Tag Archives: exchange-traded-products

ETF News, Fixed Income

Bull Week For High Yield Bonds, Thanks To ETFs

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MarketMuse blog update profiles the positive market conditions bringing a good cash flow to high yield bonds, some say both are due to the ETF market. MarketMuse blog update is courtesy of Forbes’ article “High Yield Bond Funds See $315M Cash Inflow, Thanks To ETFs” with an excerpt below. 

Retail cash flows for U.S. high-yield funds were positive $315 million for the week ended April 1, down from positive $856 million last week, according to Lipper. Both were essentially all related to the exchange-traded-fund segment, with this week’s ETF inflow of $318 million dented by a small, $3 million outflow from mutual funds.

The two-week inflow total of approximately $1.2 billion follows two weeks of outflows totaling $3 billion in mid-March. Those were the first outflows after six weeks of heady inflows.

Even with the fresh inflow this week, the trailing-four-week average holds fairly steady, at negative $446 million per week, from negative $448 million per week last week, as an inflow five weeks ago was essentially the same as this week’s inflow. Recall that the trailing-four-week reading of positive $2.5 billion seven weeks ago was the largest in this measure on record.

To read the full article from Forbes, click here.

ETF News

How To Score In The 2nd Quarter: Which ETFs To Invest In

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With all of first quarter’s numbers in seeing the success of some ETFs, like the solar ETFs, where should you invest for the second quarter? MarketMuse blog update looks to panel of investment strategists with experience of managing billions of dollars for which ETFs to invest  in this quarter. MarketsMuse blog update is courtesy of Reuter’s Trang Ho and her article, “Q2 Investing Strategies: Top Five ETF Buys From Powerhouses With $1 Billion+ In Assets Under Management“, with an excerpt below.

If you were stranded on an island in the second quarter and could only take one exchange traded fund with you, what would it be? We asked a panel of investment strategists whose firms manage more than a billion in assets to share their best ETF investing idea for Q2.

1. Market Vectors Agribusiness ETF (MOO)

The Market Vectors Agribusiness ETF (MOO) should do well when we have a bad weather summer. The constituents of this ETF are lagging because grain prices have been so low. The May 2015 futures contract for corn is $3.92 a bushel. In 2012, a bushel was almost $8. The May 2015 contract for soybeans is $9.63 a bushel. In 2012, it was close to $18. So when will this change? When we have a summer that is way too dry or way too wet. Or, as with any commodity, the cure for low prices is low prices–farmers will stop planting grains if the prices are too low and supplies could fall, thus increasing prices. Seven billion people can’t be wrong. Those seven billion people need to be fed.

The fund only has a fee of 0.55%. Not bad. It is truly global with companies from Israel to Russia, denominated in every currency from the Norwegian kroner to the Russian ruble. You won’t find that type of diversity too often. The SEC dividend yield is 1.58%. Not horrible.

– Holmes Osborne, principal of Osborne Global Investments with $1.5 billion in assets under management in Santa Monica, Calif.

2. iShares Currency Hedged MSCI Germany ETF (HEWG)

The European Central Bank (ECB) has embarked on an ambitious quantitative easing program in the Eurozone, creating investment opportunities in European equities. We think European equities represent a good value relative to expensive US stocks, both from a price-to-earnings and price-to-book perspective.

Furthermore, Germany, the strongest economy in Europe, represents a potentially attractive way to access the driving forces behind Europe’s momentum higher-quality, cyclical tilt. First, there are few attractive opportunities for German investors outside of stocks as most German sovereign bonds currently offer negative real yield. Second, Germany, as the fifth largest exporter to the U.S., appears poised to capitalize on a strong dollar/weak euro and an improving American economy.

U.S. dollar-based investors can consider accessing the strong momentum and potential opportunities presented by Europe’s quantitative easing and seek to mitigate the risk of a depreciating euro through the iShares Currency Hedged MSCI Germany ETF (HEWG). HEWG invests in large- and mid-cap German equities and seeks to mitigate exposure to fluctuations in the value of the euro and the U.S. dollar. Investors should consider risks including a potential global economic slowdown, strengthening of the euro, and a rally in European bonds. We will also be watching the outcome of the ECB’s bond buying program, Greece’s economic situation and its impact on the eurozone, and European debt issues.

– Heidi Richardson, global investment strategist, BlackRock with $4.652 trillion AUM in New York City.

