Tag Archives: marketsmuse

Fixed Income, Global Macro Strategy

Global Macro: Historical Backdrop re Yield Moves: Pre-Mature to Call Bear Market

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MarketsMuse Global Macro update is courtesy of extract from a.m. edition of “Sight Beyond Sight”, the newsletter published by global macro think tank Rareview Macro LLC and authored by Neil Azous.

Neil Azous, Rareview Macro
Neil Azous, Rareview Macro

In last Thursday’s edition of Sight Beyond Sight we argued that we couldn’t work out how anyone was able to make an argument about the short-term direction of fixed income, and especially calling the end of the sell-off, with a straight face. Put another way, there were a lot of pikers out there with no accountability or transparency voicing their opinions that day. Given that any attempt at analyzing fundamentals relative to positioning at historically climactic moments is generally a very poor exercise, we refused to go on the record that day and said we would regroup over the weekend. Given the resumption of the sell-off, that patience has served us well.

At this point, just repeating that CTA/Managed futures, a strategy that makes up ~10% of hedge fund AUM but deploys the most leverage, have lost on average ~5% over the last few weeks is a waste of time. Since CTA’s apply priced-based trend-following algorithms to the trading of futures contracts what matters is that many thresholds used to trigger a stop-loss have been breached and then some.

The takeaway at this point is that CTA’s/Managed futures strategies are way passed working through large offsides positions and many of them have now flipped their strategies to go the other way. Along those lines the positions that have flipped are more acute so far in Europe than the US.

That is very important to recognize because that position building is still in the early stages and as/if the new trends extend those positions will grow and grow given this is the most levered strategy within hedge fund products.

The big out-trade at this point is that asset managers still hold structural long US dollar and Treasury curve flattening positions and have yet to adjust them in the same way as the CTA’s. Why? Because their threshold for pain is a lot greater and they are not reactive to priced-based trend-following algorithms.

What does this mean? It means that the risk from here is that as CTA/Managed futures strategies ramp up new positions that will begin to force the hand of asset managers who have yet to be really reactive.

The new leverage being applied to the counter-trend on the hedge fund side plus the liquidation of structural position on the asset manager side is the point we think we are at now in terms of overall market positioning.

So what is most at risk now? Continue reading →

Tech Talk

NASDAQ Embraces Bitcoin; First Mover For Pre-IPO Application

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MarketsMuse Tech Talk update profiling Wall Street’s latest embracing of Bitcoin technology and a look at 11 May announcement from NASDAQ is courtesy of extracts from CNN.com and WSJ.

The Nasdaq stock exchange is tapping Bitcoin’s powerful new transaction technology to create a more secure, efficient system to trade stocks. Step 1: Pilot to take place in fledgling Nasdaq Private Market.

High-tech bankers are starting to realize Bitcoin could revolutionize trading. Nasdaq (NDAQ), a favorite exchange among many technology companies, is making the first move.

On Monday, the stock market announced it will start using a blockchain system to keep records for its Nasdaq Private Market, which handles trading of shares in the pre-IPO phase before a company goes public.

Nasdaq sees the blockchain’s perfect recordkeeping as a major step in the right direction for more transparency. The pre-IPO market doesn’t typically see as much trading and what does occur is often by a tight circle of employees and early investors.

See more at BrokerDealer.com

Fixed Income, People Profiles, Tech Talk

Fixed Income FinTech Chapter 14: More e-Trading Platforms for US Govt Bonds

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The US Government Bond Market is set to explode…with more e-trading systems.. MarketsMuse Tech Talk continues its curating of fintech stories from the world of fixed income and today’s update is courtesy of WSJ’s Katy Burne, who does a superb job (as always) in summarizing the latest assortment of US Government bond “e-trading” initiatives. MarketsMuse editor note: The financial marketplace is now littered with electronic trading platforms ostensibly designed to enhance liquidity and address the needs of respective market participants.

The once-revered premise of electronifying old-fashioned, non-transparent OTC markets so as to make them fully transparent and in turn, enhance liquidity in a manner that would inspire institutional investors to increase use of those products has, according to many, morphed into a ethernet rat’s nest. There are now almost as many of flavors of institutional electronic trading platforms as there are ice cream flavors from by Ben & Jerry’s and Baskin Robbins combined. Most if not all are ‘accelerated’ thanks to the innovation of rebate schemes, payment for order flow menus, and of course, high-frequency trading (HFT) applications, which has made the market structure more akin to a continuous “Battle of the Transformers.”

