etfRadar
Issue No. 10 ISSN 2150-9166 European Edition
SM
June 2011
Magazine Index Investor
Stoxx Europe 600 Sector Map Tactical Portfolio Update ETF of the Month THE HOTSPOTS AT A GLANCE
Rankings The Global ETF Landscape At A Glance Spotlight Institutional Demand for ETFs Continues to Climb People ValĂŠrie Baudson Amundi ETF
Feature
Covered Call Plays www.etf-radar.com
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ETF Radar Magazine | Issue June 2011
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Fast Lane
Contents Issue June 2011 Global Summary
3
Industry Highlights Global Round-Up Top20 Global Index Provider Hot Product Debuts Upcoming Events Number Cruncher
Index Investor
6
Stoxx 600 Sector Map Tactical Portfolio Update ETF of the Month
Feature
8
10
Spotlight Institutional Demand for ETFs Continues to Climb
People
12
Valérie Baudson, Amundi ETF
Rankings
14
Assets under Management Change in ADV Change in AuM Best-Performer Worst-Performer
Covered Call Plays
Index Companies and People Adam Patti (pg. 12) Amundi ETF (pg. 13) Bank of Montreal (pg. 3) CBOE (pg. 8) CETFA (pg. 3) Claymore (pg. 3) Commerzbank (pg. 4) Deutsche Bank (pg. 3) ETF Securities (pg. 3) Falcom FS (pg. 3) First Asset Capital (pg. 3) Greenwich Ass. (pg. 10) Horizons (pg. 3)
IndexIQ (pg. 4) Ivesco PowerShares (pg. 3, 4) Invesco Trimark (pg. 3) Morgan Stanley (pg. 3) SSgA (pg. 4) Standard Chartered (pg. 3) Valérie Baudson (pg. 13) Van Eck (pg. 3)
Get In Touch NORTH AMERICA americas@etf-radar.com Naples (FL) +1 239 384 6090 EUROPE, MIDDLE EAST and ASIA-PACIFIC europe.asiapacific@etf-radar.com London +44 203 519 1179
Dear Reader, The global ETF and ETP industry saw record net inflows totaling USD 25.3 Bn. in April. Little wonder, that worries and concerns have begun to multiply. As we reported in the last issue, three supranational bodies (FSB, IMF and BIS) warned over risk associated with ETFs. The main critic came on sec lending and swap-based products. Meanwhile the discussions instantiated by the “big three regulators” calmed down but a new aspect in trading ETFs appeared. The latest discussions focus on shorting ETFs: Secondary trading activity of ETFs brings with it the possibility that market participants will short the ETFs themselves. There is no real limit to the short selling which is possible in an ETF in the same way that there is with stocks. In an ETF a short seller could mostly rely on the process of creating shares in the ETF to ensure he can deliver. This could lead to the possibility that a buyer of an ETF share is buying from a short seller and that no new share has yet been created. The short interest data captured in the US-listed securities reflects the exact number of shares that have yet to be repurchased to give back to lenders. Currently, there are short-selling levels of up to 340% like in the SPDR S&P Retail ETF. Some of these funds show a significant short-ratio over a couple of months. Hence “short” means sometimes long. But this may lead to some problems and surprises – especially in choppy markets. As investors may face new fears in the near future (thanks to Greece, our feature story covers the pros and cons when using ETFs for covered call writing strategies. These strategies have advantages but also drawbacks – like shorting ETFs. Enjoy reading and let us know your thoughts.
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ETF Radar Magazine | Issue June 2011
Silvan Schelling Head of Relationship Management 3
Global Summary Industry Highlights
ted leec Fo
S
► OVERALL MARKET
At the end of Q1 2011, there were 549 ETFs/ETPs providing exposure to various emerging and frontier markets indices, with 1,119 listings and assets of US$246.4 Bn3 from 110 providers on 40 exchanges in 34 countries. The number of products increased by 7.0% YTD, from 513 at year end 2010 to 549 at the end of Q1 2011. Assets in ETFs/ETPs providing exposure to emerging markets indices decreased by 0.5% YTD to US$246.4 Bn, compared to a 1.7% rise in the MSCI Emerging Markets Index in US dollar terms over the same period.
