In a landmark referendum, Italy has rejected constitutional reform that would have shifted power from the Senate to the Lower House. The result has effectively ended the leadership of Prime Minister Matteo Renzi, who has already tendered his resignation. Although ETFs tracking Italian equities have remained relatively calm, the outcome is expected to weigh heavily on stocks as the country tries to deal with a looming crisis in its financial sector. Volatility is also expected to remain high across eurozone equity ETFs as investors attempt to discern the extent to which the result will impact the broader monetary union.[continue reading...]
- Volatility expected as Italians vote ‘no’ in referendum
- WisdomTree: ETF asset allocations for a President Trump world
- UBS unveils suite of US Treasury Inflation-Protected ETFs
- Italian banking crisis weighs heavily on European financials ETFs
- Black Friday boosts retail-focused ETFs
- Trump win catches ETF investors out as risk assets climb
- Emerging markets ETFs react to Trump’s election victory
- OPEC: Short term gain, long term (continued) pain?
- Jack Bogle: We are in the middle of a revolution due to indexing
- VanEck starts ETF distribution in Austria and Italy
- Gold ETFs topple while US equities surge on Trump win
- MSCI reports strong demand for ETFs linked to factor indices
- Global X launches international ‘SuperDividend’ ETF
- Deutsche launches two strategic beta minimum volatility ETFs
By Nizam Hamid, Head of Europe Sales, WisdomTree.
“In a nutshell, we believe a Trump victory – especially coupled with a Republican Congress – is very good for US mid-cap, US small-cap and overseas markets, such as Japan, that are sensitive to a strong USD/ weak domestic currency. Shortly after the US election results, the market began to immediately discount expected policy changes next year that will likely lead to a pro-growth economic agenda. That agenda includes cuts in individual and corporate tax rates, increased spending on defence and infrastructure, and a rollback on regulations.”
UBS has launched a suite of ETFs seeking to mitigate inflation risk by tracking US Treasury Inflation-Protected Securities (TIPS). The ETFs provide exposure to either shorter term (with remaining maturities between one and ten years) or longer term (greater than ten years) TIPS, while trading in British pounds. Currency-hedged versions of the shorter term TIPS ETF relative to the British pound, Swiss franc or euro have also been launched. Andrew Walsh, Head of UBS ETF Sales UK & Ireland, commented: “With this innovative suite of ETFs our clients our able to protect long-term purchasing power and gain access to an asset class that compounds the real rate of return.”
A growing banking dilemma in Italy, where non-performing loans currently make up in excess of $400bn worth of assets, is weighing heavily on ETFs tracking European financial stocks – Italian banks comprise roughly 9% of the European Union’s banking sector. Persistently low interest rates, increasing anti-EU sentiment within the country, and a national referendum on 4 December which may see current Prime Minister Matteo Renzi resign, are all adding up to a heightened risk profile for the country’s financial sector.
Record-breaking sales on Black Friday have added a further boost to retail-focused exchange traded funds across Europe and the US. US shoppers on mobile phones bought $3.05bn on Black Friday, adding to sales of almost $2bn on Thanksgiving day, indicating consumer sentiment in the States is still robust after a divisive and, for some, unexpected presidential result. ETFs from iShares and SPDR ETFs which track the S&P 500 Consumer Discretionary Index have risen by 3.7% since 14 November.
Global X Funds has launched the Global X MSCI SuperDividend EAFE ETF (Nasdaq: EFAS), offering equal-weight exposure to the performance of 50 firms listed in either Europe, Australia or the Far East with the highest dividend yields. The fund is the seventh ETF in Global X’s ‘SuperDividend’ suite. Jay Jacobs, Director of Research at Global X, commented: “We see tremendous value in the high dividend segment of developed international markets and we’re proud to offer investors EFAS, which provides efficient exposure to these equities.”
By Nick Leung, Research Analyst at WisdomTree:
“It’s coming down the wire. The upcoming OPEC Vienna meeting this week may represent yet another change to the status quo for 2016, with the cartel possibly cementing its first production cut in eight years and completing a dramatic shift in strategy. We believe that whilst this may present short-term tactical opportunities for oil investors, long-term positioning remains a challenge.”
As of 31 October 2016, 115 ETFs have been launched in Europe this year. Of these funds, three out of the top five in terms of asset-gathering offer fixed income exposure, highlighting the importance investors have placed on finding income and yield. Interestingly, one fund offers exposure to euro corporate bonds with a sustainability overlay, another strong indication of current demand from investors. Jose Garcia-Zarate, Associate Director of Passive Strategies Research at Morningstar Europe, commented: “Ethical and sustainable investing is becoming a strong trend, both for institutional and retail investors.”
Goldman Sachs Asset Management (GSAM) has unveiled an exchange-traded fund which tracks the 50 US equities that are most recurring in the top 10 positions across a wide range of US-based hedge funds. The ETF thereby provides investors with a cost efficient means of accessing the highest-conviction ideas of some of the best managers in the hedge fund industry. Michael Crinieri, Head of ETF Strategies at GSAM, commented: “We’re thrilled to be able to package these high conviction investment ideas from a broad array of professional investors into a cost effective, tax-efficient and convenient ETF wrapper.”
In a new interview with Bloomberg Jack Bogle, founder of Vanguard, has claimed the financial industry is “in the middle of a revolution caused by indexing” due to the inability of active managers to outperform passive benchmarks, coupled with progressively lower fees for index-tracking products. “We’re beyond the beginning, but nowhere near the end,” Bogle said, noting that while indexing was only at 10 to 15% of assets in 2016, it could “easily” get to 50%.