To see the complete list from Reuters, click here.

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MarketsMuse: This ETF Trading Expert Has This To Say About That…

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MarketsMuse.com ETF update is pleased to share an informative perspective about best practices and “best execution” that institutional investment managers, RIAs and others should consider when using ETFs, courtesy of insight from one of the more widely respected members of ETF “agency-only” execution space. Here’s the excerpt of the ETFdb.com interview:

etfdb logoAll walks have come to embrace the exchange-traded product structure as the preferred vehicle when it comes to building out low-cost, well diversified portfolios. Furthermore, active traders have also taken note of the inherent advantages associated with the ETF wrapper, embracing the product structure for its unparalleled ease-of-use and intraday liquidity.

ETFdb.com recently had the opportunity to talk with Mohit Bajaj, Director of ETF Trading Solutions at WallachBeth Capital, about his firm’s role in the industry as well as the evolution of ETF trading in recent years.

ETF Database (ETFdb): What’s your firm’s story? What role do you play in the ETF industry?

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ETFs, solar
ETF News

Solar ETFs Shine Bright

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You might need some SPF 100 after the 1st Quarter. MarketsMuse blog update profiles the huge come back solar stocks and ETFs have had after a rocky year, last year. MarketsMuse blog update is courtesy of ETFTrends’ Max Chen’s article, “Solar ETFs Perform Radiantly in Q1“. An excerpt from ETFTrends is below.

Solar stocks and related exchange traded funds have powered ahead and are among the leading sectors over the first quarter after underperforming the equities market last year.

The Guggenheim Solar ETF (NYSEArca:TAN) is the third best performing ETF for the first three months of the year. TAN has increased 31.6% year-to-date. [Solar ETFs: Industry Growth Not Reflected in Market]

Additionally, other clean energy ETFs were among the top ten performing non-leveraged ETFs so far this year, including the iShares Global Clean Energy ETF (NYSEArca:ICLN), which rose 22.8%, and the Market Vectors Solar Energy ETF (NYSEArca:KWT), which gained 22.6%. ICLN tracks a broader exposure to clean energy stocks, including solar, wind and other renewable resources.

To read the full article from ETFTrends, click here.

ETF News

The Merging of Kraft and Heinz Makes Investor ETF Hungry

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MarketMuse blog update profiles the jolt the food and beverage ETFs received on Wednesday when Kraft Foods and the H.J. Heinz Company announced a merge making the new company the world’s fifth-largest food company. This MarketMuse update is courtesy of Benzinga’s 25 March article “Heinz-Kraft News Lifts Food & Beverage ETF“, with an excerpt from the article below. 

This week it was announced that Kraft Foods Group Inc KRFT 4.49% would combine with H.J. Heinz Co. in a move engineered by Brazil-based 3G Capital and Berkshire Hathaway Inc (NYSE: BRK-B).

The combination of these two iconic brands will create a powerhouse consumer staples company with far reaching global exposure.

On Thursday, Kraft rose more than 35 percent on news of the deal, which will include a special cash dividend and 49 percent ownership share in the new combined company.

This jump also impacted a specialty ETF designed to capitalize on the strength of food, beverage, and restaurant stocks.

The PowerShares Dynamic Food & Beverage Portfolio PBJ 0.63% invests in a portfolio of 30 U.S. food and beverage companies based on strict selection criteria that includes price and earnings momentum, quality and value.

Kraft is the eighth largest holding in PBJ, with a 4.69 percent allocation, that sent the fund soaring to new 52-week highs on Thursday.

Read more: http://www.benzinga.com/etfs/sector-etfs/15/03/5356681/heinz-kraft-news-lifts-food-beverage-etf#ixzz3VbblOTeG


To read the entire article from Benzinga on the boost in food and beverage ETFs, click here.

ETF News

LSE Scores Listing of China’s First ETF

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MarketMuse blog update profiles the London Stock Exchange’s (LSE) Wednesday announcement that it had welcomed their first China ETF, Commerzbank CCBI RQFII Money Market UCITS ETF. This is an exciting new step as China hopes to have more offshore trading in the very near future. This ETF offers the abiltiy for those in the LSE to invest in China’s inter-bank market. This MarketMuse update is courtesy of BloombergBusiness’s Will Hadfield. An excerpt of the article, “The Yuan Comes to Europe as LSE Hosts ETF Tracking Chinese Money” is below.

