Global ETF News Older than One Year
DB Global Equity Index & ETF Research : Part fund, part stock: ETFs in a path to unlock global asset liquidity
January 13, 2011--Capital market advances, supported by technological innovations over the past two decades, have redefined capital market mechanics. ETFs are a brainchild of this evolution. Currently, the global ETF market is close to €1 trillion, with the European market accounting for 22% of this figure. The sector’s impressive growth over the past decade demonstrates that ETFs are here to address a key market need: dependable secured fund instruments that do away mutual fund trading inefficiencies and derivatives risk considerations.
Possessing fund and stock characteristics, an ETF combines the best features of both instruments: security [funded] – mutual funds - and trading flexibility – stocks. The amalgamation of these features translates to liquidity levers that can prove paramount when looking to unlock an investment portfolio’s full liquidity potential.
As the global markets continue to evolve and investor instrument needs expand, asset liquidity considerations will only become more important and shall increasingly determine how an investor chooses a tracker instrument. ETFs are developing to become the pre-eminent global index instrument. Today, an impressive 50%+ (in terms of AUM) of ETFs assets trade on a global level across the major three regions (US, Europe, Asia). ETF trading globalization has thus put these instruments on a global market bridging path. This makes all the more important for a portfolio manager to use ETF liquidity levers to their advantage in order to help optimize and better achieve investment objectives.
ETF liquidity is composite in nature. To understand it, both its fund and stock trading characteristics need to be understood. Similar to a traditional mutual fund, an ETF is not an asset per se, it is an asset wrapper. Irrespective of the replication method that an ETF utilizes in order to achieve its investment objectives, it needs to access its underlying benchmark’s physical market to achieve investment exposure. Due to this dependence, the link with ETF underlying benchmark market plays the biggest role in determining an ETF’s liquidity standing.
ETFs, however, are also equity instruments whose shares trade like stocks. In this respect their intra-day pricing is subject to supply and demand forces as well as other trading market dynamics (such as market depth, trading restrictions, intermediaries’ pricing etc). Despite the trading similarities of an ETF and a common stock, using stock liquidity measures such as turnover, has generated confusion, in measuring ETF liquidity.
Three main areas relating to ETF liquidity have attracted attention as the ETF market has gained prominence next to established index instruments such as futures, total return swaps and mutual funds.
Trading: How can an ETF be traded and what are the implications of different trading possibilities on its liquidity?
Creation: How is ETF wrapper liquidity created? What is the impact of the ETF wrapper on the underlying benchmark’s index liquidity?
Measurement: What are the appropriate ETF liquidity measurement indicators?
Using these three pillars, we have performed an analysis of ten popular ETF benchmarks and the associated ETF listings across sixteen exchanges in all of the three major global regions (Europe, US, Asia).
To request a copy of the report
Source: Deutsche Bank Global Equity Index & ETF Research
Thomson Reuters Monthly Market Share Reports For December 2010
January 13, 2011--Trading is fragmenting between exchanges and competing venues. But by how much and which venues? Find out in the summarised monthly reports.
Monthly Data at a Glance
The charts show the traded value of all MTF operated Dark Pools and six of the leading broker crossing services equities (in Euro € millions) recorded over the last 13 months. For the most recent month the break down for the main venues is provided. The data for the MTFs has been sourced from the Thomson Reuters Equity Market Share Reporter whilst the Broker Crossing System data, available since June 2010 has been sourced from Markit BCS Daily reporting (http://www.markit.com/).
Source: Thomson Reuters
2011 Index of Economic Freedom
January 13, 2011--Executive Highlights
Economic freedom advanced this year, regaining much of the momentum lost during the fiscal crisis and global recession. Many governments around the world have rededicated themselves to fiscal soundness, openness and reform, and the majority of countries are once again on a positive path to greater freedom.
The 2011 Index of Economic Freedom reports on economic policy developments since the second half of 2009 in 183 economies. Based on 10 measures that evaluate openness, the rule of law, and competitiveness, the Index ranks economies according to their economic freedom. The principles of economic freedom emphasized in the Index are individual empowerment, non-discimination, and the promotion of competition.
