion mark in 2012
Global ETF assets grew to $1.76 trillion during 2012 registering close to 30% YoY growth.
About 18% of it came from new cash flows (+$249bn), while the remaining 11% came from asset price increases. Global growth was led by the US ETF market that saw record inflows of $174bn in 2012. The US, Europe, Asia-Pac, and RoW regional ETF assets closed the year at $1.21 trillion (+29%), $333bn (+24%), $136bn (+50%), and $72bn (+29%), respectively. Global ETP assets grew by 28% to $1.91 trillion in the same period.
ETP Investors ventured back into riskier asset classes during 2012
The main flow trends among long only global ETP flows suggest that investors embarked on a cautious quest for growth and yield last year, in an environment that has been characterized by sluggish growth, low rates, and the threat of market shocks. Among equity products, the US (+$64.9bn), China (+$24.9bn), EM Broad (+$28.0bn), and Dividend (+$14.3bn) were the favorite ones; within the fixed income space Investment Grade (+$42.7bn, mostly Corporates) and High Yield (+$16.6bn) were the chosen ones; while in the commodity space investors sought hard currency alternatives in Precious Metals (+$11.6bn, mostly Gold)
2012 saw a very fluid competitive landscape in all regions
In the US, ETFs continue to take market share away from mutual funds, especially in equities. Since 2006, mutual funds have seen over $400bn outflows while ETFs have seen over $500bn inflows in the equity space. Among ETF providers, fierce competition has ignited a price war and multiple actions are being taken; in some cases with success, but in others not really.
In Europe the securities market regulator published long-awaited updated guidelines for ETF issuers. The regulatory playing field is level between different replication methods, however ongoing investor preference for physical replication, as evidenced by market share, is prompting issuers of synthetic ETFs to convert or issue physically replicated ETFs alongside existing issues.
Asia Pac is a more benign environment for ETF start-ups and new products, evidenced by the fact that inflows into new products in Asia represented about 62% of the cash flows compared to only 5% and 22% in the US and Europe, respectively. We believe that China has the largest growth potential in the ETF space given its opportunities for new providers and products.
We target a 23% growth for Global ETF/P assets in 2013 driven by the US
We project 23% asset growth for the Global ETF industry during 2013. This breaks down into 14% or $260bn growth from new cash flows, and 9% from price appreciation. This growth should put the industry well into the $2 trillion land at about $2.16 trillion by the end of 2013. We expect the US ETF market to be the major contributor with similar asset (23%) growth and inflows in the vicinity of $185bn. We also expect ETPs to experience a similar growth than ETFs and reach about $2.35 trillion by the end of the year.
Source: Deutsche Bank - Synthetic Equity & Index Strategy - Global
IOSCO Consults on Financial Benchmarks
January 11, 2013--The International Organization of Securities Commissions (IOSCO) published today a Consultation Report on Financial Benchmarks, which seeks comments from the public on policy issues arising from the work of its Board Level Task Force on Financial Market Benchmarks.
The Consultation Report discusses concerns regarding the potential inaccuracy or manipulation of Benchmarks and identifies Benchmark-related policy issues across securities and derivatives and other financial sectors including:
The appropriate level of regulatory oversight of the process of Benchmarking;
Standards that should apply to methodologies for Benchmark calculation;
Credible governance structures to address conflict of interests in the Benchmark setting process within the reporting financial institutions as well as in the oversight bodies; and
The appropriate level of transparency and openness in the Benchmarking process.
view the IOSCO-Financial Benchmarks Consultation Report
Source: IOSCO
FIF December 2012 Market Share and Market Dynamics Executive Summary
January 10, 2013--The December 2012 FIF Market Share and Market Dynamics Reports-Executive Summary is now available.
Source: Financial Information Forum (FIF)
Emerging Markets kicks off benchmark transitions
January 10, 2013--In the first of a series of moves designed to lock in high-quality benchmarks at lower costs for shareholders of 22 Vanguard index funds, Vanguard Emerging Markets Stock Index Fund recently began its two-step transition to a new target index, the FTSE Emerging Index.
The fund now tracks a temporary FTSE benchmark, the FTSE Emerging Transition Index, and will complete the transition to its permanent benchmark later this year.
The transition is part of a broader move, announced in October, to change benchmarks for 6 Vanguard international stock index funds to existing FTSE indexes and for 16 U.S. stock and balanced index funds to indexes developed by the University of Chicago's Center for Research in Security Prices (CRSP). The transition from the previous benchmarks for these funds is being staggered over a number of months, with completion expected by mid-2013.
Last year, Vanguard struck long-term agreements with CRSP and FTSE providing cost certainty in an environment of escalating licensing fees. It negotiated licensing agreements for these benchmarks that it expects will deliver significant value to its index fund shareholders and lower expense ratios over time.
Source: Vanguard
OECD-Strengthening Euro Area banks
January 10, 2013--Big changes are needed to strengthen the capital positions of euro area banks
European banks remain at the heart of the euro area crisis. Despite actions to strengthen banks and build a banking union, confidence in the euro area banking system remains weak, and is likely to remain so until underlying concerns over low capitalisation of some banks are addressed.
Low bank capitalisation persists in many countries despite an EU requirement that banks reach in 2012 a ratio of a minimum 9% of the best quality “Core Tier-1” capital to risk-weighted assets, in excess of the current international requirements.
Source: OECD
