In response to growing demand from IFAs for access to ETFs and in light of regulatory changes, Barclays Stockbrokers has announced that it is re-launching its service for the intermediary market. Feedback from IFAs and the increased use of ETFs across platforms supports the view that demand for ETFs is set to continue to grow in the lead up to the implementation of RDR and beyond.
Canada-based Horizons ETFs and its affiliate AlphaPro Management have announced the launch of two innovative ETFs which seek to provide exposure to North American stock market indices, while providing protection from so-called “Black Swan” events. The Horizons Universa Canadian Black Swan ETF (HUT) and the Horizons Universa US Black Swan ETF (HUS.U) are the first ETFs to be launched that pair a tail-risk hedge with an equity index investment.
Credit Suisse has found itself on the end of a class action lawsuit following the dramatic collapse in the price of VelocityShares Daily 2x VIX Short Term ETNs (TVIX) earlier this year. Wolf Haldenstein Adler Freeman & Herz, a New York-based law firm, has filed a class action lawsuit against the investment bank on behalf of investors who lost money when the ETNs fell approximately 60% in just two days.
Volatility related to political and economic uncertainty in Europe may create buying opportunities in US corporate credit and emerging markets debt, according to a report issued by Standish Mellon Asset Management, part of BNY Mellon. “During periods of high uncertainty that could arise because of eurozone issues, we believe there could be buying opportunities for US corporate credit and emerging market sovereign bonds, which appear to have attractive fundamentals,” said Thomas D. Higgins, global macro strategist.
Data released by the IMF last week shows that the official sector has continued to buy gold in large quantities this year. In particular, emerging market central banks have been major acquirers as they look to diversify their reserves away from traditional reserve currencies. For investors wanting to follow the lead of emerging market central banks or indeed capitalise on their continued gold buying, physically-backed gold ETCs are, aside from buying bullion itself, the most direct route into the metal.
BlackRock and Bloomberg have announced the industry’s first consolidated view for European iShares ETFs, designed to reduce market fragmentation and improve liquidity and transparency. A consolidated view lets investors see the most competitive bid/offer prices and the locations of best liquidity. The comprehensive picture is created by Bloomberg, using its European Composite tickers, which aggregate volume and trading data for reported over-the-counter and exchange traded transactions.
Credit rating agency Moody’s has pointed to some unusual institutional block-trading activity in SSgA’s high yield bond ETF (JNK), which, if reflective of a rising trend across all ETFs, could prove detrimental to retail investors and ultimately harmful to ETF sponsors. The activity relates to an in-kind redemption on JNK earlier this month in which an institutional investor redeemed 19.7m shares worth $780m, causing the ETF’s price to drop from an approximate 40 bp premium to NAV to a 127 bp discount.
Last week’s news that Moody’s had upgraded Ford Motor Company to investment grade status marked the latest step in a remarkable turnaround for the company. This was the second such upgrade to Ford’s debt in as many months, following a similar move by Fitch in April. The turnaround and eventual upgrade of Ford highlights the opportunities that can exist in ETFs tracking high-yield corporate bonds – and in particular those tracking a segment known as “Fallen Angels”.
Last week saw the unveiling of a global macro allocation index from Dow Jones Indexes, reflecting a growing interest in more sophisticated proprietary-model-based indices. The Dow Jones Parala Global Sector Macro Allocation Index, launched in collaboration with London-based investment adviser Parala Capital, is underpinned by a proprietary macro allocation model which analyses broad economic and market trends with the aim of anticipating the return performance of equity sectors.
JP Morgan’s proposed physical copper ETF, the JPM XF Physical Copper Trust, has drawn criticism from several industrial copper users who fear the fund would “disrupt the world market”, “inflate prices” and ultimately “wreak havoc on the US and global economy.” These views, believed to originate from Southwire, a major US manufacturer of electrical wire and cable, and Red Kite, a London-based hedge fund and metals trader, were contained in a letter sent to the SEC.