A Chinese bank has launched the first money-market fund denominated in yuan that’s based in Europe, a milestone in the currency’s emergence as a major force in world markets.

China Construction Bank Corp.’s new exchange-traded fund, which is listed on the London Stock Exchange and available to investors throughout the European Union, is the first product to give Western investors access to securities in China’s interbank bond market. The fund, called the Commerzbank CCBI RQFII Money Market UCITS ETF, started trading Wednesday.

The ETF could be the first of many Chinese-currency funds to launch in developed markets as the country’s banks seek to attract investors with higher returns than they could get from dollar-, euro- or pound-denominated accounts.

To read the rest of the article from BloombergBusiness, click here

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Survey Says: Retail Investors Need An ETF Education

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MarketMuse update profiles a recent study done by Fidelity Investments and BlackRock, inc., have discovered a huge reason why retail investors are not comfortable investing in ETFs. The study which survey 1,000 individual investors and 250 advisors found that in order for retail investors to get on board the ETF train, they need some basic ETF education. MarketMuse update is courtesy of Nasdaq’s article, “ETF Watch: Retail Investors Still Shy Away From ETFs“, an a excerpt from the article is below.

The exchange-traded funds or ETFs, are lagging in popularity among retail investors due primarily to the lack of familiarity with the investment products, according to a new study.

While the ETF industry in the U.S. has grow at a breakneck pace to more than $2 trillion in assets in just more than two decades, most of that interest has come from institutional investors.

Two-thirds of retail investors have not yet moved ETFs in their portfolios.

The study revealed that the key to further growth for ETF adoption among retail investors and advisors lies in educating them on ETF basics.

“While ETF investments have more than doubled in the last five years , there is still significant opportunity to raise awareness as more than two-thirds of investors report they have yet to tap the potential benefits of ETFs in their portfolios,” said Andrew Brownsword, SVP Fidelity retail brokerage. “ETF adoption will keep growing.”

The study showed that current ETF owners are increasingly turning to ETFs for long-term holdings, while 80 percent of them see benefit in combining ETFs and mutual funds in a portfolio.

To read the entire article from Nasdaq, click here.

 

 

 

ETF News

Contango Could Be Killer For Those Who Want Oil Via ETF products

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MarketMuse update profiles the close watch oil traders currently have on oil related ETF products such as the DNO or the USL. As investments into oil ETF products have continued to soar, resulting in a more stable oil market price, there is a risk that oil prices could drop and as a result cause people to drown. With more, below is an excerpt from the Globe and Mail article, “Why oil traders are keeping a watch on exchange-traded products”.

Tumult in Libya, U.S. rig counts, production plans of the oil exporting cartel and a pact on nuclear relations with Iran can all affect crude supply and demand, but oil traders have kept an equally close watch on retail investors in recent weeks.

Those investors and hedge funds, betting on a reversal of oil’s long rout, poured billions of dollars into exchange traded products at the tail end of the slide last year, providing unexpected support that helped prices stabilize.

Even as concerns about U.S. storage capacity triggered renewed slide over the past week investors have stuck with the view that a bottom might be in sight, pouring more money into financial products backed by oil futures.

There is a risk, however, that their bets could unravel and send oil prices tumbling again because of a market constellation where spot prices may head lower, but storage bottlenecks make futures contracts months ahead more expensive.

Some market participants warn that if that happens, the U.S. benchmark could slide towards $20 from around $47 now.

Holdings in exchange traded financial products have soared since the beginning of the year, especially highly-leveraged ones such as VelocityShares 3x Long Crude Oil ETN (UWTI). according to data from Morningstar investment research firm.

Reuters analysis of weekly flows data shows investors have been boosting positions in several long funds, while unwinding short positions over the past four weeks.

To read the entire article from the Globe and Mail, click here.

ETF News, Tech Talk

An ETF-only Exchange? BATS at Bat

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They say you should always shoot for the moon and that is exactly what BATs exchange is doing. MarketMuse update profiles BATS exchange looks to hit it out of Nasdaq’s and the New York Stock Exchange’s parks. The ETF-only exchange out of Kansas City, BATS, is planning on becoming the number one ETF trading venue by 2020 which means passing both the Nasdaq and the NYSE. BATS. This MarketMuse update is courtesy of Tom Lydon’s article “BATS Looks to be Dominant ETF Exchange” on ETFTrends.com. An excerpt from the article is below.