Despite the rising concern  on the part of both institutional investors and regulators as to the impact of market fragmentation (the latter of whom are easily-cajoled by the phalanx of lobbyists and special interest groups),  the Genie is not only out of the bottle, it’s reach continues…and the US Govt bond market is, according to those leading the initiatives described below, ripe for ‘innovation,’  for two good reasons. The first is the widely-shared belief that the rates market, which has been mostly range bound for several years thanks to the assortment of QE programs and lackluster economic recovery. is now anticipating a major uptick in volatility, which is a trader’s favorite friend. Secondly, the role of major investment bank trading desks, once ‘controlled’ the market for government bonds, has become severely diminished consequent to Dodd-Frank and the regulatory regime governing those banks and the financial markets at large.

Here’s the opening excerpt from Katy Burne’s column “Antiquated Treasury Trade Draws Upstarts”..

A host of companies are vying to set up new electronic networks for trading U.S. Treasurys, the latest upheaval in a $12.5 trillion market already being reshaped by some large banks’ pullback and the growth of fast-trading firms.

The efforts highlight the shifting role of banks, and gyrations in the market as the Federal Reserve prepares to lift interest rates in the months ahead.

Traditional Treasury trading is now widely viewed as “antiquated and rigid,” said David Light, a former head of government-bond sales at Citigroup and co-founder of CrossRate Technologies LLC, which is launching one of the new venues. “It simply did not evolve with all the changes in technology and regulation.”

Currently, there are two main channels for trading Treasurys on screens. Banks trade opposite their asset manager and hedge fund clients, with identities disclosed, via either Bloomberg LP or Tradeweb Markets LLC.

The banks then trade with other banks and professional investors anonymously, in exchange-like systems on either BrokerTec, owned by broker ICAP PLC, or eSpeed, owned by Nasdaq OMX Group. The banks trade with other banks in a wholesale market on one set of prices; they trade with customers on another set of prices. Continue reading →

ETF News

Could Russia ETFs Be Making A Comeback?

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After a rough year, Russia ETFs have been trying to make a comeback and it seems they may have finally done it. MarketsMuse blog update profiles the changes Russia has made that has helped boost Russia ETFs. This blog update is courtesy of Nasdaq’s article, “Russia ETFs Making a Strong Comeback – ETF News And Commentary“, with an excerpt below. 

2014 has been a catastrophic one for Russian equities thanks to the ban imposed on the nation by the West following its Crimea (erstwhile Ukrainian territory) annexation in the first half. The massive oil price crash in the second half also spurred many investors to abandon the country’s equities in apprehension of significant economic losses. As a result, Russian stocks almost halved in price last year .

However, things have changed in 2015. Like many other countries across the globe, Russia also entered into a cycle of rate cut in 2015 having slashed the key rate for the third time so far this year to ward off an impending recession. An upward movement in the local currency and cooling inflation has made this possible, per Bloomberg . 

In late April, Moscow reduced the key one-week interest rate to 12.5% from 14% and hinted at further easing if required. Notably, Russia generates about 50% of its revenues from oil and natural gas resources. So, this oil-dependent economy was crushed by the crude carnage last year. The Russian currency, the ruble, lost about 50% against the greenback in the second half of 2014 and stoked inflation.

To keep reading about Russia ETFs comeback, click here.

 

People Profiles, Strike Price

Open Outcry Options Pit Trading is Dead..Long Live Open Outcry Options Pit Trading

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MarketsMuse Strike Price update profiles a “return from the past and into the future” look at what many veteran (and former) option mart floor traders had all but given up for lost thanks to the electronification and bifurcation of institutional options trading.

We’re talking about those legacy, open-outcry trading pits, one -time bastions for burly and sharp-elbowed boys from Brooklyn and college ball-players-turned-options market makers and brokers who had reserved trading pit spots for them congregate and serve as liquidity centers for investors and upstairs traders to route and execute both small retail orders and large/complex institutional options orders. According to an article in today’s edition of the MarketsMedia.com newsletter, the options market is having a “Its Déjà vu all over again” moment.