HIGHLIGHTS FROM THE 2011 INDEX OF ECONOMIC FREEDOM
The global average economic freedom score for the 2011 Index is 59.7, a 0.3 point increase from last year. (See Chart 1.) Despite the challenging global economic environment, the forces of economic freedom around the world have been resilient and even increasing. In fact, economic freedom has taken an upturn in the majority of the economies that are assessed in the 2011 Index.
Highlights of the Index of Economic Freedom Report
Source: Heritage org
Growth hopes push oil to within reach of $100
January 12, 2011--Oil has risen to within reach of $100 a barrel for the first time since the 2008 price spike amid mounting optimism that global economic growth will boost demand.
But the sharp rise has also heightened concerns about the impact of soaring commodity prices on the global economy, particularly in emerging countries, as it comes on top of high costs for agricultural commodities and metals.
Source: FT.com
World moves closer to food price shock
January 12,, 2011--The world has moved a step closer to a food price shock after the US government surprised traders by cutting stock forecasts for key crops, sending corn and soyabean prices to their highest level in 30 months.
The price jump comes after the UN’s Food and Agriculture Organisation warned last week that the world could see repetition of the 2008 food crisis if prices rose further. The trend is becoming a major concern in developing countries.
Source: FT.com
BlackRock * New Report * ETF Landscape: Industry Highlights - Year End 2010
January 12, 2012--Key points from the highlights, as at year end 2010, are as follows:
United States ETF and ETP Industry
The United States ETF industry had 896 ETFs and assets of US$891.0 Bn, from 28 providers on two exchanges. This compares to 772 ETFs and assets of US$705.5 Bn, from 29 providers on two exchanges, at year end 2009.
US$19.0 Bn of net new assets went into United States listed ETFs/ETPs in December 2010. US$18.7 Bn net inflows went into equity ETFs/ETPs, of which US$16.0 Bn went into ETFs/ETPs tracking North American indices and US$0.8 Bn into ETFs/ETPs tracking international indices. Fixed income ETFs/ETPs saw net outflows of US$1.7 Bn, where corporate bond ETFs/ETPs saw net outflows of US$0.9 Bn and aggregate fixed income ETFs/ETPs saw net outflows of US$0.9 Bn. Commodity ETFs/ETPs experienced US$1.9 Bn net inflows, of which precious metals ETFs/ETPs saw net inflows of US$1.0 Bn and US$0.5 Bn went into agricultural commodity ETFs/ETPs in December 2010.
Of the US$17.7 Bn of net new assets in United States listed ETFs in December 2010, State Street Global Advisors gathered the largest net inflows with US$10.9 Bn, followed by iShares with US$3.9 Bn net inflows, while PowerShares saw US$1.0 Bn net outflows in December 2010.
Global ETF and ETP Industry
The industry grew on all major dimensions during 2010 and we expect this to continue in 2011. With products and assets both growing by 26.6%, the global ETF industry had 2,459 ETFs with 5,554 listings and assets of US$1,311.3 Bn, from 136 providers on 46 exchanges around the world, at year end 2010. This is up significantly on 2009's year end of 1,943 ETFs with 3,827 listings and assets of US$1,036.1 Bn, from 108 providers on 41 exchanges.
The global ETF and ETP industry combined had 3,503 products with 7,311 listings and assets of US$1,482.0 Bn, from 168 providers on 50 exchanges around the world. This compares to 2,672 products with 4,856 listings, assets of US$1,155.8 Bn from 132 providers on 45 exchanges at year end 2009.
European ETF and ETP Industry
The European ETF industry had 1,071 ETFs with 3,699 listings and assets of US$284.0 Bn, from 39 providers on 22 exchanges. This compares to 827 ETFs with 2,438 listings and assets of US$226.9 Bn, from 34 providers and 19 exchanges, at year end 2009.
US$4.9 Bn of net new assets went into European listed ETFs/ETPs in December 2010. US$3.8 Bn net inflows went into equity ETFs/ETPs, of which US$1.5 Bn went into ETFs/ETPs tracking emerging market indices and US$1.4 Bn into ETFs/ETPs tracking European indices. Fixed income ETFs/ETPs saw net outflows of US$0.1 Bn, of which corporate bond ETFs/ETPs saw net outflows of US$0.4 Bn, while US$0.3 Bn went into government bond ETFs/ETPs. Commodity ETFs/ETPs saw net inflows of US$1.1 Bn, of which US$0.6 Bn went into precious metals exposure and US$0.4 Bn into broad commodity exposure.