ETFTrends-logo   Most exchange traded products in the U.S. trade on the New York Stock Exchange or the or the Nasdaq Global Market. That is not stopping Kansas City-based BATS Global Markets from the ambitious goal of being the largest U.S. ETF listing venue in three to five years.

“There was a total of 1,411 U.S.-domiciled ETFs at the end of 2014, according to the Investment Company Institute, with more than 1,000 listed by Intercontinental Exchange’s NYSE unit and the balance by Nasdaq OMX Group,” report John McCrank and Jessica Toonkel for Reuters.

To read the entire article from ETFTrends, click here

ETF News

And, The Winner Is…According to ETF.com…

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MarketsMuse.com ETF coverage profiles ETF.com Awards Ceremony courtesy of opening extract from ETF.com news release. Category winners for “best” and respective ‘runners up’ extend across best issuers, best strategists, best capital markets desk, and best products across equity, fixed income, and currency and include the following products: HEDJ, DXJ, CHNB, ZROZ, BNDX, VTI, EMQQ, FV, IUSB, PDBC, TYTE, WYDE, BCHP, COMT, DIVY, SXOE, DGRO, DVP, FMLP, AIRR, QVAL, ASHS.

The WisdomTree Europe Hedged Equity Fund (HEDJ) was named the ETF of the Year at the second annual ETF.com Awards held tonight in New York—in no small part because it has been more popular than competing equity strategies designed to protect U.S. investors from the strength of the dollar.

ETF.com, the 15-year-old news, views and financial data company focused exclusively on exchange-traded funds, also honored important individuals like Lee Kranefuss, who built iShares, the world’s largest ETF company; and the fund sponsor First Trust.

The annual awards ceremony, which took place at Chelsea Piers, recognizes the people, products and companies that have been instrumental in moving the 22-year-old ETF industry forward and that have helped create better options and outcomes for investors.

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ETF News, Fixed Income

BlackRock New Bond ETF To Trade Like Common Stock

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BlackRock is the world’s largest asset manager with over $4.59 trillion in assets under management. iShares is a section of BlackRock that is in control of hundreds of ETFs. As noted on iShares page and continued to ring true today, Many people are turning to ETFs for diversified, low-cost and tax efficient investing. ETFs can be a powerful addition to your investment portfolio.

MarketMuse blog update is courtesy of the New York Times’ Landon Thomas Jr. with an extract from Thomas’s article, “BlackRock’s New Breed of Exchange-Traded Bond Fund Prizes Stability Over Swagger“

While he may not live the life of a swaggering bond market pro, Mr. Radell, a bond manager at the fund giant BlackRock, is challenging a strategy that has rewarded some of his flashier peers: the pursuit of high-risk, high-return investments.

The weapon that Mr. Radell will be using is a new variety of exchange-traded fund, or E.T.F., which tracks an index of stocks or bonds but trades like a common stock, allowing investors to jump in and out.

For years now, these funds have been a hit with passive investors. Now, BlackRock is introducing a new breed of bond E.T.F. that aims to blend the best of active investing (security selection) with index investing (cost and consistency).

Scott Radell has been with BlackRock since 2003 and currently is in charge of more than 80 ETFs for BlackRock’s iShares. 

To read the entire article on the new bond ETF from BlackRock found in the New York Times, click here.

ETF News

Hedged Vs. Unhedged International Currency ETFs

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MarketMuse blog update courtesy of CNBC. With investing overseas being so dangerous right now, because of enormous moves in currency, buying stocks overseas—including ETFs, why are people so keen on doing it. CNBC reporter, Bob Pisani’s ask the question:

Why doesn’t everyone buy hedged international ETFs when they want international exposure, rather than unhedged ETFs?

There are several reasons:

1) Until recently, it was almost impossible for the average investor to do so. There simply were no ETFs that enabled an investor to hedge out currency. A professional could hedge, of course, but at considerable cost.

Now that more hedged ETF products are becoming available, investors are taking note. In fact, the biggest European ETF is now a hedged product, the WisdomTree International Hedged, which recently surpassed its biggest unhedged rival, the Vanguard European ETF.

2) There was not a huge demand for such a product because currency moves like we have seen in euro this year (down 5 percent against the dollar) are very rare. Oh sure, maybe if you were investing in Argentina, but not the euro, not the yen. Most years did not involve anywhere near such dramatic moves.