u rf
ts en Ev
nt ve e ll
i ls ta de
radar. w.etf-
com
TORONTO Canada Cup of Invest. Mgnt. 07–08 June 2011 InterContinental
► HIGH YIELD INFLOWS SURGE, BLEEDING IN COMMODITY ETP DIDN‘T STOP
High yield bond ETP inflows surge while yields sink to record lows. According to recent estimates, High yield fixed income ETPs gathered $3.5bn in new cash in the first five months of this year, running well ahead of 2010 when they attracted $6.5bn over the whole year (see also ETF Radar Magazine, Issue May 2010).
p
the isit v se lea
w on w tion c e nt s eve
CHICAGO Morningstar Investment Conference 8-10 June 2011 McCormick Place
The bleeding in commodity-related exchange-traded products didn’t entirely stop last week, but it sure slowed down. Investors took out a relatively modest $280 million from said ETPs, dropping total assets to $161 billion. But assets are actually about $1 billion higher than last week, due to modest gains in most commodity prices.
Global Round-Up ► US: FIRST ETF LINKED TO MONGOLIAN STOCKS
► CANADA: CETFA SEEKS NEW MEMBERS
► MIDDLE EAST: OMAN ETF STOPPED
Van Eck Global is seeking to roll out a new Mongolia fund. The Market Vectors Mongolia ETF will hold at least 80% of its assets in companies either based in or listed in Mongolia, or based elsewhere but derive at least half their revenues from business activities in Mongolia. The Central-Asian country owns large amounts of commodities like coal, gold and copper.
Canadian ETF Association (CETFA) is seeking to expand its membership. The newly launched lobby group currently has Bank of Montreal ETFs, Claymore Investment and Horizons ETF as members. First Asset Capital and Invesco Trimark are also expected to join CETFA. The group has extended an open invitation to iShares. CETFA is also considering discussing ETF classification by different classification services.
Falcom Financial Services has postponed the launch of Oman's first ETF. The Saudi investment bank is yet to receive an approval from the Capital Market Authority regarding the launch. The firm cited unfavorable market conditions and the tense political environment in the region as the cause for the delay. Falcom launched its first ETF in Saudi Arabia last year.
► US: NEW DOLLAR CURRENCY ETNS LAUNCHED
Deutsche Bank and Invesco PowerShares announced the launch of two new ETNs, which are designed to provide triple long and triple short exposure to futures contracts on the US Dollar Index, an index designed to reflect the value of the US dollar compared with six of the world's most traded currencies. Trading symobls are UUPT and UDNT.
4 ETF Radar Magazine | Issue June 2011
► EUROPE: WORLD‘S
FIRST RHODIUM ETC LAUNCHED Deutsche Bank AG launched the world‘s first physical rhodium ETC. The product is 100% backed by physical rhodium and is designed to track the dollar spot price, minus fees (0.95% p.a.). The physical rhodium that backs the ETC will be kept with Johnson Matthey in the UK.
► ASIA-PACIFIC: INVESTORS HUNGRY FOR SECTOR ETFS
Investors in Asia need more sectorfocused ETFs to facilitate tactical asset allocation in regional investments, said market strategists from Dt. Bank, Standard Chartered and Morgan Stanley at the Dynamic Asset Allocation conference in Hong Kong. Hopefully some issuers jump on the bandwagon – and gather assets in local sector ETFs.
Global Summary HONG KONG ETF Index Investment Summit 2011 31 Aug. - 1 Sept. 2011 JW Marriot Hotel
Top10 Global Index Provider (Ranked by AuM)
MSCI 25.5% S&P 23%
SINGAPORE World Islamic Conference 8-9 June 2011 Pan Pacific Hotel
Barclays Capital 8.1% STOXX 7.2% ↑ Russell 6% FTSE 4.3% → Dow Jones 3.8% → Markit 3.3% NASDAQ OMX 2.6%
FRANKFURT ETF & Indexing Deutschland 20-22 June 2011 Radisson Blu Hotel MADRID ETF & Indexing Espana 15-16 Jun 2011 Melia Ave. America Hotel
NYSE Euronext 1.2% ↑ Other 15.0%
Number Cruncher
Hot Product Debuts
1455 bps.
62.43%
Yield spread of crippled Greek vs. German 10-year bonds as of May, 27 2011.
