With bond yields at record lows – the 10-year gilt yield is down to 0.8% today from 3% in January 2014 – investors have been pushed towards alternative strategies for income, including European-domiciled emerging market dividend exchange-traded funds. The sector has yielded between 4% and 6% annually compared to 2% from developed market counterparts over the past three years, according to a new study from Morningstar. Iff investors want to include emerging market equities, they might be more tempted to place their capital specifically with emerging market dividend funds, where the relatively higher yield helps to compensate for the falling return of the underlying stocks.[continue reading...]
- Solactive launches UK Domestic Index
- Are emerging market dividend ETFs the answer in times of low yield?
- Gold in vogue amid high grade bond demise
- Canada and US ETF assets reach all time high in June
- ETFs listed in Japan see assets hit record high in June
- European ETF flows slow in Q2 amid EU Referendum
- Global X launches ESG equity ETF
- VanEck launches investment grade EM sovereign bond ETF
- Inflows to European ETFs hit 21st consecutive month, finds ETFGI
- STOXX enters agreement with Yuanta and MUTB to expand Taiwan’s smart beta footprint
- PIMCO: China – Are investors tapping the brake?
- iShares launches two ESG equity ETFs
Gold is making a comeback this year as high grade bond yields fall. Gold ETPs have benefited from inflows of around $21bn in the first six months of the year, which is in stark contrast to last year when the asset class saw redemptions of $3.4bn, according to a report from WisdomTree. The precious metal, which is now trading at around $1,319 an ounce (up 24% since the beginning of the year) enables investors to diversify their multi-asset portfolios because of its negative correlation with equities and bonds. Its renewed interest has also extended to the precious metals sector.
Assets invested in the exchange-traded fund and exchange-traded product industry in Canada and the US hit a record high at the end of June, according to ETF consultancy ETFGI. Canada saw assets rise to $79.42bn at the end of last month, while in the US they hit $2.256tn. The news will be a boon to the ETF industry, which is predicted to hit assets of $7tn by 2021, according to a recent report from PWC. The firm expects the North American ETF market to grow to $5.9 trillion in AUM by 2021 (a 23% cumulative annual growth).
The European ETF market netted nearly €8bn of new money in the second quarter of this year helping boost assets under management to €482.4bn – a 4.2% increase on the first quarter. This was despite the second quarter of the year being an 18% decline from the €11bn of net inflows registered in the first quarter, according to data from Morningstar. Jose Garcia-Zarate, Associate Director of Passive Strategies Research for Morningstar, said: “Given the general investment environment, we see these figures in a positive light. Investors had a tough time in the second quarter of 2016.”
New York-based ETF provider Global X Funds has launched the Global X Conscious Companies ETF (NASDAQ: KRMA) which draws on dozens of sources to identify companies that have demonstrated a long term focus on creating positive outcomes for a variety of stakeholders, including employees, customers, communities, suppliers, and stock and debt holders. Alex Ashby, Director of Product Development at Global X, commented in a statement: “Investors are increasingly looking at socially responsible investing not only as a values-driven decision, but also as one that can potentially lead to better long term returns.”
By Luke Spajic, executive vice president and portfolio manager.
MSCI’s recent decision to delay including China’s local shares in its widely tracked emerging markets equity index reflects the views of its clients: namely, the global investors who use the index as a benchmark for constructing portfolios and measuring their performance. To put the decision in perspective, China has the second-largest equity market in the world, and global investors will inevitably face the task of integrating these assets into their portfolios. But with the MSCI announcement, investors may be saying, “not yet.”
Following Thursday’s Brexit result the price of gold rallied, rising 6.6% on Friday to hit $1,337 an ounce. But while prices may look saturated there could still be upside and ETPs could offer investors another way to access the precious metal. In the wake of the announcement that the UK had voted to leave the European Union, the S&P 500 and FTSE 100 fell 5.3% and 5.68%, respectively. However, the S&P GSCI Gold Total Return gained 4.9% between 2th – 27th June- its best performance since August 2011 – and the Bloomberg Gold Sub index Total Return rose 5%.
ETF provider WisdomTree has launched an equity ETF targeting firms considered likely to increase their dividend payouts in the future. The WisdomTree Eurozone Quality Dividend Growth UCITS ETF (EGRA) has been launched on the London Stock Exchange in euros and British pounds. It tracks WisdomTree’s proprietary in-house Quality Dividend Growth Indices, which uses specific criteria to establish which companies are growing their dividends. The strategy focuses on growth and quality. Viktor Nossek, Director of Research at WisdomTree Europe, said in a statement: “We believe that companies that can grow their earnings also have the greatest potential to raise their dividends.”
US-based exchange-traded fund provider Guggenheim Investments has launched the Guggenheim S&P 100 Equal Weight ETF (NYSE Arca: OEW), the first smart beta ETF to provide investors with equal-weight access to the S&P 100 Index, which is made up of 100 of the largest and most stable companies from the S&P 500. “OEW offers strategic beta exposure to large, blue-chip stocks across multiple industry groups and could serve as a core holding in a diversified portfolio,” said William Belden, Managing Director and Head of ETF Business Development for Guggenheim Investments. “OEW’s portfolio constituents typically are household names with strong brand recognition and global operations.”
Niche index provider Solactive AG has launched a new index tracking UK listed companies whose revenues are primarily generated in the UK. The Solactive UK Domestic Index targets investors who are interested in the UK domestic market, which is the second largest market in Europe by GDP. The launch of the index comes a month after the EU Referendum result, which saw Britain vote to leave the European Union. Henning Kahre, Head of Research at Solactive AG, said in a statement: “London is one of the most important financial centres in the world and a listing on the LSE is therefore an attractive gateway to capital markets.”