This year, for example, the yen has barely moved against the dollar, so the difference between a hedged Japan ETF and an unhedged Japan ETF is very small:

That was not the case last year, when there was an enormous move in the yen versus the dollar, and investors made the DXJ the hottest ETF in years.

For the entire article from CNBC’s Bob Pisani’s story “Why currency-hedged ETFs are hot”, click here.

ETF News

Following Slashing ETF Prices, State Street To Shutdown Three ETFs

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MarketMuse update profiles the the second oldest financial institution in the United States, State Street’s plans to shut down three ETFs after what has been a very difficult year for them. The shutdowns are due to what they call “limited market demand”. With more of an update, an excerpt from InvestmentNews’ Trevor Hunnicutt’s story, “State Street to close three ETFs that attracted little investor interest” from 10 March , is below. 

The announced closure of the ETFs, including one municipal-bond fund in partnership with Nuveen Investments Inc., comes five weeks after the ETF pioneer slashed prices on nearly a third of its funds and while the firm faces outflows in its flagship fund.

State Street, who manages the first-to-market “SPDR” ETFs, will shut its S&P Mortgage Finance ETF (KME), S&P Small Cap Emerging Asia Pacific ETF (GMFS) and SPDR Nuveen S&P VRDO Municipal Bond ETF (VRD), according to a statement Monday. The funds are each at least three years old, but none hold more than $6 million in assets.

State Street, whose money managing arm is also known as SSGA, has $441 billion in U.S. ETF assets, third behind BlackRock Inc.’s iShares and the Vanguard Group Inc. The firm is perhaps best known for its SPDR S&P 500 ETF (SPY), which is commonly recognized as the first ETF traded in the U.S. as well as the most widely traded. That fund has lost $26 billion to investor redemptions this year, according to Morningstar Inc. estimates. State Street, whose index-tracking fund is used widely by tactical traders and institutions along with advisers, has said those flows are cyclical.

Meanwhile, the firm also has tried to expand its lineup to more profitable mutual funds and partnerships on ETFs with Nuveen and DoubleLine Capital’s Jeffrey Gundlach to attract assets into other product lines.

For the entire article from InvestmentNews, click here.

ETF News

BlackRock Slashes Investing Cost Creating ETF War

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MarketMuse update profiles BlackRock’s huge slash in investing cuts to cause pressure on rival is courtesy of Reuters’ Simon Jessop 10 March story “1-British ETF price war heats up with BlackRock FTSE 100 fee cut”

BlackRock, the world’s largest asset manager, has slashed the cost of investing in Britain’s oldest FTSE 100 exchange-traded fund, ratcheting up the pressure on rival providers such as Vanguard.

Demand for exchange-traded funds (ETFs) has surged in recent years as a result of often anaemic returns from more actively managed funds.

BlackRock said on Tuesday that it would now charge 7 pence a year per 100 pounds invested in its ETF that pays out dividend income, down from 40 pence previously, to make it the cheapest such tracker on the market. Both Vanguard and Deutsche Bank charge 9 pence, it said.

“It really doesn’t leave much more room to fall, but I don’t think the price war has ended,” said Adam Laird, head of ETFs at fund supermarket Hargreaves Lansdown. “In the U.S., you can get mainstream ETFs with fees as low as 0.03 percent.”

However, he said he expected rival providers to wait and see if clients switched their money before responding.

The iShares FTSE 100 UCITS ETF (Dist) fund was the first ETF to launch on the London Stock Exchange in 2000 and currently holds 3.8 billion pounds ($5.7 billion) of assets under management.

To read the entire story on how BlackRock is starting a war with its competitors from Reuters, click here.

ETF News

Threat Of Hackers Grows And So Does Cyber Security ETFs

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MarketMuse update courtesy of Todd Shriber of ETF Trends, profiles the increase in cyber security ETFs as the threats of being hacked become more and more relevant.

The PureFunds ISE Cyber Security ETF (NYSEArca: HACK) continues to cement its status as a legitimate event-driven exchange traded fund.

HACK is higher by 0.7% Tuesday on volume that is already more than quadruple the daily average after Russia’s Kaspersky Lab, a major cyber security firm, said a group of hackers have stolen as much as $1 billion from over 100 banks in 30 countries since late 2013.

Various media outlets are reporting those hackers are more interested in financial gain than pilfering personal information from the banks’ customers. That point is unlikely to assuage the banks or their customers, but it is enough to have HACK trading at record highs for the second consecutive session.