Of the US$4.5 Bn of net new assets in European listed ETFs in December 2010, Lyxor Asset Management gathered the largest net inflows with US$1.8 Bn, followed by iShares with US$1.3 Bn net inflows, while Source Markets had the largest net outflows with US$0.7 Bn.
Asia Pacific (ex-Japan) ETF and ETP Industry
The Asia Pacific (ex-Japan) ETF industry had 200 ETFs with 307 listings and assets of US$53.3 Bn, from 59 providers on 13 exchanges.
Japan ETF and ETP Industry
The Japanese ETF Industry had 80 ETFs with 83 listings and assets of US$32.2 Bn, from seven providers on two exchanges.
Latin America ETF and ETP Industry
The Latin American ETF industry had 26 ETFs with 355 listings and assets of US$10.1 Bn, from four providers on three exchanges.
Canada ETF and ETP Industry
The Canadian ETF industry had 157 ETFs and assets of US$38.4 Bn, from four providers on one exchange.
Source: Global ETF Research & Implementation Strategy Team, BlackRock
Global Economic Prospects 2011 Navigating Strong Currents
January 12, 2011----Economic activity in most developing countries has or is close to having recovered. Supported by a resurgence of international and domestic financial flows and higher commodity prices, most of the economy-wide spare capacity created by the crisis has been reabsorbed, and as a result demand stimulus is being retracted.
Overview and main messages
Economic activity in most developing countries has, or is close to having, recovered. Supported by a resurgence in international and domestic financial flows and higher commodity prices, most of the spare capacity in developing countries that was created by the crisis has been reabsorbed, and developing countries have regained trend growth rates close to those observed in the pre-crisis period.
In contrast, the recovery in many high-income countries (and several economies in developing Europe and Central Asia) has not been strong enough to make major inroads into high unemployment and spare capacity. Prospects in these economies, many of which were at the center of the financial boom and bust, continue to be weighed down by banking-sector restructuring, high consumer debt and a right-sizing of economic sectors that grew unsustainably large during the boom period.
view full report-Global Economic Prospects 2011 Navigating Strong Currents
Source: World Bank
Developing Countries Are Driving Global Growth, but Risks Remain
January 12, 2011-Led by developing countries, the world economy is moving on from a post-crisis bounce-back phase of recovery to slower but still solid growth this year and next
Developing countries face three main short-term risks—tensions in financial markets, large and volatile capital flows, and a rise in high food prices
For the longer-term, countries need to shift focus from short-term crisis management toward measures that address underlying structural challenges
The world economy is moving on from a post-crisis bounce-back phase of recovery to slower but still solid growth this year and next. Global GDP, which expanded by 3.9% in 2010, is expected to slow to 3.3% in 2011, according to the World Bank’s Global Economic Prospects 2011.
Most of the developing world has weathered the financial crisis well, and, by the end of 2010, many emerging market economies had recovered or were close to resuming the growth potential they had attained prior to the crisis.
"On the upside, strong developing-country domestic demand growth is leading the world economy, yet persistent financial sector problems in some high-income countries are still a threat to growth and require urgent policy actions," said Justin Yifu Lin, the World Bank’s chief economist and senior vice president for development economics.
Source: World Bank
Dow Jones Index Data Monthly Reports
January 12, 2011---The following Dow Jones Index Data Monthly Reports for OCtober 2010 are now available.
Index Data Monthly Report: U.S. Edition
Index Data Monthly Report: Dow Jones-UBS Commodity Indexes
Index Data Monthly Report: Europe Edition
Index Data Monthly Report: Latin America Edition
Index Data Monthly Report: Dow Jones Brookfield Infrastructure Indexes
Source: Dow Jones Indexes
Capital markets must absorb longevity risk, insurers say
January 12, 2011--Capital markets will have to help governments and the insurance industry absorb some longevity risk, insurers have said.
They said the most likely solution to dealing with the massive increase in public debt due to age-related liabilities was that people would have to work longer
Source: IP&E