Best 1 Month performance in May 2011, achieved by ProShares Ultra Silver ETF.
Sources: Event organizers, Reuters, BusinessWire, BlackRock, ETF Radar Global Research
► FIRST WAVE OF NEW SPDR ETFS
► HK SMALL CAP ETF LAUNCHED
► FIRST S-DAX ETF LAUNCHED
► NEW
State Street Global Advisors has launched eight new ETFs at Deutsche Börse's Xetra platform. The portfolio includes seven equity-index ETFs and one bond-index ETF. The launch also includes five emerging markets equity ETFs, as well as the first local currency emerging market debt ETF to be listed in Europe. SSgA’s ETFs are intended as the first wave of a fresh assault on the European market.
IndexIQ recently launched the first ETF dedicated to providing access to Hong Kong’s dynamic small-cap sector. HKK‘s expense ratio is fair priced compared to already available HK bluechip ETFs. The fund has a strong exposure to Consumer Discretionary stocks and Financial companies. Investors should be aware of that this ETF trades small cap equities. Hence in volatile times increased spreads are possible.
Commerzbank, Germany's second largest bank, has launched an ETF linked to the country's S-DAX, making it the first product worldwide to replicate the small-cap index. The ComStage ETF SDAX TR replicates the performance of the SDAX, which comprises 50 German smallcaps stocks. ComStage, Commerzbank's ETF brand, has ca. USD 9.2 billion assets under management, making it Europe's seventh-largest ETF player.
Invesco PowerShares is launching the PowerShares Convertible Securities ETF. The fund, which is likely to issue monthly distributions, will be linked to the BofA ML All U.S. Convertibles Index and will invest at least 80% of its assets in the component securities that comprise the convertibles index, which is designed to track the performance of USDdenominated investment grade and non-investment grade convertible.
Ticker/ISIN: IE00B3YLTY66 TER: 0.55% - 0.65% p.a. CCY: USD
Ticker/ISIN: HKK TER: 0.69% p.a. CCY: USD
Ticker/ISIN: LU0603942888 TER: 0.70% p.a. CCY: EUR
Ticker/ISIN: CVRT TER: 0.35% p.a. CCY: USD
CONVERTIBLE ETF
5 ETF Radar Magazine | Issue June 2011
Index Investor Stoxx 600 Sector Map
European investors shift their sector preferences by Sebastian Stahn In May the STOXX 600 Index fell -0.96%. Is 2011 once again a year that approves the phrase “Sell in May and go away”? Having a look at the sector performances you can clearly see a beginning sector rotation as market participants believe that the economy is moving from late expansion to early contraction. Usually basic materials and energy stocks perform best in late expansion and consumer staple stocks best in early contraction. Exactly this situation appeared in
The Action Plan
May. The Automobiles and Parts Index was the worst performing with a loss of -3.83% in May 2011. If investors believe in a recovery, the contrarian pick with the ComStage ETF STOXX Europe 600 Automobiles & Parts (LU0378435043) would be the best choice. Best performing sector with a performance of +6.47% in May 2011 was the STOXX 600 Health Care Index. If you believe in an ongoing trend, the db x-trackers STOXX Europe 600 Health Care ETF (LU0292103222) would be your best pick. . n
CONTRARIAN PICK
BEST-TREND PICK
ComStage ETF STOXX® Europe 600 Auto & Parts ISIN/Ticker: LU0378435043 TER / AUM: 0.25% / 22mn. 1 Year Return: +46.39% Last Price/High/Low 52-Weeks: EUR 50.70 / 34.22 / 53.80 Replication: Synthetic
db x-trackers STOXX Europe 600 Health Care ETF ISIN/TIcker: LU0292103222 TER / AUM: 0.30% / 231.8mn. 1 Year Return: +19.33% Last Price/High/Low 52-Weeks: EUR 61.39 / 50.97 / 61.39 Replication: Synthetic
RISK-REWARD-ANALYSIS
RISK-REWARD-ANALYSIS
based on an investment horizon of one month
HIG CBSXAR.GY
WORST PERFORMING SECTORS
Automobiles & Parts –3.83%
Chemicals –2.45%
–0.79%
Retail +3.80%
Basic Resources –2.53%
Technology –1.06%
Oil & Gas –3.51%
Telecommunications –2.53%
Industrial Goods & Services –0.97%
Travel & Leisure +0.72%
Real Estate +1.78%
Personal Goods & Household +3.51%
Health Care +6.47%
rform ance
. As o f Ma
y 31,
ETF Radar Magazine | Issue June 2011
Utilities –3.58%
LOW
Food & Beverage +4.00%
Mon thly P e
6
Insurance –3.68%
Construction & Mat. –3.22%
Media –2.06%
XSDR. GY
HIGH
LOW
Banks –3.31%
Financial Services
based on an investment horizon of one month
2011 .