HACK’s Tuesday momentum is carrying over from last Friday when the ETF soared to a record high on volume of nearly 1.4 million shares as President Obama hosted the first-ever cyber security summit, which featured luminaries from throughout the tech industry, including Apple (NasdaqGS: AAPL) CEO Tim Cook.

Importantly, most of the action in HACK last Friday was of the bullish variety. So intense was buying activity in the ETF that the fund is now home to $231 million in assets under management, confirming HACK’s place on the list of most successful ETFs to debut in 2014. Impressively, HACK’s ascent to $231 million in AUM means the ETF has more than doubled in size over the past six weeks after topping $100 million in assets in early January. The ETF debuted in November.

News of the $1 billion bank hack, while positive for HACK in the near-term, also serves as reminder of the long-term opportunity with the ETF because the financial services industry is expected to be one of the largest spenders on cyber security enhancements in the coming years.

In October 2014, J.P. Morgan Chase (NYSE: JPM) CEO Jamie Dimon said the banking giant will likely double its cyber security spending to $500 million within the next five years.

HACK benchmarks to the ISE Cyber Security Index, “which tracks the performance of companies actively engaged in providing services for cyber security and for which cyber security business activities are a key driver of their business model. These cyber security services are designed to protect computer hardware, software, networks and data from unauthorized access, vulnerabilities, attacks and other security breaches,” according to PureFunds.

 

ETF News

ETF Industry Growing At Rapid Rate; Assets Will Hit $5 Trillion By 2020

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MarketMuse update courtesy of ETF Trends’ Tom Lydon. 

The U.S. exchange traded products industry hit a major milestone last year, eclipsing $2 trillion in assets under management, but industry observers do not see that growth slowing. Rather, it is expected that ETFs will continue their exponential growth rate in the years ahead.

While it took nearly two decades for the ETF industry to reach $2 trillion in assets, it will not need nearly as long to get to $5 trillion, according to a new report by PwC. The PwC repots says the global ETF industry will reach $5 trillion in combined AUM by 2020.

“New types of indexing (also referred to as “smart beta”) represent a hotbed of product development activity with 46 percent of firms surveyed identifying this as the most important area of innovation. PwC expects this to continue for the near-term. Active ETFs (34 percent) and alternatives (29 percent) are also expected to be sources of significant ETF growth between now and 2020,” according to the “ETF 2020” report.

The rise of strategic beta ETFs has also played a significant role in boosting U.S. ETF assets. As of late August, assets under managements across smart beta ETFs totaled $350 billion, a 30% year-over-year increase. Much of that growth has been driven by institutional investors, including large money managers, endowments and pensions. The growth of these non-traditional ETFs has been exponential as smart beta ETFs accounted for just 19% of total industry assets at the end of 2013. [U.S. ETFs top $2 Trillion in AUM]

Some industry observers also see actively managed ETFs being a key driver of ETF industry growth in the coming years. For the week ending Jan. 16, U.S.-listed actively managed ETFs had a combined $17.24 billion in AUM with nearly half that total allocated to PIMCO and First Trust ETFs, according to AdvisorShares data.

While that is just a fraction of the overall U.S. ETF industry, increased demand for active ETFs and the potential for a more favorable regulatory environment could make actively managed ETFs a $500 billion asset class by 2020, according to a report by publishedSEI Investments last year. [Big Growth Seen for Active ETFs]

“In the U.S., institutional investors, including registered investment advisors, wealth management platforms, other asset managers, endowments and foundations are each expected to continue to expand their investments in ETFs between now and 2020,” said PwC.

Those comments jibe with data released last year by several major ETF issuers that show institutional investors are increasingly turning to ETFs.

Institutional investors continue to be key drivers of ETF asset growth, a theme that is expected to continue in 2015. In its 2014 U.S. Institutional ETF Usage Report, BlackRock (NYSE: BLK) notes the “results show that institutional use of ETFs is expected to rise across the board. This trend holds true for both existing institutional ETF investors and those who do not currently hold ETFs.” [Institutions Boost ETF Usage]

Fixed income and global ETFs are expected to be favorites of institutional investors this year. That prediction has proven accurate to this point in 2015 as three international ETFs and one bond fund rank among the top 10 asset-gathering ETFs on a year-to-date basis.

