Global ETF News Older than One Year
Global Pension Funds Rebound in 2009
February 1, 2010--Global institutional pension fund assets in the 13 major markets increased by 15% during 2009, from US$20 trillion to over US$23 trillion, according to Towers Watson’s Global Pension Assets Study released today. The growth is in sharp contrast to a 21% fall in asset values during 2008 and brought assets back to 2006 levels.
The study also reveals that the global pensions balance sheet[1] strengthened by around 10% in 2009, compared to a 25% fall in 2008. According to the study, pension assets now amount to 70% of the average global GDP, down from 76% a decade earlier, but substantially higher than the equivalent figure in 2008 of 58%.
Roger Urwin, global head of investment content at Towers Watson, said: “The global financial crisis was a huge wake-up call and problems of poor systemic design in the industry point to increased likelihoods of further periods of financial distress in future. While the recovery of markets will be welcomed, it is hoped that it will not stifle recognition of these as major issues for national governments and companies to address. I fear that without exceptional leadership we will have another tough decade in the pension and investment world.”
Other highlights from the report include:
Global asset data for the P13
On average global pension assets (measured in local currency) grew by over 16% in 2009, compared with an 11% fall in 2008, improving the ten-year average growth rate to almost 7% Despite losing market share in the past ten years the US, Japan and the UK remained the largest pension markets in the world, accounting for 57%, 14% and 8% respectively of total pension global fund assets
All countries saw significant growth in pension assets in 2009 (measured in local currency), except Japan which still has a negative five-year growth rate In terms of ten-year CAGR (in local currency terms), these are mostly positive, with Brazil (18%), Hong Kong (14%), the Netherlands (12%) and Australia (10%) having the highest and Japan (1%), Switzerland (2%), US (3%) and the UK (3%) having the lowest The Netherlands now has the largest proportion of pension assets to GDP (120%), followed by Switzerland (113%) and Australia (93%).
Asset Allocation for the P7
Bond allocations for the P7 countries increased from 25% in 2005 to 32% in 2008, but fell back to 27% in 2009. Allocation to equities rose significantly during 2009 to reach 54%
Other assets, especially real estate and to a lesser extent hedge funds, private equity and commodities, have grown from 12% to 17% in the last five years.
Roger Urwin said: “The gyrations of markets during the past few years has presented pension funds with very difficult strategic asset allocation choices. During the crisis, some funds sold out of equities to address solvency issues, some drifted out of equities and into bonds by not rebalancing, while others maintained their strategic mix and rebalanced to prior equity percentages. The result overall was a phase of de-risking, but not in a measured way and this has largely been reversed as equity markets have rebounded and risk allocations rebuilt.
Highly changeable market conditions in short periods of time will have caused serious disruptions for pension funds. In order to get back on track, they will be reviewing all options, including extra contributions from sponsors, contingent funding arrangements, investment strategy reviews, hedging strategies and pension insurance buy-ins, not to mention changes to benefits structures including fund closures.”
Defined Benefit (DB) vs. Defined Contribution (DC) for the P7
During the ten-year period from 1999 to 2009, the CAGR of DC assets was 6% against a rate of 2% for DB assets DC assets now comprise 42% of global pension assets compared with 32% in 1999
Australia has the highest proportion of DC pension assets, having increased them from 78% to 82% of overall assets between 1999 and 2009
The countries that show a larger proportion of DC assets than DB assets are the US, Australia and Switzerland while Japan and Canada are close to 100% DB.
Roger Urwin said: “As a result of the crisis there is a heightened awareness of the need to be better prepared in future and to think differently about how markets can be buffeted by extreme events. An important characteristic of this new environment is the acknowledgement by asset owners of much increased complexity and the recognition that the appropriate governance for a chosen investment strategy is critical. This will increasingly lead investors to either prioritising higher governance and allocate proportionate resources or simplifying their investment strategies to minimise cost and avoid value destruction. This will become all the more important as pensions and financial services regulators seek to spell out what governance standards funds should adhere to and their broader responsibilities. Funds in the past have had a very light touch applied on these issues, but the massive size and sphere of their influence make pension funds ripe for greater regulatory influence.”
view the Global Pension Asset Study 2010 report
Source: Towers Watson
IOSCO Quarterly Update – January 2010
January 29, 2010--Key Issues – Enforcement MMoU, Joint Forum, Audit Services, Emerging Markets, Unregulated Markets & Products, Annual Conference 2010.
IOSCO’s announcements and publications reflect its work in support of the organizations objectives:
The protection of investors
Ensuring that markets are fair, efficient and transparent;
The reduction of systemic risk
ource: IOSCO
January 2010 “Market’s Measure” - Preliminary Report - A Monthly Report From Dow Jones Indexes And STOXX Ltd. On The Performance Of U.S., European, Asia And Other Global Stock Market Indexes
Dow Jones Industrial Average Posts 2.24% Loss in JANUARY, European Stocks Lose 2.71%, Asia Falls 0.05% and World Equities Fall by 2.92%
Travel & Leisure Sector Posts Biggest Gain for January in Europe & Worldwide,
Telecommunications Takes the Hardest Hit for January in U.S.
