Global ETF News Older than One Year
BlackRock New Report * ETF Landscape: Industry Review - Year End 2010
January 31, 2011--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.
Demand for ETFs globally has surged as professional and retail investors alike have discovered their unique combination of benefits, such as versatility, transparency and significant cost advantages. The availability of cost effective, flexible, liquid, and diversified investment products that enable rapid implementation of a comprehensive range of investment strategies has struck a chord with investors – during both bull and bear markets.
Factors driving expanding use of the vehicle include the number and types of equity, fixed income, commodity and other indices covered, more fund platforms embracing ETFs, more active marketing of ETFs by online brokers, greater involvement by fee based advisors, the growing number of exchanges planning to launch new ETF trading segments, and regulatory changes in the United States, Europe and many emerging markets that allow funds to make larger allocations to ETFs.
We expect global AUM in ETFs and ETPs to increase by 20 to 30 percent annually over the next three years, taking the global ETF/ETP industry to approximately US$2 trillion in AUM by early 2012. Considering ETFs separately, AUM should reach US$2 trillion globally by the end of 2012, US$1 trillion in the United States in 2011 and US$500 billion in Europe in 2013.
Source: Global ETF Research & Implementation Strategy Team, BlackRock
95 New ETFs Launched in 2010 Based on Standard & Poor's Indices
Represents 46% Increase Over 2009; ETFs Listed Outside the U.S. Comprise Over Half the Growth
January 29, 2011--Standard & Poor's, the world's leading index provider, announced today that its ETF licensing business experienced exceptional growth in 2010, as 95 ETFs based upon its family of stock market indices were launched in 2010 - the biggest annual total in Standard & Poor's history - raising the number of ETFs linked to S&P Indices to 301.
2010 was characterized by unprecedented growth in S&P Indices' international licensing business, with ETF launches outside of the United States outpacing those from within. Of the 95 new ETFs tracking Standard & Poor's family of indices, 57 were listed outside of the US. The greatest growth was in Europe, where 29 new ETFs were launched by product providers in 2010 - more than doubling the total for the region.
In Europe, S&P Indices licensed eight product providers (Amundi, BNP Paribas, Commerzbank, Credit Suisse, Deutsche Bank, HSBC, Lyxor, and Source) to launch ETFs based on the S&P 500 providing greater access to the U.S. equity market.
In the U.S., S&P Indices and Vanguard finalized an agreement that has so far resulted in 10 new ETFs for U.S. domestic investors. Additionally, S&P Indices entered into an agreement with SSgA that transitioned seven of their existing ETFs, including their style series, to S&P benchmarks.
S&P Indices also expanded its footprint in Asia Pacific, highlighted by a landmark licensing agreement with Bosera Asset Management for an S&P 500 ETF in China. In addition, S&P Indices relocated its head of ETF licensing to Asia in an effort to catalyze additional growth in the region.
For its efforts in index development, S&P Indices was recognized with several industry awards in 2010 including:
•Most Innovative Index Provider of the Year: Structured Products Americas Awards 2010
Most Innovative Index Provider of the Year: Structured Products Europe Awards 2010
Best Local Provider of Indices: AsianInvestor in their 2010 Service Provider Awards
Best Index Provider of the Year: Asia Asset Management Awards 2010
"Our ETF licensing business is well positioned to contribute to S&P Indices' growth in 2011 as our reach becomes increasingly global and investors allocate more of their assets to ETFs," says Alexander Matturri, Executive Managing Director at S&P Indices. "We believe 2011 will bring further growth in ETF development throughout the world and across a variety of asset classes including equity, fixed income and commodities where we are already well positioned with leading index products and services."
For more information about S&P Indices, please visit: www.standardandpoors.com/indices.
Source: S&P Indices
Inequality: The Haves and Have-nots
January 28, 2011--To the young and ambitious in the world, Branko Milanovic has a sober message: your income and global status mostly aren’t in your control.