BEST PERFORMING SECTORS
Index Investor Tactical Portfolio Update
Bullish outlook for Health Care and Consumer Staples by David Cohne QUICK FACTS ► Health Care Stocks still with high upside potential. ► Despite the crisis in Southern Europe, the consumer sector remains attractive .
The ETF Radar Tactical portfolio is a model portfolio that invests in five ETFs based on an individual tactical ETF rankings system maintained by Cohne Investment Group. The portfolio trades at the end of each month. The holdings for June include SPDR MSCI Europe Health Care (FR0000001737), Amundi ETF MSCI Switzerland (FR0010655753), SPDR MSCI Europe Consumer Staples ETF (FR0000001745), Lyxor ETF MSCI Europe Real Estate
(FR0010833558) and SPDR MSCI Europe Small Cap ETF (FR0010149880). European stocks fell this week and the Euro tumbled with Greek sovereign debt fears coming back to the fore and recent economic data signaling that the recovery of developed economies may not be as robust as thought. Meanwhile, Moody's cut its rating on Greece by three notches to Caa1. Hence we expect that the markets become shaky and volatitlity levels may increase. Based on the rankings SPDR MSCI Europe Health Care ETF is the ETF of the month. The fund is dominated by three well-known pharma stocks: Novartis (16,11%), its local rival Roche (14,65%) and GlaxoSmithKline
(14,60%). Most pharma stocks in the MSCI HC Index have performed very well since April and the investment outlook remains bullish for the next months. From a technical point of view, the above mentioned trio may climb above their current resistance levels. n ETF of the Month SPDR MSCI Europe Health Care ETF (FR0000001737) 52-Week Range Market Cap Dividends TER Last Volume ETF Issuer Replication
$62.55-$51.61 $43.6 million 0.30% p.a. n/a SPDRs Europe Full Replication
ETF Radar Tactical Portfolio TICKER FR0000001737 FR0010655753 FR0000001745 FR0010833558 FR0010149880
ETF NAME SPDR MSCI Europe Health Care ETF Amundi ETF MSCI Switzerland SPDR MSCI Europe Consumer Staples ETF Lyxor ETF MSCI Europe Real Estate SPDR MSCI Europe Small Cap ETF
TER 0.30% 0.25% 0.25% 0.40% 0.40%
AUM WEIGHT $43.6 million 20% $51.7 million 20% $20.3 million 20% $31.0 million 20% $5.3 million 20%
Source: Cohne Investment Group, exclusively for ETF Radar / June 1, 2011 Ranking
7 ETF Radar Magazine | Issue June 2011
Feature
HIG
H
Covered Call Plays One way to add some protection to your portfolio is by employing a covered call strategy. ETFs offer an easy way to add buy-write insurance to a portfolio – espcially in a gradually rising or choppy market. But there are also some drawbacks. by David Cohne QUICK FACTS ► Increasing fears among investors may lead to shaky markets in the near future. ► Implementing covered call strategies would allow investors to hedge their portfolio partly against a drop-down of the markets. As we come to the mid way point of the year, we can see the market has essentially moved sideways with high volatility. As of May 26th, the S&P 500 is up over 5% for the year. The CBOE VIX volatility index trades currently at 15 points which is pretty close to all time low of 2007. The major question is “how will the market perform through the next quarter?” No one can say there isn't a lot on the minds of the average investor. The pressing questions are: Will gas prices stay at their current level or possibly increase? Will the U.S. and world economies continue to grow? How will the unemployment situation shake out through the remainder of the year? Employers in the States probably hired fewer workers in May 2011 and factory orders grew at the slowest pace in 8 ETF Radar Magazine | Issue June 2011
seven months, some economists argued. The market has experienced a drawback in May due to these concerns. First quarter U.S. GDP growth was weak at 1.8% and global unemployment and housing concerns persist. New fears in the markets One of the bigger issues is the European debt crisis. Chances are increasing that Greece will have to renegotiate debt. Credit spreads of Greek government bonds soared. European Central Bank Board member Lorenzo Bini Smaghi said recently that talk about Greece reneging on debt commitments “has been very damaging” and suggested “that investing in the euro area is unsafe.” Even for a country that flouted eurozone fiscal rules for a decade, “a debt restructuring, or exiting the euro, would be like the death penalty – which we have abolished in the European Union,” he said. The ECB has already bought about 45 billion euros in Greek government bonds in the past year but Bini Smaghi said the impact of a default would fall largely on eurozone national >
Feature central banks, rather than the ECB, and ultimately on taxpayers. “We care about taxpayers’ money and this is why we warn against restructuring. We seem to be the only ones,” he said. On Wednesday, Moodys downgraded Greece's local and foreign currency bond ratings deeper into junk status, citing heightened risk that the country will fail to stabilise its debt position without a debt restructuring.