Those who have been around for more than 15 minutes lament the fact that in recent years, those brick and mortar venues have become mere shells of their former selves and in some cases, ghost towns. The American Stock Exchange, arguably the pioneer in options pit trading, was acquired by the NYSE a few years back and is now literally a vacant lot that real estate developers hope to convert into a luxury rental and retail space. Beantown’s BOX might as well be a bowling alley, as trading via that venue is all electronic. One can hear a pin drop on the floor of the CBOE thanks to the ISE, the options market “Dominator” and a completely virtual exchange that has no physical structure other than corporate office space for their execs, and is otherwise comprised of air-conditioned warehouses patrolled by security dogs to protect rows of rack space for computer servers.

John Houlahan, OMEX Systems
John Houlahan, OMEX Systems

Noted John Houlhan, the COO of OMEX Systems, a long time, broker-favored OEMS platform (recently acquired by fintech firm Raptor Trading) and first designed exclusively for agency-only options and ETF floor brokerages operating on the AMEX and since embraced by a number of “upstairs” executing brokers, prop shops and select hedge funds, “Other than a handful of firms that were rolled up, most legacy floor brokerage firms and market-making firms turned in their trading smocks and floor badges long ago.” Added Houlahan, “The others who are relevant in the course of facilitating large block and/or complex options orders for institutional clients or hedge funds now generally operate from loft spaces in tony areas in Chicagoland, offices in various parts of Manhattan and New Jersey offices adjacent to exchange co-location areas.”

BUT WAIT! Everything you just read in that last paragraph is not entirely true; open outcry options trading floors are as relevant as ever, according to coverage from financial media firm MarketsMedia.com.. Here’s an extract from today’s edition of their newsletter, including a look at select veteran options market brokers who have lived to tell the tale… Continue reading →

ETF News

Social Media Popularity Doesn’t Show In Social Media ETF

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MarketsMuse blog update profiles the social media ETF, The Global X Social Media Index ETF (SOCL). So far this year, SOCL has not been performing very well, which is in contrast to social media performance in everyday life. Social media sites are gaining more users everyday however the trend doesn’t show in SOCL’s performance. Investopedia’s article “Is Social Media ETF SOCL Too Risky?” by Dan Moskowitz investigates the reason this trend occurs. Extracts from the article are below. 

The world is atwitter social media and its rapid growth right now. According to the Pew Research Center, 74% of online adults use a social networking site of some kind, up from 29% in 2008. And more advertising opportunities are blooming alongside the increased usage of mobile devices. In March, for the first time ever, the number of mobile-only internet users exceeded the number of desktop-only internet users, according to research firm comScore.

One of the trendiest ways to invest in social media is via the Global X Social Media Index ETF (SOCL), which tracks the largest publicly held social media firms around the world, including Facebook Inc. (FB), LinkedIn Corp. (LNKD) and Twitter Inc. (TWTR). With the sector’s global growth expected to continue for the long haul, betting on SOCL seems like a no-brainer.

What’s tricky with SOCL is that the trend doesn’t always match the performance. 

For starters, SOCL returned -15.04% in 2014. Take a look at SOCL’s top ten holdings, their percentage of assets, and their one-year stock performances 

The heavier-weighted holdings are performing well, but the 0.65% expense ratio for SOCL comes into play. Also notice that some of the weaker-performing stocks belong to Wall Street darlings — buzzy startups investors loved during their IPOs — that have had difficulty delivering consistent profits: Pandora, Groupon and Twitter, if you’re looking for a big industry name that’s falls farther down in SOCL’s holdings. If these companies are unable to deliver stock appreciation when markets are at all-time highs, then you shouldn’t expect them to perform well when the market takes a turn for the worse.

More people are accessing social media sites every day, a very positive trend. But without positive returns, that trend is irrelevant. Some of the companies/holdings for SOCL have difficulty delivering consistent profits and haven’t yet shown investors a clear-cut path to how they’ll do it down the road. If that’s the case when the stock market is at all-time highs, then it’s highly unlikely for these stocks to appreciate if and when the market falters. Put simply, unless you’re looking for a short-term trade, consider avoiding SOCL. But if the broader market continues to move higher thanks to Federal Reserve assistance and basic momentum, there’s a possibility it will take SOCL with it. As always, do your own research prior to making any investment decisions.