In fact, more than 80% of your likely income is determined at birth by your citizenship and the income class of your parents, says Milanovic, an economist at the World Bank’s Development Research Group.
With intelligence, hard work and luck, you can move up in your country’s income distribution, but it may do little to improve your ranking among the almost 7 billion people in the world unless your country, too, forges ahead. Sometimes, if constrained by access to education and income mobility, you can’t even pull ahead in your own country.
That, in a nutshell, is the story behind global inequality. And, at a time when the incomes of the world’s top 1.75% earners exceed those of the bottom 77%, it raises all sorts of questions, such as the role of development, international migration and the global equality of opportunity, says Milanovic, one of the world’s leading experts on inequality.
We need to realize how important it is to have high growth in poor countries, particularly in Africa," he says. "Because if your country is doing well, you are put in a faster lane. If your country goes backward, you can run, but you won’t move forward globally. And that assumes that institutions in your country do allow for some upward mobility. Unfortunately, as we know, in many countries they do not."
Source: World Bank
FEAS Newsletter for January 2011
January 28, 2011--The FEAS January 2011 newsletter in now available.
Source: FEAS
Fiscal Monitor Update
Strengthening Fiscal Credibility
January 27, 2011--Despite the improving global outlook, the pace of fiscal consolidation this year is slowing in some key countries. The United States and Japan are adopting new stimulus measures and delaying consolidation relative to the pace envisaged in the November 2010 Fiscal Monitor.
The underlying fiscal outlook has also weakened in some emerging markets—among them are several that need to build larger fiscal buffers, particularly in the face of surging capital inflows, overheating, and possible contagion from advanced countries. By contrast, advanced economies in Europe are projected to continue tightening policies amid heightened market scrutiny in several countries. Altogether, sovereign risks remain elevated and in some cases have increased since November, underlining the need for more robust and specific medium-term consolidation plans.
Fiscal outturns in 2010 were slightly better than projected, but some large emerging economies underperformed While advanced economies maintained expansionary fiscal policies on average in 2010, outturns were generally slightly better than projected in the November 2010 Fiscal Monitor
Source: IMF
Food prices: tackle volatility with better functioning markets, says OECD’s Gurría
January 26, 2011--Surging food and commodity prices are undermining efforts to tackle global poverty and hunger and threaten economic growth, said OECD Secretary-General Angel Gurría.
Welcoming the French government’s decision to make commodity price volatility and global food security priority issues of its G20 presidency, Mr Gurría said: “Agriculture markets have always been volatile, but if governments act together then extreme price swings can be mitigated and vulnerable consumers and producers better protected.”
“Commodity markets need to function better and more transparently,” Mr. Gurria said.
The OECD believes stronger discipline should be imposed on the use of trade restrictions – on both exports and on imports. OECD work has also shown the need for better public information on short-term production, consumption and stocks, as well as on medium-term market prospects. Greater transparency would help decision-making and avoid market panic, the OECD says.
Source: OECD
Global Financial Stability Report
Global Financial Stability Still at Risk
January 25, 2011--Nearly four years after the onset of the largest financial crisis since the Great Depression, global financial stability is still not assured and significant policy challenges remain to be addressed. Balance sheet restructuring is incomplete and proceeding slowly, and leverage is still high.
The interaction between banking and sovereign credit risks in the euro area remains a critical factor, and policies are needed to tackle fiscal and banking sector vulnerabilities. At the global level, regulatory reforms are still required to put the financial sector on a sounder footing. At the same time, accommodative policies in advanced economies and relatively favorable fundamentals in some emerging market countries are spurring capital inflows. This means that policymakers in emerging market countries will need to watch diligently for signs of asset price bubbles and excessive credit.
Source: IMF
World Economic Outlook Update
Global Recovery Advances but Remains Uneven
January 25, 2011--The two-speed recovery continues. In advanced economies, activity has moderated less than expected, but growth remains subdued, unemployment is still high, and renewed stresses in the euro area periphery are contributing to downside risks.