“
This strategy provides insurance for your portfolio by reducing volatility and increasing income.
”
Portfolio insurance – for sideway markets Many of these factors could lead to a drop in the markets or markets could trade sideways. One way to add some protection to your portfolio is by employing a covered call strategy. This works well in sideways markets. A covered call or buy-write is a strategy when you go long on a security or index and sell call options on that same security or index. This provides some insurance for your portfolio by reducing volatility and increasing income. One word of caution: Your returns will be less on the upside and that this won't provide you a full hedge. It's a strategy that can be used in conjunction with other hedges such stop losses, inverse ETFs and cash.
BETTER BUT NOT BEST Performance Comparison Of Selected Buy-Write ETFs vs. S&P500 Performance (USD)
2007
2008
2010
2009
2011 0%
BWV
-10%
-20%
PBP HYG S&P500
-30%
-40%
-50%
-60% Source: Teledata as of May 30, 2011
What is a buy-write index? Implementing this strategy can be difficult in a retail account since the need for a margin account setup. This is solved by investing directly in a covered call ETF. Currently you can track the S&P 500 Index with two exchange traded products linked to the CBOE S&P 500 BuyWrite Index, commonly known as the BXM Index. This is a benchmark index designed to track the performance of a hypothetical buy-write strategy on the S&P 500 Index. The BXM is a passive total return index based on buying an S&P 500 stock index portfolio, and "writing" (or selling) the near-term S&P 500 Index "covered" call option, generally on the third Friday of each month. The SPX call written will have about one month remaining to expiration, with an exercise price just above the prevailing index level (i.e., slightly out of the money). The SPX call is held until expiration and cash settled, at which time a new one-month, near-the-money call is written. First ETF we analyzed is the PowerShares S&P 500 Buy/Write ETF (PBP) and second is the iPath CBOE S&P 500 BuyWrite ETN (BWV). The ETN has a 30year maturity and is a senior, unsecured, unsubordinated debt security issued by Barclays Bank. PowerShares had also launched an ETF that tracked the NASDAQ 100, but has since liquidated it. ETFs to Watch The PowerShares S&P 500 BuyWrite Portfolio (PBP) tracks the CBOE S&P 500 BuyWrite Index. It was launched on 12/20/2007. PBP has an expense ratio of 0.75% p.a. and $118 Million under management. Top holdings include Exxon Mobil Corp. (XOM), Apple Inc. (AAPL), Chevron Corp. (CVX), General Electric Co. (GE) and International Business Machines Corp (IBM). Technology and financials are the largest sectors of the portfolio which is up 2.9% for the year through May 26th. Investors morely exposed to the European markets should think aobut Lyxor‘s ETF DAXplus Covered Call (DE000A0C4BY2). This fund tracks the performance of the DAXplus Covered Call strategy index. The ETF is listed on Frankfurt stock exchange and has an expense ratio of 0.45% p.a. – much lower than its peer linked to the BXM. The basic idea behind this index is mostly the same. The preceding funds offer an easy way to add buy-write insurance to your portfolio. Nevertheless you should remind that hedging has drawbacks. As mentioned above, both ETFs work best in a gradually rising or choppy market. Indeed, both products will probably underperform when the volatility is low and investor sentiment is high. n
9 ETF Radar Magazine | Issue June 2011
Spotlight
HIG
H