ETF News

Issuers Get Pickier Over Which ETFs to Launch

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MarketMuse update courtesy of ETF Trends’ Tom Lydon.  

In 2014, just over 200 new exchange traded products launched in the U.S., more than double the nearly 90 that closed, but even with launches continuing to easily outpace closures, some major ETF issuers are getting choosy about the new number of rookie products they bring to market.

For example, BlackRock (NYSE: BLK), the parent company of iShares, the world’s largest ETF sponsor, launched 29 new ETFs in 2014, a number that matches the ETFs shuttered by the firm, reports Victor Reklaitis for MarketWatch.

The bulk of iShares’ closures came by way of an August announcement declaring 18 closures. Ten of those 18 ETFs, all of which ceased trading in mid-October, were target date funds. In early 2014, iShares announced the closure of 10 ex-U.S. sector ETFs.

Some of the more successful ETFs launched by iShares last year include the $146.1 million iShares Core Dividend Growth ETF (NYSEArca: DGRO), the $206.2 millioniShares Core MSCI Europe ETF (NYSEArca: IEUR) and the $140.3 million iShares MSCI ACWI Low Carbon Target ETF (NYSEArca: CRBN).

Increased selectivity by issuers when it comes bring new ETFs could become a more prominent theme as the battle for investors’ assets intensifies. Simply put, many new ETFs struggle out of the gates and go months if not years with nary a glance from advisors and investors. As of late December, 92 of the ETFs launched last year had over $10 million in assets under management and none of 2014’s crop of new ETFs came within spitting distance of the over $1 billion accumulated by the First Trust Dorsey Wright Focus 5 ETF (NasdaqGM: FV). FV debuted last March and by November had over $1 billion in assets

There are more than 7,500 U.S. open-end mutual funds, MarketWatch reports, citing Morningstar data, implying there is room for the U.S. ETF industry to grow from the current area of about 1,700 products.

One thing is clear: Different issuers are taking different approaches to new ETFs. For example, Vanguard, the third-largest U.S. ETF issuer, did not bring a new ETF to market in 2014 but still managed to add $75.3 billion in new ETF assets, a total surpassed only by iShares. Earlier this month, Pennsylvania-based Vanguard said it expects to launch its first municipal bond ETF early in the second quarter.

First Trust, one of the fastest-growing U.S. ETF sponsors, launched 15 new products last year, including FV.

For the original article from ETF Trends, click here.

 

ETF News

ETF Issuer Spanked by SEC; CEO Present No Longer Present

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MarketsMuse update courtesy of extract from 22 December edition of  Bloomberg, with reporting by Dave Michaels. 

F-Squared Investments Inc. agreed to pay $35 million over U.S. regulatory claims that it misled investors about the performance of a trading strategy used by exchange-traded funds.

The firm admitted that performance data used to market the strategy to mutual funds and other clients was based on historical models for a seven-year period before the product existed, the Securities and Exchange Commission said in a statement today. Investors were told that the performance represented actual results from 2001 through 2008, the SEC said.

Investigators also found that the hypothetical data contained an error that further inflated the performance results by about 350 percent, the SEC said. F-Squared is the largest active-ETF strategist with about $28.5 billion invested under its index strategies, according to the agency.

“Investors must be able to trust that performance advertisements are accurate,” said Andrew Ceresney, director of the SEC’s enforcement division. “F-Squared has admitted that it misled its clients over a number of years about the existence and success of its core strategy.”

In a statement, F-Squared said the strategy, known as AlphaSector, has performed as expected since it was launched in 2008 and “clients have seen the results” in their returns. Following the strategy told investors when to buy or sell nine ETFs, the SEC said.

‘Downside Protection’

“We greatly appreciate the continued support of our clients who have maintained confidence in F-Squared’s ability to deliver downside protection in down markets and upside participation in rising markets,” Chief Executive Officer Laura Dagan said in the statement.

F-Squared explicitly advertised AlphaSector’s performance as “not back-tested,” the SEC said. An F-Squared analyst tried to inform former CEO Howard Present about a mistake in the performance model in 2008. The formula continued to be used for the next five years, according to the agency.

The SEC also sued Present, alleging that he made false statements when he claimed AlphaSector was based on a strategy that had been used to invest client assets since 2001. In a statement, Present’s attorneys said they would challenge the allegations, which they called “misdirected and meritless.”

For the entire article by Michaels from Bloomberg, click here