ETFs largely unmoved by Jackson Hole speech

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ETFs largely unmoved by Jackson Hole speech

The case for raising US interest rates has “strengthened”, the chairwoman of the Federal Reserve has said. Speaking at the Fed’s annual meeting at Jackson Hole, Wyoming, Janet Yellen was cautiously positive on the US economy and said “the case for an increase in the federal funds rate has strengthened in recent months”. Yellen’s comments have not come as much of a surprise, however, and ETFs were fairly quiet following the speech, with few major moves directly triggered by her comments. ETFs tracking the US utilities sector, such as SSGA’s $8 billion NYSE-listed Utilities Select Sector SPDR ETF (XLU), were perhaps the most obvious casualties of the speech, falling around 2.5%.

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Latest news

European ETFs/ETPs reach record high AUM at end of July, finds ETFGI

European ETF industry sees 22nd consecutive month of inflows

Assets in exchange-traded funds and exchange-traded products listed in Europe reached a new record high of $539bn at the end of July 2016, according to ETFGI. Net inflows of $9.4bn over the month represent the largest month of asset gathering during 2016 and mark the 22nd consecutive month of net inflows. Deborah Fuhr, managing partner at ETFGI, commented: “Investor confidence returned during July after the surprising result of June’s Brexit vote. The S&P 500 was up 3.7% in July. Developed markets outside the US gained 5.1% and emerging markets were up 4.8%.”

First Trust launch two actively managed low volatility ETFs

First Trust launches two actively managed low volatility ETFs

First Trust has launched two new actively managed ETF on the NYSE that seek to capture upside price movements in rising markets and reduce downside risk when markets decline. Sub-advised by Horizon Investments, the funds use a proprietary quantitative rules-based investment process to manage volatility. Robbie Cannon, President & CEO at Horizon, said: “In this low interest rate environment, we are seeing all kinds of investors participating more and more in equity markets, even those who traditionally looked to fixed income markets…And while they want equity exposure, they naturally are looking for lower risk and lower volatility products.”

Comments from SPDR ETFs showcase potential for emerging markets

Emerging market debt ETFs back in focus as investors hunt yield

With negative interest rate policies being adopted by several central banks in the developed world, investors are beginning to turn their attention back to emerging market debt (EMD) in a hunt for yield. Already this year $5.7bn has flowed into EMEA-domiciled EMD ETFs. Antoine Lesné, Head of SPDR ETF Strategy & Research EMEA at SSGA, believes the asset class may offer an attractive return thanks to a healthy real yield differential, improving fundamentals and supportive monetary policies.

Charles Schwab launch series of ETF-based target date retirement funds

Charles Schwab launches ETF-based target date retirement funds

Charles Schwab Investment Management has unveiled a new series of target date mutual funds constructed using low-cost Schwab ETFs as underlying investments. The Schwab Target Index Funds include funds with target retirement dates between 2010 and 2060 in five-year increments “At a time when some asset managers are inundating investors with confusing, complex products, we’re experiencing greater demand for our straightforward, transparent products that deliver great value on their own or with professional management built in,” said Marie Chandoha, president and chief executive officer of Charles Schwab.

Equities

ESG performing well and in demand, but shortage of ETFs is holding back adoption

ESG performing well and in demand, but a shortage of ETFs is holding back adoption

In a recent white paper, exchange-traded fund provider UBS found that ESG (environmental, social and governance) funds were just as good as conventional funds for the same risk. Also called ethical, sustainable or socially responsible, assets under management in ESG-compliant ETFs have risen nearly 45% to $3.4bn in the last 18 months, according to data from BlackRock, parent of iShares. And the trend looks like it will continue. However, a shortage of ETFs is holding back wider adoption, with portfolio managers frustrated by the lack of products on offer. According to Camilla Ritchie, portfolio manager at 7IM: “There are not enough SRI/ESG ETFs for all the different asset classes.”

Commodities

ETF Securities to close global agriculture ETF though sector remains compelling

ETF Securities to close agribusiness ETF despite compelling sector fundamentals

London-based ETF Securities will close its ETFS S-Network Global Agri Business GO UCITS ETF at the end of August, but agriculture-focused exchange-traded funds remain a compelling proposition as the global food supply/demand imbalance continues. The fund launched in 2008 but insufficient investor demand – current AUM is £12.4m – has led ETF Securities to decide its relatively small size did not make it worth paying the associated operating costs. Shareholders who have not sold their holding before 31 August will have their shares automatically redeemed for cash.

Fixed Income

First Asset introduces actively managed investment grade bond ETF

First Asset launches actively managed IG corporate bond ETF on TSX

Canadian investment manager and exchange-traded fund issuer First Asset has launched the First Asset Investment Grade Bond ETF (Toronto: FIG), an actively managed ETF providing exposure to a high quality, diversified mix of investment grade corporate bonds from issuers in Canada, the US and Europe. The ETF, which has been listed on the Toronto Stock Exchange (TSX), has come about via the conversion of the Marret Investment Grade Bond Fund. Toronto-based Marret Asset Management, which specialises in credit fixed income portfolios, will continue to act as manager to the fund.

Alternatives / Multi-Asset

iSectors launch US-listed actively managed ETF based on flagship allocation model

iSectors debuts actively managed multi-asset ETF on Nasdaq

iSectors, a US investment strategist firm, has debuted an actively managed multi-asset ETF designed to optimize investor return and minimize downside risk. Listed on Nasdaq, the iSectors Post-MPT Growth ETF (NASDAQ: PMPT) is based on the firm’s flagship quantitative factor-driven investment model, the iSectors Post-MPT Growth Allocation. “We developed the iSectors PMPT Growth ETF to answer advisors’ call for a more easily accessible form of iSectors Post-MPT Growth Allocation,” noted Chuck Self, Chief Investment Officer of iSectors. “We launched PMPT for risk-averse investors, seeking downturn protection while still benefitting from possible market gains.”

ETF and Index News

CBOE launches first in series of benchmark indices tracking social media trends

CBOE launches social media sentiment index based on Twitter traffic

The Chicago Board Options Exchange (CBOE) has launched the CBOE-SMA Large Cap Index (SMLC Index), the first of a series of sentiment-based strategy indices that tracks stocks according to their social media noise. The index, which comprises 25 equally weighted US large cap stocks, is based on research from social media intelligence gatherer Social Market Analytics (SMA). The principles of the strategy are similar to those underlying the Sprott BUZZ Social Media Insights ETF (NYSE Arca: BUZ).