% Institutional Demand for ETFs Continues to Climb ETFs are playing an increasingly important role in the portfolios of U.S. institutional investors. More and more institutional investors are adopting ETFs as a flexible, multipurpose tool. The perception of ETFs as a retail product seems clearly out of date. by Tom Benson A recent investment study, performed by Stamford-based Greenwich Associates, reveals that institutionals are increasingly bullish on using Exchange-Traded Funds in their portfolios. Nearly one-half of the asset management firms and onethird of the institutional funds taking part in the study of current institutional ETF users, plan to increase the share of portfolio assets they invest in ETFs over the next two years. The research paper‘s outcome is based on interviews conducted between February and April 2011 with 45 institutionals, including corporate pensions, public pensions, endowments and foundations, as well as 25 large asset management firms in the United States. 10 ETF Radar Magazine | Issue June 2011
Institutionals bullish on ETFs Nearly 50% of asset management firms interviewed expect to increase portfolio allocations to ETFs between now and the year 2013. Of those, slightly more than half expect to increase ETF allocations by 5% or more. More important: Not a single asset manager plans to cut ETF allocations in the coming two years! About 60% of asset managers said, they use ETFs to add alpha through tactical applications and about a quarter use them to achieve strategic allocation ranges.
trader at an asset management firm with more than USD 250 billion AuM explained “If we have a fund with inflows, we may buy an ETF before we decide to invest in an underlying area. It's a far better option than parking the money in cash.” Approximately 45% of participating institutional funds and 40% of asset managers use ETFs as part of their regular rebalancing procedures. Roughly 45% of participating institutional funds and 40% of asset managers use ETFs to make tactical adjustments to their portfolios.
Multiple Usage More specifically, institutions use ETFs for several critical functions. 75% of the asset managers and half of the institutional funds use ETFs for cash equitization or interim beta. A head
Perfect heding instrument In addition to the largely tactical uses, study respondents also note using ETFs for more strategic purposes, such as hedging. In particular, 30% of participating asset managers and
Spotlight
about 1 in 10 institutional funds use ETFs as part of hedging programs. A quoted study participant from a $450 million cultural endowment explains the role ETFs play in his fund's hedging strategies. The fund views its $20 million investment in a gold ETF as long-term investment and a core part of its overall hedging program.
BEYOND OLD SCHOOL ASSET MANAGEMENT ETF Applications in Institutional Portfolios Transitions Cash equitization Rebalancing Tactical adjustments Core/Satellite Portfolio completion Hedging ETF overlay/Liquidity
w i t h a p p r ox i m a t e l y 8 5 % o f participating asset managers and 78% of participating institutional funds purchasing iShares ETFs. Among asset managers, 55% of participants use SPDRs (State Street Global Advisors), 45% use Vanguard, and 35% use BLDRs/Powershares. Among institutional funds, 44% use SPDRs, 29% use ETFs of Vanguard, and 7% use BLDRs/Powershares. Three factors in focus Asset managers focus on three additional factors when assessing potential ETF providers: tracking error (cited by 63% of asset managers), expense ratios (cited by 58%), and the benchmarks used by the provider in individual funds (cited by 47%). Rounding out the top five factors considered by asset managers when selecting an ETF provider is the overall strength of the fund company and management behind the funds.
Institutional Funds Asset Managers
Other 0% 20%
40%
60% 80%
Source: Greenwich Associates as of May, 2011
MOSTLY A SHORT TIME INVESTMENT
For institutional funds, expense ratios almost match liquidity in terms of importance when selecting an ETF provider or a specific ETF product. Almost 60% of institutional funds include expense ratios in their list of the three most important factors considered when assessing ETF providers. Ranked a close third in importance in picking an ETF provider is tracking error, which is cited as an important selection criterion.
