Archive for May 2016

Dow Jones ETFs in focus as index celebrates 120th anniversary

May 31st, 2016 | By
US equity ETFs in focus as Dow Jones celebrates 120th anniversary of launch

Leading global index provider S&P Dow Jones Indices has celebrated the 120th anniversary of the Dow Jones Industrial Average (DJIA), a widely followed indicator for US stock market performance. The index, designed to reflect the health of the broad US economy, is a price-weighted average of 30 stocks traded on the New York and NASDAQ exchanges. It also serves as the benchmark for several exchange-traded funds from providers such as State Street Global Advisors, iShares and ProShares.

Cerulli: Asset managers turn to ETFs for fixed income exposure

May 31st, 2016 | By
ETF industry celebrates $5 trillion AUM milestone

An increasing number of asset managers are using exchange-traded funds to get passive fixed income exposure, according to research from global analytics firm Cerulli Associates. Cerulli found that the broad ETF industry experienced another month of positive net inflows with more asset managers using ETFs as vehicles for fixed income exposure. According to the report, US ETF assets grew for a third straight month in April, increasing 1.7% to finish just greater than $2.2tn. Flows into the funds were positive, at $8.9bn with significant demand noted for taxable bond ETFs, which garnered flows of $3.1bn.

ERI Sci Beta launches new pricing scheme for flagship indices

May 31st, 2016 | By
ERI Scientific Beta launches long/short factor index

Smart beta index provider ERI Scientific Beta has announced a fresh approach to index pricing that may disrupt the traditional model of fixed fees on assets under management. Investors will be able to request a pure performance fee structure that levies charges only if the index has actually outperformed its cap-weighted benchmark. The fee structure is available on the Scientific Beta Multi-Beta Multi-Strategy indices. Noël Amenc, CEO of ERI Scientific Beta, said: “Our rationale for this mandate offer is that smart beta providers’ claims on the quality and robustness of their strategies should materialise in their live performance. ERI Scientific Beta’s initiative is intended to provide consistency between the smart beta provider’s revenues and the quality of its offering.”

Spotlight on US municipal bond ETFs

May 31st, 2016 | By
Spotlight on US municipal bond ETFs

The US municipal market is the largest in the world with total assets of over $3.7tn. ETF providers such as iShares, State Street Global Advisors, Van Eck Global and PowerShares all have funds with over $1bn in AUM covering the space. While municipal bonds may not repeat the kind of superior returns achieved in 2015 where they were the best performing asset type of that year, the stable outlook given across all 50 states from ratings agency Fitch along with the bond’s tax advantaged nature, may provide investors with an attractive means to increase their after-tax income returns.

Access to ETF model portfolios key to IFA investment, finds Source

May 31st, 2016 | By
Oil price falls will benefit markets in 2016, says ETF issuer Source

IFAs would be more likely to invest in ETFs if they had better access to ETF-based model portfolios, according to a survey from ETF provider Source. Asking 150 UK-based IFAs and discretionary wealth managers who were interviewed by Prescient during March 2016, the survey found that IFAs reported that they would be encouraged to invest more in ETFs if they had greater access to ETF-based model portfolios. Existing users of ETFs had a different view of ETFs, with 71% of those surveyed saying it was the ability of ETFs to offer long-term market exposure as their main reason for using them. This was followed by tactical portfolio adjustments (62%), income generation (40%) and sector rotation (39%).

Twenty20 to offer ETF Model Portfolios on Parmenion

May 30th, 2016 | By

Discretionary fund manager Twenty20 Investments is set to put 10 of its exchange-traded fund model portfolios on investment platform Parmenion. The 10 risk-rated model portfolios are offered on Parmenion’s FinTech50 platform, which includes a fully integrated technology comprising scalable risk mapping tools, commitment to adviser service and a philosophy based on the notion that automation is key to driving down costs to end investors. Allan Lane, Managing Partner of Twenty20 Investments, said in a statement: “Our mission at Twenty20 Investments has always been to put the investor first, and we are strong believers that innovative use of technology offers the best hope of driving costs down.”

iShares launches first MBS bond ETF in Europe

May 27th, 2016 | By
BlackRock slashes fees on iShares MBS ETF

Global exchange-traded fund provider iShares has launched Europe’s first ETF to invest in high quality US mortgage-backed securities. The iShares US Mortgage Backed Securities UCITS ETF (IMBS LN) provides access to AAA-rated mortgage-backed securities issued by three agencies (Ginnie Mae, Fannie Mae and Freddie Mac) backed by the US government.Brett Olson, Head of iShares EMEA Fixed income, commented in a statement: “Mortgage-backed securities have the potential to offer higher yields than bonds of similarly high credit quality. This fund could be an option for investors looking to gain exposure to the US housing market in addition to corporate balance sheets.”

SSGA issues 40 ETFs on Euroclear’s fund platform

May 27th, 2016 | By
SSGA enters fee war with ultra-low-cost SPDR Portfolio ETFs

SSGA has issued 40 of its existing SPDR exchange traded funds on Euroclear’s FundSettle fund processing platform. The move comes in response to client requests to align their ETF order execution with transactions in mutual funds. The 40 ETFs includes SPDR’s 29 Sector ETFs and enables end investors to buy and sell shares in ETFs like mutual funds, at the end-of-day “net asset value”. Those European investors who exclusively invest in mutual funds will now have access to the 40 SPDR ETFs. Launched in 2000 by Euroclear, FundSettle automates and standardises the straight-through processing of offshore and domestic fund transactions.

STOXX launches sustainable smart beta indices

May 26th, 2016 | By
Stoxx licenses Asia Pacific quality dividend index to Yuanta for ETF creation

Deutsche Boerse’s index business STOXX, has launched a range of smart beta ethical indices adding to its STOXX Select and STOXX Diversification Select index family, released last year. The indices are launched as liquid underlyings for financial products such as exchange traded funds. The newly launched indices combine investment themes including low carbon and ESG (economic, social & governance) with low volatility, high dividend and low correlation screens, creating hybrid index concepts. Matteo Andreetto, CEO at STOXX, said in a statement: “By extending our suite of smart-beta indices, we are again at the forefront of innovation with regard to major investment trends.”

Hedge fund ETFs take a battering

May 26th, 2016 | By

Hedge funds have suffered a blow following the announcement from Hillary Clinton’s son-in-law Marc Mezvinsky that he would be closing his Greek-focused fund after it plummeted in value by 90%, just two years after it launched. For passive investors, the news was a stark reminder that hedge funds come with a lot of risk, especially when they are making big bets on a single market. ETF assets, now at around $3.13tn, according to ETFGI data, beat that of hedge funds for the first time ever last summer, but have taken a battering in the hedge fund space following negative performance.