Archive for June 2016

Ethical ETFs in vogue amid tobacco sell-off

Jun 10th, 2016 | By

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%.


Gilt ETFs rally as UK 10-year bond yield hits record low

Jun 10th, 2016 | By
UK government sells negative-interest gilts for first time

The yield on 10-year UK government bonds (gilts) reached an all-time low of 1.22% on Thursday, driven by a lower probability of a June interest-rate increase by the US Federal Reserve, a shift in sentiment towards risk-off assets on the back of stronger indications that the UK might vote for Brexit, and continued asset-purchase programmes. Owing to the inverse relationship between interest rates and bond prices, gilt exchange-traded funds have provided attractive returns in 2016 as 10-year rates began the year at roughly 2%. The Lyxor FTSE Actuaries UK GILTS (DR) UCITS ETF (GILS), the cheapest gilt ETF on the market, has returned 7.6% year-to-date.


Is now the time to invest in broad Emerging Market ETFs?

Jun 9th, 2016 | By
First Trust considers human dignity in new emerging markets ETF

Emerging markets have had a dreadful two years, but Tuesday heralded a 1.5% jump from MSCI’s Emerging Market (EM) index – its biggest gain since mid-April – following positive comments from Janet Yellen on the US economy and suggestions that an interest rate rise is coming. However, despite emerging markets as an asset class performing very poorly in general over the last two years with large asset outflows, the index’s movement is a reversal of fortunes for emerging markets, which has seen it drop nearly 20% to 349 in the last two years.


ETF flows reflect pullback in risk sentiment, finds BlackRock

Jun 9th, 2016 | By
Investors favour risk-on ETFs in preparation for Trump presidency

Flows into global ETPs slowed in May to $10.7bn, just shy of the $11.1bn net inflows seen in April. The slowdown reflected the pullback in global risk sentiment, with fixed income exposures accounting for the majority of net inflows, according BlackRock’s ETP Landscape report. Fixed income net inflows registered $9.7bn, pushing cumulative flows into the asset class this year to $61.8bn – the best year-to-date performance in the history of the product. Ursula Marchioni, Chief Strategist, iShares EMEA at BlackRock, said: “With government bond yields at record lows, the influx of fixed income flows are going into credit-based exposures in the hope of getting whatever yields are left to scrap.”


ETFGI: ETF assets hit record high in May

Jun 9th, 2016 | By
Globally-listed ETFs/ETPs gathered over $370bn in net new assets during 2015, according to ETFGI

Global assets in exchange-traded funds and exchange-traded products hit a record high at the end of last month, according to data from ETFGI’s May 2016 global ETF and ETP industry insights report. Assets invested in ETFs and ETPs reached $3.143tn at the end of last month, up 0.2% on the previous record set in April this year. Deborah Fuhr, managing partner at ETFGI, said in a statement: “There is still a significant amount of uncertainty in the markets due to Investors the upcoming Brexit vote and the expectation that the Fed will raise rates sooner than expected”


Franklin Templeton debuts LibertyShares smart beta ETF range

Jun 9th, 2016 | By
Franklin Templeton debuts LibertyShares smart beta ETF range

Californian asset manager Franklin Templeton Investments has launched LibertyShares, its new exchange-traded fund arm. The provider has officially begun operations with the launch of four new smart beta funds known as LibertyQ ETFs, offering exposure to global, emerging market and international stocks. Each fund tracks a proprietary, research-driven index which targets exposure across four factors (value, quality, momentum and low volatility) which have historically provided superior returns to market cap-weighted benchmarks over the long-term.


Cost of equity ETFs slow to reduce

Jun 7th, 2016 | By
James King, Head of Private Client, Partner, Price Bailey

In the wake of the so-called ETF price war, the actual cost of ETFs has not reduced as much as some investors would have hoped, with prices only reducing by 0.03% in the last ten years. According to new data from Morningstar, the asset-weighted average total expense ratio of an equity ETF in the UK has only declined by 0.03% in the past decade to 0.32%. In the same time period the number of ETFs has risen from 119 to more than 550. James King, head of the private client department at wealth firm Price Bailey, said “The ongoing charge figure isn’t everything, but with vanilla type products it is pretty important.”


FTSE Russell launches ten ‘green-weighted’ equity ESG indices

Jun 7th, 2016 | By
FTSE Russell unveils ESG equity indices designed for ETF development

Leading index provider to the exchange-traded fund industry FTSE Russell has launched ten smart beta sustainability-themed equity indices based on a new analytical tool which scores companies by the proportion of their revenues derived from ‘green’ pursuits – goods, products and services that directly help the world to alleviate the impact of climate change, resource depletion or environmental erosion. Mark Makepeace, Chief Executive of FTSE Russell, said in a statement: “FTSE Russell has long been a pioneer in the development of ESG benchmarking tools. As such, we identified a significant gap in the ability of portfolio managers to track exposure to the increasing shift towards a green economy.”


Multi-asset ETFs: Back in the spotlight

Jun 7th, 2016 | By
SCM Private and Deutsche Bank team up to launch active multi-asset ETF

Active fund managers often tout their multi-asset strategies, which combine bonds, equities and other assets in one wrapper, as a clever and convenient way for investors to buy into a one stop shop solution and diversify their portfolios. However, investors might not be aware that this multi-asset strategy is also available in an exchange-traded fund form. The multi-asset ETF sector has been pushed back into the spotlight this month as global index provider STOXX launched a four-strong range of multi-asset indexes, which could be used as the underlying index for an ETF.


LSEG teams up with Boat to launch European trade reporting platform

Jun 7th, 2016 | By
VanEck launches two high yield corporate bond ETF on London Stock Exchange

London Stock Exchange plc and electronic platform Boat Services have come together to launch a trade reporting service that will cover all pre- and post- trade reporting services to help with looming regulation in the form of MiFID II and is intended to be the European platform of choice for trade reporting. TRADEcho is being launched on the back of demand in light of MiFID II regulation, due to come into force in 2018, which requires certain trades from all asset classes be reported. TRADEcho aims to be the platform of choice for trade reporting in Europe and will start by covering equities and fixed income.