January 27, 2010--As of January 26 the Dow Jones Industrial Average fell 233.75 points in January, closing at 10194.29. Stock market indexes in Europe, Asia and globally were down in January, according to preliminary monthly figures from global index providers, Dow Jones Indexes and STOXX Ltd.
The Dow Jones Industrial Average fell 233.75 points in January, closing at 10194.29. Month-to-date, the index is down 2.24%.
Measuring Europe, the Dow Jones STOXX 50 Index is down 70.02 points for January, closing at 2515.31. Month-to-date, the index is down 2.71%.
Measuring Eastern Europe, the Dow Jones STOXX EU Enlarged Total Market Index is up 3.19 points for January, closing at 210.69. Month-to-date, the index is up 1.54%.
The performance of the Dow Jones STOXX EU Enlarged 15 blue-chip index is up 31.16 points for January, closing at 2224.53. The index is up 1.42% so far this month.
The Dow Jones Asian Titans 50 Index fell 0.07 points in January, to 134.20. So far this month, the index is down 0.05%.
The Dow Jones Global Titans 50 Index fell 5.07 points in January, closing at 168.58. Month-to-date, the index is down 2.92%.
Source: Mondo Visione
M Stanley warns on ‘prop trading’ crackdown
January 27, 2010--US proposals to limit sharply proprietary trading by banks could cut earnings at global investment banks by 3-5 per cent, with JPMorgan, Bank of America and Deutsche Bank particularly at risk, new analysis by Morgan Stanley has found.
But the Morgan Stanley analysts were more bullish on US banks than their European counterparts because they believe the another big set of regulatory proposals – from global banking regulators based in Basel – will hit European banks harder than those in the US.
Source: FT.com
Fund industry wants ETF issues resolved, says SSgA
Regulatory uncertainty still clouds parts of the exchange-traded fund market, says a new report from State Street Global Advisors.
January 27, 2010--The exchange-traded funds market may be growing fast, but regulatory uncertainty remains over products such as commodity, inverse, leveraged and active ETFs. And there's pressure to get quick resolution on structural issues, says State Street Global Advisors (SSgA), the world's second biggest ETF provider.
Global ETF assets under management grew by 31% to $933 billion in the nine months to September 30, with the Asia-Pacific region accounting for $62 billion, or around 7% of the total, said SSgA in a report* published yesterday. But Asia-Pacific ETF assets are growing faster than those of any other region, having risen by 50% in the same period.
Source: Asian Investor
World Economic Outlook Update-A Policy-Driven, Multispeed Recovery
January 26, 2010--The global recovery is off to a stronger start than anticipated earlier but is proceeding at different speeds in the various regions. Following the deepest global downturn in recent history, economic growth solidified and broadened to advanced economies in the second half of 2009. In 2010, world output is expected to rise by 4 percent.
This represents an upward revision of ¾ percentage point from the October 2009 World Economic Outlook. In most advanced economies, the recovery is expected to remain sluggish by past standards, whereas in many emerging and developing economies, activity is expected to be relatively vigorous, largely driven by buoyant internal demand. Policies need to foster a rebalancing of global demand, remaining supportive where recoveries are not yet well sustained.
Real activity is rebounding, supported by extraordinary policy stimulus Global production and trade bounced back in the second half of 2009. Confidence rebounded strongly on both the financial and real fronts, as extraordinary policy support forestalled another Great Depression. In advanced economies, the beginning of a turn in the inventory cycle and the unexpected strength in U.S. consumption contributed to positive developments. Final domestic demand was very strong in key emerging and developing economies, although the turn in the inventory cycle and the normalization of global trade also played an important role.
view the World Economic Outlook Update
Source: IMF
Global Financial Stability Report -GFSR Market Update
Financial System Stabilized, but Exit, Reform, and Fiscal Challenges Lie Ahead
January 26, 2010--Systemic risks have continued to subside as economic fundamentals have improved and substantial public support remains in place. Despite improvements, financial stability remains fragile in many advanced countries and some hard-hit emerging market countries. A top priority is to improve the health of these banking systems so as to ensure the credit channel is normalized. The transfer of financial risks to sovereign balance sheets and the higher public debt levels also add to financial stability risks and complicate the exit process. Capital inflows into some emerging market countries are beginning to raise concerns about asset price and exchange rate pressures.
Policymakers in these countries may need to exit earlier from their supportive policies to contain financial stability risks. For all countries, the goal is to exit from the extraordinary public interventions to a global financial system that is safer, but retains the dynamism needed to support sustainable growth.