To read the entire article profiling the ETF SOCL, click here.

 

 

Fixed Income, Global Macro Strategy

Global Macro: Selloff and Noise Level Around European Fixed Income Reach Historic Levels

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MarketsMuse Global Macro update is courtesy of opening extract from today’s a.m. edition of “Sight Beyond Sight“, the global macro newsletter published by global-macro think tank Rareview Macro LLC and authored by Neil Azous, Rareview Macro’s Founder and Managing Member.

Neil Azous, Rareview Macro
Neil Azous, Rareview Macro

Forgive our saucy tone today, but this has been a long week. That is not because we were long European bonds, but because we provided a lot of free therapy to people who were. In the last two hours we have received way too many communications around today’s events.  At one end of the spectrum there are those arguing that Fixed Income has crashed, the bond bull market is over, and this is reminiscent of US Treasuries in 1994 or the Japanese JGB move in 2003. And at the other end, today’s reversal off the extreme yield levels seen just a short while ago is leading many to call the move finally over, arguing that supply/demand and the search for income are once again set to take over and force global yields much lower.

We don’t know how either side is able to make either argument with a straight face. Put another way, there are a lot of pikers out there with no accountability or transparency in their views voicing their opinions today. The attempt to analyze fundamentals relative to positioning at climactic moments historically is a poor exercise, especially considering the UK election is today and the US employment number is not released until tomorrow.

Instead, you might be able to make a better argument that the European Central Bank (ECB) was able to meet its bond buying quota very early in the month, and at choice prices and it is best for everyone else to wait until next Monday to go on the offensive. That just seems more rational. Just because we write a newsletter doesn’t mean we have to go on the record today. So we will not and instead regroup over the weekend and come back Monday refreshed.

To be clear, we are not “off-side’s.” We are just more interested in where Global fixed income will be over the next two to three months rather than getting caught up in the next two to three hours. In that spirit, for those who want to fall back on something more fundamental or process oriented instead, the below observations may be of interest.

US Fixed Income Observation

Below is a snapshot of our internal model for US interest rate hike probabilities over the next 18 months. The top graph looks at the total probability of a hike BY a certain meeting, whereas the bottom graph determines the probability of a hike AT a certain meeting. Beyond that, the very affordable cost of Sight Beyond Sight ® newsletter prohibits us from sharing any additional methodology with you. So please don’t ask us. Let’s just say we utilize this tool frequently in our internal process and we place a lot of weight on it. Continue reading →

ETF News, Global Macro Strategy

Global Macro: Is The Darling of EM Faltering?; How To Trade It..

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MarketsMuse ETF and Global Macro update takes a look at India for those following the two leading ETFs in the space, the $2.3 billion WisdomTree India Earnings Fund (EPI. C-73) and the $1.9 billion iShares MSCI India ETF (INDA. C-92), and introduces a global macro perspective that adds a different dimension via a brief excerpt from today’s a.m.  edition of Sight Beyond Sight and courtesy of Rareview Macro LLC a.m. notes

India: The Darling of EM Faltering

In a very rare occurrence in India, where investors are two-times overweight the equity market benchmark, 49 of the 50 names in the National Stock Exchange CNX Nifty Index (NIFTY Index -2.81%) closed negative. Not only has the ratio of India to Brazil (NIFTY/IBOV) now retraced almost 50% since its mid-2012 ascent higher, but it remains one of the best representations globally of the unwind of the commodity importer vs. exporter strategy that dominated the deflation headlines from July 2014 to February 2015.

Here is an updated version of our favorite representation. This is the Indian SENSEX versus Brazilian Bovespa overlaid with the inverse of WTI crude oil. As you can see, without Brazil even being opened today yet, the Indian leg has taken that ratio down below the 200-day moving average.

For the avoidance of doubt, which is very high in the professional community when it comes to India, after last night’s price action the equity markets are now formally in a technical correction (i.e. -10%) as the NIFTY is -11.36% off its March high. Additionally, the major benchmarks are now negative on the year in both US dollar and local currency (INR) terms. Optically, next to Turkey, India is the only other major emerging market that is negative year-to-date.

