Exchange traded funds are often touted by providers as being an ideal vehicle for short-term decisions and tactical investors due to their intraday liquidity, but a new study argues that ETFs are best held over the longer term. The June 2016 study from Vanguard, called “The Case for Low-Cost Index-Fund Investing”, said that time horizon is an especially important factor for investors who want to pay less in fees, see higher returns and favourably compare performance of passive versus active funds.[continue reading...]
- Are ETFs a better investment over the shorter or longer term?
- PowerShares cross-lists smart beta EM ETF in Germany
- The benefits of blending index funds, ETFs and active funds
- Mackenzie Investments launches smart beta equity ETFs
- Sterling ETFs unstable in run up to referendum
- Strategy Shares debuts two actively managed ETFs on NYSE
- Fullgoal becomes first Chinese issuer to list ETF in Europe
- European equity ETFs rally as fears over Brexit ease
- BMO cuts fees on five equity and fixed income ETFs
- Oil ETP investors should consider taking profits as speculators move in
- VanEck lowers fees on Fallen Angel High Yield Bond ETF
- Direxion launches inverse leveraged US high yield bond ETP
ETF provider InvescoPowerShares has cross-listed its PowerShares FTSE Emerging Markets High Dividend Low Volatility UCITS ETF (EMHD) to Xetra and Börse Frankfurt. First listed on the London Stock Exchange in May this year, the smart beta ETF tracks stocks from emerging markets with high dividend yields and low price volatility. It trades in US dollars and tracks the performance of the FTSE Emerging High Dividend Low Volatility Net Total Return Index. Bryon Lake, Head of Invesco PowerShares – EMEA, said: “By combining the high dividend and low volatility screens, we are seeking to present the best of both factors for emerging markets equity exposure.”
Investors have historically had to choose between passive or active management, but in recent years they have been offered a combination of the two, or – blending – as it is often referred to, an approach that has seen good results. One such firm offering this ‘blended’ service is discretionary investment management firm JM Finn. It offers a core satellite managed portfolio service (MPS), which has been running for five years and has £150m in AUM. The service uses ETFs, index funds and active funds for varying reasons and the team building and managing these is headed up by Mike Mount, Director of Intermediary Solutions.
Canada-based Mackenzie Financial Corporation (Mackenzie Investments) has launched two smart beta equity exchange-traded funds on the Toronto Stock Exchange offering exposure to US and Canadian equities. Launched in partnership with Paris-based asset management firm TOBAM, the ETFs are designed to act as core portfolio holdings. The funds track the performance of rules-based indices from TOBAM’s Maximum Diversification Index Series. Each index aims to create a more diversified portfolio relative to a market capitalization weighted benchmark. The ETFs have a TER of 0.60%.
Sterling exchange traded funds continue to be volatile in the run-up to the Brexit referendum following further warnings from the Bank of England (BoE) that the outcome is the largest immediate risk facing UK financial markets. In the run up to last Thursday’s BoE monetary policy meeting before the referendum today, the pound dropped toward a two-month low versus the dollar and crashed to a three-year low versus the Japanese yen. The pound touched $1.4091 on 14th June, its lowest level since 14th April, but was up Wednesday 22nd to close at $1.4683.
European equity ETFs rose sharply on Monday as investors traded on revised expectations of the outcome of the UK’s EU referendum. The release of new polling data suggest the ‘Remain’ camp may have established a lead ahead of Thursday’s vote on Brexit. Eurozone mega-cap ETFs such as the €5.5bn iShares Euro Stoxx 50 UCITS ETF (Xetra: EXW1) and €4.6bn db x-trackers Euro Stoxx 50 UCITS ETF (Xetra: XESC) were up around 3.2%, as were ‘Footsie’ ETFs such as the £3.6bn iShares Core FTSE 100 UCITS ETF (LSE: ISF) and £2.1bn Vanguard FTSE 100 UCITS ETF (LSE: VUKE). ETFs tracking the CAC 40, DAX and IBEX also took part in the rally, adding around 3.4%, 3.5% and 3% respectively.
ETPs linked to the performance of oil futures have enjoyed significant gains over the past five months as the commodity has rallied from multi-year lows. The possibility of further gains, according to WisdomTree Europe, may be optimistic as the commodity is trading broadly in line with its fundamentals. Viktor Nossek, Director of Research at WisdomTree Europe, commented: “It was easy for investors to be bullish when oil traded below $30, but given the scale of the recovery we have seen in the last four months, it is hard to make the case that oil looks undervalued now. Indeed, the recovery means it is now in line with its long-term historic price.”
Short and leveraged exchange-traded fund provider Direxion has launched a new fund offering investors double the inverse daily performance of an index of US-listed high yield bonds. The Direxion Daily High Yield Bear 2X Shares (HYDD) has begun trading on the NYSE Arca. he fund’s reference index is the Barclays US High Yield Very Liquid Index, which tracks US dollar-denominated, non-investment grade, fixed-rate, taxable corporate bonds that have a remaining maturity of at least one year and $600m or more of face value outstanding.
AXA Group announced last month that it was planning to sell around €1.8bn in tobacco investments. The announcement comes as assets in ethical investing via ETFs have boomed, with global AUM rising nearly 45% since 2014, according to data from BlackRock. However, from an investment stance, tobacco stocks have been a pretty strong performer in the last few years. British American Tobacco (one of the largest tobacco firms with market cap of £78bn) has seen its share price rise 52% to 4,167 (last week) over the last five years. In the last year it has risen 19%.
HK-based Fullgoal Asset Management has launched a fixed income ETF on the London Stock Exchange, becoming the first Chinese issuer to list an ETF in Europe independently in its own right. The Fullgoal FTSE China Onshore Sovereign and Policy Bank Bond 1-10 Year Index ETF (LSE: RMB3) provides exposure to RMB-denominated bonds issued by the Chinese government and China’s so-called “policy” banks. Michael Chow, Head of International Business and Managing Director at Fullgoal, said: “The Chinese onshore fixed income market is the world’s third-largest bond market. Our fund provides an avenue for overseas investors to access an otherwise not easily accessible market. We believe that, over time, RMB fixed income will become an essential asset class for global investors.”