Product innovation is thought to be a core aspect of the future evolution of the exchange-traded fund industry, according to a recent survey by custodian and administrator Brown Brothers Harriman, together with events organiser Inside ETFs. The 2016 European Investor Survey on ETF product and distribution strategies sought the opinions of 180 respondents, collectively representing over €3.8tn in global assets. Andrew Craswell, Head of European ETF Business Development at BBH, said: “As European ETF AUM sets to pass $550bn, the market is poised for a period of accelerated growth as new entrants come in and the market surpasses a point of scale.”[continue reading...]
- Innovation is top attraction for European ETF investors, finds survey
- Deutsche AM converts fixed income ETFs to physical replication
- SPDR ETFs: Is there value in Value?
- Source and Rothschild RBIS launch US low vol equal risk ETF
- Hartford Funds launches multi-factor REIT ETF
- Vanguard founder John Bogle: Buy total market ETFs and avoid “marketing gimmicks”
- Falling pound boosts FTSE ETFs as Brexit timetable outlined
- Soft commodity ETFs surge as coffee and sugar prices jump 20%
- Etho Capital and Future Super team up on global sustainability index and ETF
- TrimTabs launches actively managed US Float Shrink ETF
- Amundi/EDHEC study finds high satisfaction among smart beta ETF users
- iShares cross-lists giant FTSE 100 ETF on Deutsche Börse
- ETF provider WisdomTree investigates benefits of optimised commodity strategies
- What’s in a name? For European ETFs, a lot of confusion
Deutsche Asset Management is completing its transformation into one of Europe’s largest providers of physical replication ETFs, having recently announced the conversion from synthetic to physical replication of a swathe of fixed income ETFs. Simon Klein, Deutsche AM’s Head of Passive Investment Sales for EMEA and Asia, commented: “The market has shown clearly that bond investors prefer physical replication, so we’ve adapted to meet that demand. This is good for the market as there is now another major ETF house in Europe providing a wide range of physical ETF products.”
By Rebecca Chesworth, Equity Strategist for SPDR ETFs, State Street Global Advisors.
Value-weighted is one of the easiest to define and best known of smart beta factors. There is much academic proof that value outperforms over the long term and, as such, there are many supporters of this approach to investing. Nevertheless, value has been out of favour for years. However, after several years of underperformance, we now believe that the value factor is ready to outperform the general market, and it is time to consider value-weighted funds again.
European exchange-traded fund provider Source has launched the Source RBIS Equal Risk Equity US UCITS ETF (LON: RUQR) in partnership with Risk Based Investment Solutions (RBIS), a subsidiary of Rothschild & Co. The ETF follows an equal risk contribution concept and aims to provide large-cap US equity exposure with lower volatility than traditional market cap-weighted strategies. Chris Mellor, Executive Director, Equities Product Management, at Source, commented: “We believe that this form of risk control offers a significant step forward beyond volatility targeting and minimum variance strategies.”
US-based Hartford Funds has launched the industry’s first exchange-traded fund to apply a multi-factor smart beta weighting strategy to real estate investment trusts. The NYSE-listed Lattice Real Estate Strategy ETF (NYSE: RORE) selects and weights US REITs with the strongest quality, momentum and value characteristics. “The launch of RORE is a natural extension of Hartford Funds’ strategic beta ETF platform,” said Darek Wojnar, Head of Exchange-Traded Funds at Hartford Funds. “The strategy focuses exclusively on REITs and may be a compelling solution for investors interested in taking advantage of the growing opportunities in the real estate sector.”
Addressing a Conservative Party conference in Birmingham, UK Prime Minister Theresa May announced: “We will invoke Article 50 no later than the end of March next year,” indicating that Britain will leave the EU in early 2019. In response, the British pound fell to a seven-week low against the US dollar and a three-year low against the euro during morning trading in London on 3 October 2016. Weaker Sterling was positive for UK equities, however, with ETFs tracking the FTSE 100 or FTSE 250 indices achieving gains of over 1% during the day.
Soft commodity exchange-traded funds and exchange-traded commodities have received a boost in recent months thanks to sharp price increases in the futures contracts for sugar and coffee. Droughts, heavy rain and frost in Brazil have driven up the prices of both food stuffs by more than 20% in the past few months, according to a note from Rabobank. The $47m ETFS Coffee ETC (LSE: COFF), is up more than 13% year to date and just over 2% in the last three months, while the $26m ETFS Sugar ETC (LSE: SUGA) is up 44.6% and just over 10% over the same periods.
European ETF provider Source has released research revealing the relatively low indebtedness of emerging market countries compared to their developed peers. Indonesia and Russia performed particularly well with debt/GDP ratios of 64% and 84% respectively and low proportions of externally financed debt. Paul Jackson, Head of Research at Source, commented: “Based on their debt fundamentals, emerging markets are better placed than most developed markets, which make the yield premiums on their bonds even more attractive.”
According to a recent statement from the Bank of England, the UK may still face a “challenging period of uncertainty and adjustment” in the wake of the Brexit referendum. The Bank’s Financial Policy Committee said that although immediate capital market volatility has calmed down since June, there remain elevated risks, such as the threat of a “sharp adjustment” in the commercial property market and the danger that foreign investors could divest from the UK. UK property ETFs such as the iShares UK Property UCITS ETF (LON: IUKP) are down roughly 10% year-to-date.
Investors should pick diversified total market exchange-traded funds and hold them for the long term, rather than buying into “marketing gimmicks”, according to the founder of Vanguard, John Bogle (pictured), and its former Chief Investment Officer, Gus Sauter. Bogle, who left Vanguard in the 1990s, has frequently encouraged higher ethical standards and called out some companies and investors for using ETFs for “less than noble purposes”. He said he appreciated that ETF fees were generally low, but the increasing number of so-called “fringe ETFs” – funds that invest in obscure and niche corners of the market – are encouraging investors to bet on anything from Chinese tech companies to soybeans.