Financial markets have recovered strongly since their troughs, spurred on by improving economic fundamentals and sustained policy support (see the World Economic Outlook Update, January 2010). Risk appetite has returned, equity markets have improved, and capital markets have re-opened. As a result, prices across a wide range of assets have rebounded sharply off their historic lows, as the worst fears of investors about a collapse in economic and financial activity have not materialized
Source: IMF
Investor Confidence Index rises from 104.3 to 104.5 in January
January 26, 2010--Investor confidence rose fractionally by 0.2 points to 104.5 in January from a revised December level of 104.3, according to the State Street Investor Confidence Index.
The mood was upbeat in North America, where confidence showed an increase of 4.4 points over December’s reading of 103.5 to settle at 107.9.
In Europe, by contrast, institutional investors were more wary, and their confidence fell 5.6 points to 98.9 from the December level of 104.5.
Amongst Asian institutional investors, confidence rose slightly to 98.1 from a level of 97.5 in December.
Source: ETF Express
January 2010 “Islamic Market’s Measure” – Preliminary Report - Monthly Report On The Performance Of The Dow Jones Islamic Market Indexes
January 26, 2010--Based on the close of trading on January 25, the global Dow Jones Islamic Market Titans 100 Index, which measures the performance of 100 of the leading Shari’ah compliant stocks globally, lost -1.69% month-to-date, closing at 2085.53. In comparison, the Dow Jones Global Titans 50 Index, which measures the 50 biggest companies worldwide, posted a loss of -2.67%, closing at 169.01.
The Dow Jones Islamic Market Asia/Pacific Titans 25 Index, which measures the performance of 25 of the leading Shari’ah compliant stocks in the Asia/Pacific region, increased 1.12%, closing at 1870.98. The Dow Jones Asian Titans 50 Index, in comparison, posted a gain of 1.67%, closing at 136.52.
Measuring Europe, the Dow Jones Islamic Market Europe Titans 25 Index, which measures the performance of the 25 of the leading Shari’ah compliant stocks in Europe, closed at 2112.95, a loss of -2.12%, while the pan-European blue chip Dow Jones STOXX 50 Index lost -4.62%, closing at 4363.33.
Measuring the performance of 50 of the largest Shari’ah compliant U.S. stocks, the Dow Jones Islamic Market U.S. Titans 50 Index decreased, closing at 2101.68. It represents a loss of -2.01%. The U.S. blue-chip Dow Jones Industrial Average decreased -2.22%, closing at 10196.86.
Source: Dow Jones Indexes
Trust in Business Rises Globally, Driven by Jumps In U.S. and Other Western Economies
Recovery Fragile as Majority Expect a Return to “Business as Usual,” 2010 Edelman Trust Barometer Finds
January 26, 2010-- Global trust in business is up modestly but the rebound is fueled by a spike in a handful of Western countries, especially the United States where it jumped 18 points to 54 percent, according to the 2010 Edelman Trust Barometer. Trust in business remains high in three of the four BRIC countries, with Brazil, India, and China above 60 percent. The overall rise is tenuous, however, with nearly 70 percent saying business and financial companies will revert to “business as usual” after the recession. Trust in banks declined dramatically in most Western countries, plummeting 39 points (68 to 29 percent) in the U.S. and 20 points (41 to 21 percent) in the U.K. from 2007-2010*.
“Trust in business has improved, but the patient has a long road to go for a full recovery,” said Richard Edelman, president and CEO, Edelman. “The increase in trust in business belies its fragility. There is concern that short-term actions have been taken only as a result of the crisis and that government will need to remain a watchdog. Companies will have to prove the skeptics wrong and show they can achieve both profit and purpose.”
Additional Key Findings Include:
While Sweden, Canada, and Germany remain the most trusted countries for global headquarters (76, 76, and 75%, respectively), the U.S. is now trusted by 61%, up 10 points from last year. China rose by seven points in this category (27 to 34%).
In all 22 countries, when asked which stakeholder should be most important to a CEO’s business decisions, respondents replied that “all stakeholders are equally important” – by as much as a 4:1 margin against individual stakeholders.
Trust in business jumps by 26 points in Italy, 18 points in the U.S., 15 points in the Netherlands, and 14 points in Spain. In Russia, trust in business falls by 10 points (to 42%).
Trust in government is stable, with significant moves in the U.S. (up 16 points to 46%) and in Russia, where trust decreased by 10 points to 38%. In 20 countries, corporate or product advertising continues to be the least credible source of information at 17%.
In the U.S., U.K., Germany and the BRIC countries, more than 70% say that actions such as firing non-performing managers, repaying bailout money, or reducing the pay gap between senior executives and rank and file workers would restore their trust in the company.
Source: Edelman
