Global ETF News Older than One Year
World Recovery Continues, But Risks Increase, Says IMF
IMF forecasts continuing global recovery
But renewed financial turbulence and euro area problems cloud the outlook
Fiscal consolidation should be based on credible medium-term plans
July 8, 2010--Balancing the strong growth numbers for the first half of 2010 and the adverse impact of increased financial turbulence, the IMF forecasts world growth to rise to 4 ½ percent this year, before falling somewhat to 4 ¼ percent in 2011—with the world average masking large differences around the globe.
But despite the stronger than expected first half recovery, the IMF warned that uncertainties surrounding sovereign and financial sector risks in parts of the euro area could spread more widely, posing difficulties for both financial stability and the economic outlook.
“While we predict the recovery will continue, it is clear that downside risks have risen sharply,” Olivier Blanchard, the IMF’s chief economist, told reporters. Blanchard and José Viñals, respectively the Fund’s Economic and Financial Counselors, launched updates to the IMF’s World Economic Outlook (WEO) and Global Financial Stability Report (GFSR) in Hong Kong for the first time.
Differences in performance
As always, these world growth rates hide a large difference between and within advanced and emerging and developing economies, with the United States expected to grow at about 3 ¼ percent in 2010, the euro area at 1 percent, Japan at close to 2 ½ percent, and emerging and developing economies averaging about 6 ¾ percent
view the IMF World Economic Outlook (WEO) Update -- Contractionary Forces
View the World Economic Outlook Update A Policy-Driven, Multispeed Recovery
Source: IMF
ESG issues ‘are’ financial risks for pension funds says influential Towers Watson head, Roger Urwin
Respected consultant predicts advent of ESG credit ratings.
July 7, 2010--The assumption that environmental, social and governance (ESG) issues are ‘extra’-financial is wrong, but better metrics are needed to prove their short- to medium-term material impact on company performance, according to Roger Urwin, global head of investment content at Towers Watson, and one of the world’s most influential investment advisors.
Speaking to Responsible-investor.com, Urwin, who is also an advisory director to MSCI Barra, which recently bought RiskMetrics, the New York-based risk and ESG firm, said he predicted that one development that might dispel the extra-financial argument could be the launch of ESG credit ratings, akin to bond ratings. “There’s a basic assumption that if extra financial issues matter then they should already be there in investment analysis and decisions. It’s not an unreasonable assumption, but as you prod at it you realise that it is a weak argument.” Urwin said that because fund manager mindsets are set on 3- or 12-month returns because of the business structure, there was an “all-too-ready reflection” that extra financial impacts might only affect share prices over a longer time-frame: “I think that is wrong because extra financial influence on stocks is set at a gradient which is quite low which means that it may take five years before you can see the effects. But just because you can’t necessarily assess it in 3 or 12 months that doesn’t mean it doesn’t exist.
Source: Responsible Investor
Index Data Monthly Report-Dow Jones
July 7, 2010--The following Index Data Monthly Report from Dow Jones are now available
Index Data Monthly Report: UBS Commodity Indexes
Index Data Monthly Report: Asia Pacific Edition
Index Data Monthly Report: MENA Edition
Index Data Monthly Report: Dow Jones Islamic Market Indexes
Index Data Monthly Report: Europe Edition
Index Data Monthly Report: Latin America Edition
Index Data Monthly Report: Dow Jones Brookfield Infrastructure Indexes
Index Data Monthly Report: U.S. Edition
for more info, click here
Source: Dow Jones Indexes
Private equity funds recovered from crisis
Although Q1 2010 data will not be published until later this year, Preqin said there are indications the recovery has remained on track.
"Company valuations and performance started to improve from the second quarter of 2009 and the industry has since continued its recovery," said Preqin head of research Etienne Paresys.
The survey recorded returns of 13.8% in the 12 months to the end of December 2009, compared with losses of 9.2% over the year to September 30 2009.
Performance still trailed the major markets over the same period however, with the US S&P 500 up 26.5%, the MSCI Europe rising 35.8% and MSCI Emerging Markets index up a whopping 78.5%, however Preqin said.
Within the asset class, buyout funds posted the highest returns last year, returning 16.7%, with venture capital up 5%, mezzanine by 2.3% and fund of funds 0.2% higher.
The data also showed median returns for 2005 vintage and older buyout funds are now all in positive territory, while 2006 vintage and subsequent median returns are still in the red.
"Although the 2006 buyout vintage was heavily affected by the global downturn and is still showing negative median returns, we have seen a significant improvement in performance, and there is now a strong possibility that it will move into positive territory in the coming months," Paresys added.
Source: Preqin
HSBC hires ex-Merrill Knight for new climate change research role as broker hiring spree continues
Rivals including Citi, Morgan Stanley and Merrill Lynch itself have all been adding to their sustainability teams in recent months as demand for related research grows. Nick Robins, head of HSBC’s Climate Change Centre of Excellence, which bridges group sustainability and research at the bank, said Knight’s appointment reflected a rise in client requests for climate research.
Source: Responsible Investor
Fears mount over slowing global demand
Figures showed manufacturing output slowing across large parts of the world, posing further challenges to leading economies as they attempt to shore up shaky fiscal positions without falling back into recession. In Asia – the world’s production powerhouse whose economies are still largely dependent on export demand – manufacturing activity indices for China, South Korea, Taiwan, India and Australia all showed weaker activity for June.
Source: FT.com
BlackRock ETF Landscape Industry Review, May 2010
YTD ASSETS INCREASED BY 0.8%, COMPARED TO THE 7.6% DECREASE IN
THE MSCI WORLD INDEX IN US DOLLAR TERMS.