 

Sight Beyond Sight® is a global macro trading newsletter written daily by Neil Azous. With close to two decades of institutional experience across asset classes, Neil interprets the day-to-day economic, policy and strategy developments and provides actionable trading ideas for investors.

ETF News, Tech Talk

BNY Mellon Introduces New ETF Tool

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MarketsMuse blog update profiles The Bank of New York Mellon Corporation aka BNY Mellon, and their introducing a new ETF negotiation tool. This update is courtesy of Asset Servicing Times’ article, “BNY Mellon launches new ETF negotiation tool“,  with an excerpt below. 

BNY Mellon has introduced a new automated process to aid authorised participants in the creation and redemption of exchange traded funds (ETFs).

The new process allows these participants to use BNY Mellon’s ETF centre to conduct propositions and negotiations on underlying data for ETF baskets with a fund sponsor.

It is designed for large financial institutions that are chosen by such a sponsor to obtain the necessary assets for creating or redeeming an ETF.

Usually, participants will have to go through more than one institution to do this, before shares are transferred to a custodian bank.

The new system is designed to offer a more flexible and more efficient environment for negotiating ETF baskets.

Steve Cook, global head of ETF services at BNY Mellon, said: “Helping authorised participants become more efficient ultimately benefits the other participants in the ETF marketplace, ranging from issuers to those in the secondary trading market.”

To continue reading about this new ETF negotiation tool, click here.

ETF News, People Profiles

Goldman Sachs Readies ETF Launch

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MarketsMuse blog update profiles Goldman Sachs preparing for a launch of its own ETFs. Goldman Sachs is the largest U.S. investment bank and they are finally going to make the move to become a huge player in the ETF industry.  The firm has completed all its necessary paperwork with the SEC as of May 4th for its six ETFs. These six new ETFs include: Goldman Sachs ActiveBeta International Equity ETF (GSIE), Goldman Sachs ActiveBeta Emerging Markets Equity ETF (GEM), Goldman Sachs ActiveBeta Europe Equity ETF (GSEU), Goldman Sachs ActiveBeta Japan Equity ETF (GSJY), Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (GSLC) and the Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF (GSSC). This MarketsMuse blog update is courtesy of ETFTrends’ Tom Lydon and his article, “Goldman ETFs Near Liftoff“, with an excerpt below. 

ETFTrends-logo

Goldman Sachs (NYSE: GS), the largest U.S. investment bank, is getting closer to launching its own exchange traded funds.

In a filing with the Securities and Exchange Commission dated May 4, New York-based Goldman Sachs revealed tickers and fund managers for its six “ActiveBeta” ETFs as well as tickers for its five passively managed ETFs.

Among Goldman the managers for the ActiveBeta ETFs are “Steve Jeneste, a managing director most recently oversaw portfolio management of macro and multi-asset strategies. Another is Raj Garigipati, vice president, who most recently served as chief risk officer for Goldman’s QIS unit,” reports Chris Dieterich for Barron’s.

To continue reading about Goldman Sachs preparing  for the launch of its six “ActiveBeta” ETFs, click here.

 

Tech Talk

What’s Next? Another Dark Pool: LSE Jumps In via Plato’s Retreat

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MarketsMuse.com Tech Talk update profiles the latest news flash for FinTech wonks: Whilst the securities industry landscape continues to debate the “dark pool vs. lit market” topic, the London Stock Exchange (LSE) is taking a chapter from the behometh brokerdealer universe with their own scheme to introduce a dark pool, but the regulated LSE proposes to make their platform a ‘non-profit utility”. Below is courtesy of extract from Bloomberg LP reporting. MarketsMuse Editor’s note: Our MM title editor apologizes to those who might be confused by the reference to the once notorious Manhattan NY gathering place for those seeking to keep their wild side ‘dark’..but we thought it was a fun title nonetheless..
 Continue reading →

ETF News

Rookie ETFs Of The Year: Two New ETFs That Are Standouts In 2015

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MarketsMuse blog update profiles two ETFs that have become standouts so far this year. The ETFs iShares Exponential Tech ETF (XT) and SPDR DoubleLine Total Return Tactical ETF (TOTL) have been dubbed with the title according to Zacks’ Neena Mishra in her article, “2 New ETFs with Big Potential“, excerpts from the article are below. 