In many emerging economies, activity remains buoyant, inflation pressures are emerging, and there are now some signs of overheating, driven in part by strong capital inflows. Most developing countries, particularly in sub-Saharan Africa, are also growing strongly. Global output is projected to expand by 4½ percent in 2011 (Table 1 and Figure 1), an upward revision of about ¼ percentage point relative to the October 2010 World Economic Outlook (WEO). This reflects stronger-than-expected activity in the second half of 2010 as well as new policy initiatives in the United States that will boost activity this year. But downside risks to the recovery remain elevated. The most urgent requirements for robust recovery are comprehensive and rapid actions to overcome sovereign and financial troubles in the euro area and policies to redress fiscal imbalances and to repair and reform financial systems in advanced economies more generally. These need to be complemented with policies that keep overheating pressures in check and facilitate external rebalancing in key emerging economies.
Source: IMF
OPEC Monthly Oil Report January 2011
January 21, 2011--Oil Market Highlights
The OPEC Reference Basket increased further in December, moving within a $85-90/b range for a
monthly average of $85.56/b. The upward trend was attributed to bullish market sentiment, driven by improving macroeconomic expectations and the colder winter in the North Hemisphere. Declining inventories in the US and growing appetite for commodity investments, such as oil, also supported
prices.
In December, the Nymex WTI front month averaged $89.23/b and ICE Brent averaged $92.65/b. Futures continued to increase in early January to hit their 27-month highs with Brent around $98/b. For the year, the Basket averaged $77.45/b in 2010, up 26.8% from the previous year. The Basket moved higher in January to reach $94.04/b on 14 January.
The world economy continues to enjoy positive momentum backed by the ongoing expansion in the manufacturing sector. Growth for 2010 was revised up to 4.5% from 4.3% previously. Although dependent on government-led support, growth in 2011 has also been revised up to 3.9% from 3.8%. US growth is forecast at 2.8% in 2010 and 2.6% in 2011. The deceleration in Japan’s economy remains more pronounced, dropping to 1.5% in 2011 after growth of 4.3% in 2010. The Euro-zone, which is forecast at 1.5% in 2010 and 1.2% in 2011, is expected to continue its two-speed growth pattern, with Germany taking the lead. China and India still face signs of overheating and continue to be challenged by high inflation. The forecasts for China and India remain unchanged at 9.7% and 8.5% for 2010 and at 8.8% and 8.0% for 2011, respectively.
Source: OPEC
Deutsche Bank Index Fundamental Views Equities: Euro Stoxx 50 (Buy), Solid Q4 ahead
January 21, 2011--Trade idea: Buy Euro Stoxx 50 (ES50)
We have identified 3 key themes which support our positive view on the ES50 as
our bottom-up implied 2011E index target scores 3,308 index points which
corresponds to an upside of 14% to the current price level. Key theme no.1 is the positive view on European Banks (Bank account for c20% of ES50 index weight).
Banks are relatively cheap and have seen strongest ETF inflows over the past months among the European sector universe. Our European Strategy team is overweight ‘Banks’ and ‘Insurances’ (Financials account for c27% of ES50 index weight). Key theme no. 2 involves the upcoming Q4 2010 reporting season which promises solid results as we expect analysts’ estimates beats on net income and revenues in the order of >60%. A bottom-up aggregation of 28 ES50 companies suggests net income should grow by 45% qoq relative to Q4 2009 (up 44% yoy). Finally, our key theme no. 3: Fundamentals. Key metrics in the focus are a) attractive dividend yield/growth, b) comfortable leverage and c) a strong cash position (see middle chart on the right).
European fund flows: Strong flows into Euroland and especially into Banks Equities continue to be the most attractive class on our Asset Class Scorecard (review our ‘Index Trading Ideas and Flows’ note, published 11 January 2011). Overall, ETFs focused on Euroland added 3.8% to their AuM (+E734m) over the past month while ETFs focused on the European Union suffered outflows at 1.9% (-E464m).
Source: Deutsche Bank Global Markets Research
