The global bond ETF industry achieved its best quarter on record with $44.5 billion of inflows during Q1 2017, according to analysis by BlackRock. Stephen Cohen, head of fixed income beta at BlackRock, highlighted some of the global trends seen in the space since the start of the year, including strong appetite for investment grade credit, emerging market debt and Treasury bond funds.
‘ Emerging and Frontier ’
VanEck has launched the VanEck Vectors JP Morgan EM Local Currency Bond UCITS ETF (EMLC) on the London Stock Exchange, offering exposure to bonds issued in local currencies by emerging market governments. Uwe Eberle, head of international business development and distribution at VanEck, commented: “Local emerging markets economies have hstorically had higher yields than developed markets and potential for currency appreciation. Additionally, local currency bonds tend to have a lower correlation to the US dollar and thus provide a great way to diversify a portfolio.”
Amundi has reported that North American equity ETFs listed globally have recorded strong inflows of €21 billion in March, amounting to 41% of total equity ETF flows during the month, and a continuation of the trend seen thus far in 2017. Year to date, global ETFs targeting exposure to North American equities have seen positive flows of €48bn, representing 35% of globally-listed equity ETF inflows.
STOXX, the index business of Deutsche Boerse Group, has licensed the STOXX ASEAN Select Dividend 30 Index to One AM, Thailand’s largest equity ETF issuer, to underlie a new ETF that has launched on Singapore Stock Exchange.
By Yacov Arnopolin, Executive Vice President, Emerging Markets Portfolio Manager, PIMCO.
As 2017 progresses and the priorities of the Trump administration take shape, the outlook for emerging markets (EM) has evolved from uncertain to promising. What has changed so quickly? Several important concerns that weighed on the sector since late last year have subsided, allowing the relatively strong fundamentals in many EM countries to shine and driving an impressive recovery in EM bonds.
Nikko Asset Management has launched the Nikko AM-Straits Trading Asia ex-Japan REIT ETF (SGX: CFA), a new ETF on the Singapore Exchange tracking the performance of Asian real estate investment trusts (REITs).
Global analytics firm Cerulli Associates has reported that an increasing number of Asian asset managers are ramping up their passive capabilities, including providing greater access to strategic beta strategies. The report found this trend is being driven by increasing regulatory scrutiny on fees and the rise of online distribution, including robo-advisory, which is further powering the proliferation of low-cost investing. The findings are supportive of further growth in the region’s ETF industry.
Following the Dutch election results and the Fed rate hike, Antoine Lesné, Head of SPDR ETF Strategy & Research, EMEA, comments on the options for investors. In summary, he says: Given the current investment backdrop, investors will likely seek defensive investment options within each asset class; Within sectors, European Financials, US Materials and Global Technology are tipped to outperform; and within fixed income, the Fed’s current rate outlook appears positive for local currency bonds.
Hong Kong-based E Fund HK has launched the E Fund Yuanta Hang Seng Index Daily (-1x) Inverse ETF (HK: 7302). Launched in conjunction with Yuanta, Asia’s largest inverse ETF issuer, the ETF provides the inverse daily return of the Hang Seng Index, a reference for the 50 largest companies listed on the Hong Kong Stock Exchange.
India Index Services & Products Limited (IISL), a subsidiary of the National Stock Exchange of India, has launched a series of six AAA-rated corporate bond indices tracking the local Indian market. The indices may be used by asset managers seeking a benchmark that measures the risk-return dynamics of the Indian corporate bond market, as well as serving as reference indices to be tracked by future investment products such as ETFs.