The ETF industry continues to grow exponentially, with a record $96 billion in global inflows during the first quarter, up more than 100% from a year ago. More than 70 ETFs have been launched in the US so far this year, taking the total number of ETFs to 1702 and total assets to over $2.1 trillion.

Below, we highlight two ETFs launched this year that stand out from the rest and in our view hold a lot of potential.

iShares Exponential Tech ETF (XT)

This ETF has attracted almost $647 million in assets since its inception in March, making it one of the most successful ETF launches. Investing in innovative technologies that have the potential to transform our lives is a very exciting concept. Further, this ETF includes not only developers but also users of promising technologies. So the coverage extends beyond the technology sector.

The idea for this ETF came from the famous financial advisor Ric Edelman and it is understood that some of the assets in this ETF came from his clients. Investors should note some of these disruptive technologies stocks have been quite hot lately and so this ETF is not really attractive looking at the valuation but companies focused on cutting edge technologies definitely have the potential to deliver superior return over time and this ETF could be a solid choice for long-term investing.

SPDR DoubleLine Total Return Tactical ETF (TOTL)

Bond markets have confounded most analysts and investors of late. Yields plunged last year when almost everybody was expecting them to go up. Over the past few months, the bond market has seen erratic swings and we have also seen substantial flattening of the yield curve.

As the Fed gets ready to raise interest rates, shorter-term rates have been going up but longer-term rates have actually declined, thanks mainly to massive demand from foreign investors since interest rates in Europe and Japan are so low.

To continue reading about these two standout new ETFs, click here

Fixed Income, Tech Talk

Corporate eBond Trading Chapter 8: InterDealer Broker GFI Up at Bat With Odd-Lot System

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MarketsMuse.com Fixed Income & Trading Tech update is without a rating and instead, takes a long view towards this week’s announcement from inter-dealer broker GFI Group launch of an electronic service for “dealers only” to trade odd lots of corporate bonds. For those not in the know, “odd-lot” is generally under $1million notional value.

This is not to suggest that GFI’s launch represents anything innovative; more than a few electronic platforms intended to make trading in corporate bonds easier have started up and since failed throughout the past 20 years, and GFI’s recent announcement is on the heels of six other announced initiatives during the past 3 years alone. The fact that GFI is aiming at the so-called underbelly or odd-lot marketplace puts them in competition with among others, multiple dealer pages on Bloomberg’s terminal farm, entrenched player MarketAxxes, and to a much lesser extent, the NYSE Bond system (“NYSE BONDS”) a platform that was first introduced around the same time as the Ford Edsel.

More interesting than the below “news flash” courtesy of TradersMagazine, readers following the “electronification of corporate bond trading” should borrow back from time and reflect on a report published in 2013 by McKinsey & Co. & Greenwich Associates (click on image below). Despite its aging, the white paper remains evergreen.

Electronic trading in the fixed-income market is about to take another leap into the digital age for those traders looking to execute non-standard order sizes, or odd-lots. GFI Group has announced a new electronic trading platform for odd lot corporate bonds in the U.S. Historically, odd lots have been traded via telephone and voice brokering. GFI’s new offering, available via CreditMatch, serves the dealer-to-dealer market for corporate bonds with a notional value of less than $1 million. Odd lot transactions represent almost 90% of the number of trades in the interdealer corporate bond market and almost 20% of the notional amount traded, according to FINRA. Effective today, the new service consists of an end of day odd lot matching session that provides instant executions via CreditMatch, GFI’s electronic trading system for corporate bonds and derivatives. The service will be extended into a fully executable Central Limit Order Book (CLOB) during the third quarter of 2015. Trades will be electronically posted to FINRA’s Trade Reporting and Compliance Engine (TRACE) and cleared by Pershing.

ebond trading marketsmuse mckinssey report

 

ETF News

ETFs Hit New Milestone As Individuals Put More Into ETFs Than Mutual Funds

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MarketsMuse blog update profiles the new milestone exchange-traded funds have reached as now more than ever, individual investors have pouring more money into ETFs than traditional mutual funds. This MarketsMuse blog update is courtesy of an analysis done by Broadridge Financial Solutions and found in the Wall Street Journal’s article, “A New Milestone for ETF Adoption“, with an excerpt below.