>Source: Global ETF Research & Implementation Strategy Team, BlackRock
Securitisation drops 5% in second quarter
On a global basis, the volume of securitised deals reached just $139bn, according to figures from Thomson Reuters, a 5 per cent drop on the amount seen in the second quarter of 2009.
Compared with the peaks of 2006, when bonds were sold backed by payments on loans ranging from residential mortgages to car loans to leases on aircraft, the securitised markets are still only a fraction of their former selves, in spite of efforts by US and European central banks to prop them up.
Source: FT.com
SPDR Gold Shares exceeds USD50bn in assets
"With assets having increased by approximately 32 per cent year-to-date (as of 25 June 2010), SPDR Gold Shares has radically transformed the way in which a wide range of investors access the gold market," says James Ross, senior managing director at State Street Global Advisors.
Jason Toussaint, managing director, investments, World Gold Trust Services, adds: "Strategic asset allocation will continue to play a central role in investors' portfolio performance moving forward, and portfolios that contain even a small allocation in gold have the potential to better cope with varying market scenarios. This milestone for GLD underscores that investors have embraced gold as a viable core holding over the long-term." As of 25 June, assets under management in the trust totalled more than USD53bn, making it the second largest ETF by assets in the world.
GLD is also cross-listed on the Bolsa Mexicana de Valores, the Singapore Exchange the Tokyo Stock Exchange and the Stock Exchange of Hong Kong.
Source: Online News
EDHEC-Risk Study Finds No Theoretical or Empirical Justification for Cap-Weighted Indices
New research from the EDHEC-Risk Institute shows that financial theory, despite widely-held views to the contrary, does not support investment in these types of indices. It is therefore urgent for investors to seek alternatives to these indices which are justified by neither fact nor theory. The three main conclusions of the research are the following:
1.A cap-weighted stock market index is not the market portfolio of financial theory (the Capital Asset Pricing Model (CAPM) theory is often evoked to show that cap-weighted stock market indices are efficient portfolios and attractive investments). That it is not is clear from the choices made in empirical studies that attempt to come up with reasonable proxies for the market portfolio. These studies attach great importance to including many more stocks than indices do, and their proxies of the market portfolio include bonds, real estate, and non-tradable assets such as human capital.
2. Even if it were possible to construct and hold the market portfolio, the theory does not predict that the market portfolio is efficient unless we make highly unrealistic assumptions. In fact, the authors of the seminal academic research in the 1950s and 1960s, Harry Markowitz and William Sharpe, have themselves emphasised (Sharpe (1991) and Markowitz (2005)) that the market portfolio may not be efficient in a more realistic setting.
3. In view of these arguments, financial theory alone does not justify the current practice of cap-weighting. In fact, from a theoretical perspective, cap-weighted stock market indices seem to offer no particular advantage.
Source: EDHEC
July 1, 2010--On June 28, 2010, Preqin reported; Private equity funds have recovered from some of the heaviest losses of the global downturn, research has shown.
Analysis of 5,000 funds worldwide by data provider Preqin found valuations increased 13.5% in 2009, almost erasing the losses of in 2008 which saw net asset values drop 15.8%.
July 1, 2010--Banking giant HSBC has hired Zoe Knight, former senior director of socially responsible investing (SRI) research at Merrill Lynch in London, for a new role as director of climate change strategy. The hire by HSBC adds to the recent turnaround in the recruitment of sustainability analysts at investment banks after a cull in numbers during the credit crunch as costs were cut.
July 1, 2010--Fears grew that the global recovery is faltering on Thursday after a slew of data pointed to weaker global demand led by slower growth in China.
June 30, 2010--GLOBAL
At the end of May 2010 the global ETF industry had 2,218 ETFs with 4,478 listings, assets of US$1,044.1 Bn from 131 providers on 42 exchanges around the world.
THE TOP 100 ETFs, OUT OF 2,218, ACCOUNT FOR 64.5% OF GLOBAL
ETF AUM, WHILE 458 ETFs HAVE LESS THAN US$10.0 MN IN ASSETS.
YTD THE NUMBER OF ETFs INCREASED BY 13.7% WITH 290 NEW
ETFs LAUNCHED.
THE NUMBER OF ETFs LISTED IN EUROPE HAS SURPASSED THE US WITH
946 ETFs LISTED IN EUROPE, COMPARED TO 836 IN THE US.
THERE ARE CURRENTLY PLANS TO LAUNCH 884 NEW etFS.
YTD THE NUMBER OF EXCHANGES WITH OFFICIAL LISTINGS INCREASED FROM
40 TO 42.
YTD THE AVERAGE DAILY TRADING VOLUME IN Us DOLLARS INCREASED BY
132.8% TO US$117.1 BN.
MSCI AND STANDARD & POOR’S (S&P) ARE VIRTUALLY TIED IN TERMS OF
etF aUm TIED TO THER BENCHMARKS WITH ASSETS OF US$241.0 BN
AND 308 ETFs TRACKING MSCI, WHILE S&P HAS US$239.8 BN AND 272
ETFs, FOLLOWED BY BARCLAYS CAPITAL WITH US$101.4 AND 78 ETFs.
June 30, 2010--The amount of money raised through securitisation dropped in the second quarter of 2010 compared with the previous year, highlighting the slow pace of recovery in this once-dominant part of the capital markets.
June 30, 2010--Assets in the SPDR Gold Trust have surpassed USD50bn, according to State Street Global Advisors and World Gold Trust Services, a wholly-owned subsidiary of the World Gold Council.
June 29, 2010--After the financial crisis and the accompanying falls in the stock markets, many commentators have questioned the appropriateness of tracking cap-weighted indices. These indices are particularly inefficient and, through their momentum properties, favour the emergence of speculative bubbles.
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