THE KEY FACTORS FOR INSTITUTONLAS Most Important Selection Criteria Liquidity/trading volume
Expense ratio of fund
Tracking Error
Fund company and management behind funds
Track record of fund
Typical ETF Holding Period Benchmark used
Short holding periods In keeping with the tactical applications favored by asset managers, 40% of participating professionals said they typically hold ETF investments for 1–6 months and 40% say their typical holding periods are shorter than one month. In contrast, about a quarter of participating institutional funds report average holding periods of 1–6 months, a quarter typically hold ETF investments for 7–12 months, and slightly more than one-third report average holding periods of a year or more. Top ETF Providers to U.S. Institutional Investors Given the importance of scale and trading volume in the ETF business, a few very large providers dominate the institutional market. The boss among them is iShares/BlackRock,
Institutional Funds Servicing by sponsoring company
12% Breadth of ETF offerings
38%
24% 0%
25%
50%
75% 100%
Source: Greenwich Associates as of May, 2011
26%
Asset Managers
Institutional Funds Asset Managers
Up to 1 month 1 – 6 months 7 – 12 months 1 year and longer
18% 41% 41%
Source: Greenwich Associates as of May, 2011
Finally, the perception of ETFs as a retail dominated product is (more or less) clearly out of date. ETFs have slowly but steadily gained acceptance as an important multi-purpose tool in institutional portfolios – but not only in the US. The survey shows that institutionals with experience using ETFs in their portfolios will increase their level of investment and activity in ETFs in the next few years. Hence the ETF industry should be well prepared for more, good questions and requests from increasingly sophisticated product users. n 11
ETF Radar Magazine | Issue June 2011
People Expert Talk with
´ Valerie Baudson Managing Director, AmundiETF The Grand Dame of Europe‘s ETF business talks about monitoring of bid/offer spreads , pragmatic approaches and provides a preview about Amundi‘s next product wave.
by Silvan Schelling
VITA ► Born: 1971 ► Lives in: Paris Area ► Career:Valérie has been Managing Director of Amundi ETF since December 2007. Amundi is one of the largest asset managers in the world with almost €700bn of AUM. It is 75/25% owned by Credit Agricole and Societe Generale. Prior to joining Amundi, Valerie spent eight years at Crédit Agricole Cheuvreux, the European stockbroking subsidiary of Crédit Agricole Group. From 2004 to 2007, she was Marketing Director and a Member of the European Management Committee and from 2001 to 2004 she held the position of Company Secretary and was a Member of the Management Committee. Valérie joined Crédit Agricole Cheuvreux in 1999 as Project Manager for the Senior Management team. Valérie started her career at Banque Indosuez where she managed international audit missions from 1995 to 1999. She is a graduate from HEC (Haute Ecole de Commerce, Paris) where she majored in Finance. ► My first ETF, I bought in June 2008 ► My favourite investments: Amundi ETFs
12 ETF Radar Magazine | Issue June 2011
The average total expense ratio for your products amounts to 27 basis points against an average of 36 bps for rival European providers. Also Amundi has a smallerthan-average tracking error against most competitors. What is the secret behind these figures? Right at the beginning, when we launched Amundi ETF in September 2008, we decided to implement a competitive pricing strategy. Cost is a key criteria when selecting an ETF; our TER is on average 25% lower than that of our competitors. And, in addition to TERs, we carefully monitor bid/offer spreads with our market makers to make them as tight as possible. We set up very close relationships with market markers such as Morgan Stanley, Merrill Lynch and Goldman Sachs, selected for their ETF trading experience and quality of service. Which replication method you implemented for your ETFs? We decided to favour synthetic replication at it produces the lowest tracking error as well as the lowest costs to investors.
Recently Amundi was associated with a "price war over European ETFs". Is Amundi the coming Tesco of the ETF business? Our primary concern is to offer European institutional investors a cost efficient with high quality standard to answer their needs. The quality of our products is reflected through the choice of the index used as well as the quality of replication, ie tracking error. We also commit to filling in the gaps in the market by launching innovative products. We take a very pragmatic approach to innovation - innovation does not mean complexity.
“
We take a very pragmatic approach to innovation innovation does not mean complexity.
”
Who is Amundi's primary swap counterpart for the synthetic (swap) replicated products?