Individual investors have a lot more money invested in traditional mutual funds than in exchange-traded funds. But as people continue pumping dollars into ETFs, their ETF holdings grew by more in dollar terms than their mutual-fund investments over the year through March—apparently for the first time—according to an analysis by Broadridge Financial Solutions.

That conclusion is based on the company’s tally of fund and ETF holdings in accounts at “retail” companies, including full-service and discount brokerages, which cater to individual investors and their advisers. Broadridge, based in Lake Success, N.Y., sells communications and technology services to financial-services companies.

Individual-investor holdings of ETFs grew by $267 billion in the year through March, a 24.4% increase, according to Broadridge. Over the same period, individuals’ holdings of long-term mutual funds grew by $255 billion, or 5.6%, the company said.

“This is the first period in which we’ve seen that the actual dollar amount in the retail channel is higher in the ETF space than in the mutual-fund space,” says Frank Polefrone, senior vice president at Access Data, a Broadridge unit in Philadelphia. ”It’s a big shift over what we’d seen a year ago or two years ago.”

Broadridge has been tracking the data for more than four years.

To continue reading about the latest ETF milestone, click here.

ETF News

Twitter’s Weak Q1 Jolts Social ETFs

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MarketsMuse blog update profiles the disappointing Q1 for Twitter and the impact it is having on social media ETFs such as Renaissance IPO ETF (IPO), Global X Social Media Index ETF(SOCL) and ARK Web x.0 ETF (ARKW). This MarketsMuse update is courtesy of Zacks Equity Research and their article, “Twitter Tweets a Weak Q1 & Soft View, ETFs in Focus“, with an excerpt below. 

On April 28, Twitter (TWTR) came up with a weak Q1 and a disappointing guidance. The social networking site then saw a freefall in its share price as it failed to live up to many investors’ expectations.


Q1 in Detail

The company’s first-quarter 2015 non-GAAP loss per share (including the stock-based compensation expense) of 20 cents was a penny ahead of the Zacks Consensus Estimate. Excluding the stock-based compensation expense, the company earned 7 cents per share on a pro forma basis.

Revenues of $436 million in the quarter fell shy of the Zacks Consensus Estimate of $455 million. ‘A lower-than-expected contribution from newer direct response marketing products’ was held responsible for lower-than-expected revenues. However, revenues grew about 74% year over year.

Market Impact

This subdued performance dampened investors’ mood as the stock was severely beaten down in recent trading sessions. Following the earnings leak on April 28, about 40 minutes ahead of the closing bell, Twitter shares saw a landslide, plunging over 18% for the key trading session of April 28 on about fourth times the regular volume.

Shares slid about 8.9% on April 29. However, after such a massive sell-off for consecutive two days, Twitter stock recouped 0.94% after hours. Year to date, the stock is still up 8.3%.

Twitter does not have a sizable exposure in the overall ETF world with only three ETFs – Renaissance IPO ETF (IPO), Global X Social Media Index ETF(SOCL) and ARK Web x.0 ETF ((ARKW – ETF report)) – having major exposure of 8.17%, 3.66% and 3.20% respectively, at present. Such a huge fall in one of the major components should impact these ETFs.  Below, we have discussed these three funds in detail:

To continue reading about Twitter’s disappoint Q1’s impact on ETFs, click here

People Profiles, Tech Talk

Byrne’s Bitcoin Exchange Files $500 Million Offering of Virtual Shares

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MarketsMuse.com Tech Talk update profiles the latest development regarding Overstock.com’s CEO Patrick Byrne  plan for a cryptosecurity trading system “for brokerdealers” only and akin to the array of ECNs and ATS platforms that Fintech aficionados and broker-dealers  are already accustomed to.

The headline:

Overstock looks to issue Bitcoin-style stocks via new trading system; may issue up to $500 million in stock through blockchain-style technology

Overstock, the online retailer building a crypto-securities exchange, has revealed that it may issue up to $500 million in stock through blockchain-style technology.

Last year Overstock CEO Patrick Byrne hired developers and lawyers in an effort to create a platform – dubbed ‘Medici’ – that could use the core blockchain technology to create a cryptosecurity trading system, in which computer algorithms are used to trade virtual stocks issued by public companies.

The firm has now filed a prospectus related to the sale of securities with the Securities and Exchange Commission, adding: “We may decide to offer any of the securities described in this prospectus as digital securities, meaning the securities will be uncertificated securities, the ownership and transfer of which are recorded on a cryptographically-secured distributed ledger system using technology similar to (or the same as) the distributed ledger technology used for trading digital currencies.”

The prospectus says that these digital securities would not be traded on any existing exchange but on a specific system registered with the SEC as an ATS open only to subscribers that agree to trade exclusively through vetted broker dealers.

For the full story from Finextra.com, please click here

ETF News, People Profiles

CEO Believes The ETF, JETS, Will Have A Smooth Take Off

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MarketsMuse blog update profiles U.S. Global Investors CEO’s, Frank Holmes, interview with Forbes’ Trang Ho. Frank Holmes’s company is launching a new airline ETF, JETS, tomorrow, Thursday, April 29, 2015. After so many past airline ETFs have crashed and burned, Holmes highlights how JETS is different. This interview is courtesy of Forbes’ article, “Why This CEO Believes New Airlines ETF Will Soar Even Though Its Predecessors Went Down In Flames” with an excerpt below. 

Frank Holmes, the CEO and chief investment officer of U.S. Global Investors, believes he can soar where others went down in flames. Holmes is launching a new airlines exchange traded fund on the stock market Thursday — U.S. Global Investors Jets ETF (JETS) — even though its predecessors were shuttled to ETF heaven for lack of investor interest. His San Antonio, Texas-based mutual fund firm oversees $927 million in assets.

Guggenheim Airline ETF (FAA), which rolled out in January 2009, was canceled in March 2013 after attracting only $21 million in assets. Direxion Airline Shares Fund (FLYX) was grounded in October 2011 only 10 months after take off. Its $3 million in assets were peanuts compared to the $25 million to $30 million needed for an ETF to break even.

Why did you launch this ETF?

Holmes: We believe the time is right for an airline ETF.  Thanks to wide-ranging structural changes in the airline industry, both domestic and international airlines are currently seeing strong growth in profits as well as demand. Although airlines have undoubtedly benefited from falling fuel prices—airlines’ single greatest operating expense—other important factors are also at work, which enable them to remain profitable in a highly competitive industry.

On a personal note, after flying more than 100 times last year, and over 8 million miles for the past 25 years, I noticed that all the new fees associated with flying began adding up. That’s when I thought to myself, if I can’t beat them, I might as well join them.

To continue reading this interview from Forbes, click here

ETF News

Apple Low Sales Show In Tech ETFs

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MarketsMuse blog update profiles iPhone company’s, Apple, lacking in sales even with the new iPhone 6 and the recent release of the iWatch, effecting the tech ETFs. This MarketsMuse blog update is courtesy of ETFTrends’ Todd Shriber’s article “Ahead of Earnings, no Love for Apple ETFs”, with an excerpt from ETFTrends below.

ETFTrends-logoApple (NasdaqGS: AAPL), the world’s largest company by market value, reports fiscal second-quarter earnings after the close of U.S. markets Monday with analysts expecting per share earnings of $2.16 on revenue of $56.1 billion.

Should the reported numbers be close to or in-line with those estimates, Apple’s second-quarter results will lag the $3.06 per share on sales of $74.6 billion reported in the fiscal first quarter, turning investors’ attention to iPhone 6 and iPhone 6 Plus sales, Apple Watch comments and the company’s plans to return capital shareholders.

Apple reinstituted its dividend in the third quarter of 2012 after a 17-year hiatus. Since reintroducing the payout at 37.8 cents per share per quarter, Apple’s dividend has grown at an impressive clip to 47 cents a share per quarter.

It is not a stretch to say few companies’ earnings reports are as closely monitored and scrutinized as Apple’s, but even with the fervor leading up to the iPad maker’s latest batch of quarterly results, investors have been shying away from exchange traded funds with hefty allocations to the stock.

To continue reading about the fall of Apple’s sales and the effects it has on tech ETFs from ETFTrends, click here.