People
All our Equity, Commodity and Money Market ETFs use Crédit Agricole CIB as a counterparty whereas Société Générale CIB acts as counterparty on our Fixed income ETFs. Who are your main investment clients (institutionals, IFAs, Private Investors)? Our European client base is composed mainly of institutional investors (asset managers, including balanced and multi-management teams, pension funds, insurance companies etc). This is in line with the rest of the European ETF market, w h i c h i s m a i n l y d r i ve n b y institutional investors. In which of your ETFs, you have seen the most inflows within the last weeks – and which ETF saw the most redemptions? The Eurostoxx 50 has been the most popular and this is consistent with the market trend. We have also had particular success with the MSCI Nordic, S&P500 and on the fixed income side, Euro corporate and Short US treasury ETFs. The main outflows were on some Emerging market exposures.
“
ETFs. We will continue to cross-list and register our products on the main European Stock Exchanges which are France, Germany, Italy, Switzerland, the Netherlands and the UK. In May, we made our debut in the United Kingdom with the listing of 16 ETFs on the London Stock Exchange. We expect to launch approximately 50 ETFs in the UK over the next 3 months.
“
We expect to launch approximately 50 ETFs in the UK over the next 3 months.
”
Which ETFs an investor should consider currently and why? This all depends on the investor's strategy and objectives. Amundi's strategists believe that the context is still favourable to equities, especially in the US and the euro zone. They also feel that the global picture is still credit friendly. Thank you! n
Our European client base is composed mainly of large Institutional Investors.
”
Are there any plans to list further ETFs the next time? Into which asset classes you want to expand? We currently have a range of over 100 products which cover the main asset classes. We plan to launch around 15 products during the course of 2011. Our latest launch was early May on Euronext Paris and was composed of 2 Euro Corporate financial and ex financial ETFs as well as Emerging Latin America and Emerging Asia
Across the Atlantic:
People
Interview with Adam S. Patti, IndexIQ in the Magazine’s North American Edition. www.etf-radar.com 13
ETF Radar Magazine | Issue June 2011
Rankings
In association with
Top 25 ETF providers around the world ranked by Assets under Management As at end April 2011
WORLDWIDE Apr 11
YTD change
# ETFs
AUM (US$ Bn)
% total
ADV (US$ Bn)
% ETFs
AUM (US$ Bn)
iShares
467
$636.9
43.3%
$16.1
19
State Street Global Advisors
123
$210.2
14.3%
$23.4
49
-6
-1.3%
10
8.8%
Vanguard
66
$173.1
11.8%
$1.5
1
1
Lyxor Asset Management
159
$57.4
3.9%
$0.8
1
db x-trackers
187
$54.8
PowerShares
131
$50.7
3.7%
$0.7
3.5%
$2.9
Van Eck Associates Corp
33
$23.2
1.6%
ProShares
107
$23.2
Credit Suisse Asset Management
58
Nomura Asset Management
32
Provider
Zurich Cantonal Bank
# planned # ETFs
% AUM
% market share
$58.3
10.1%
-0.8%
$19.5
10.2%
-0.2%
1.5%
$24.6
16.6%
0.5%
3
1.9%
$4.1
7.6%
-0.2%
18
8
4.5%
$5.7
11.6%
0.0%
48
1
0.8%
$7.9
18.5%
0.2%
$0.9
36
4
13.8%
$3.3
16.3%
0.1%
1.6%
$2.6
93
7
7.0%
$1.6
7.3%
-0.1%
$18.1
1.2%
$0.1
0
4
7.4%
$2.5
15.9%
0.0%
$15.2
1.0%
$0.1
2
0
0.0%
-$1.2
-7.6%
-0.2% 0.1%
7
$14.2
1.0%
$0.1
0
0
0.0%
$2.4
20.5%
46
$12.2
0.8%
$0.2
71
2
4.5%
$2.3
23.0%
0.1%
1
$12.1
0.8%
$0.5
0
0
0.0%
-$0.1
-0.9%
-0.1%
UBS Global Asset Management
42
$10.8
0.7%
$0.0
3
13
44.8%
$4.2
64.3%
0.2%
Amundi ETF
95
$9.9
0.7%
$0.1
0
3
3.3%
$2.7
38.1%
0.1%
Commerzbank
90
$9.8
0.7%
$0.1
0
0
0.0%
$1.2
13.5%
0.0%
HSBC/Hang Seng
31
$8.2
0.6%
$0.1
3
14
82.4%
$0.9
11.5%
0.0%
First Trust Advisors
57
$8.0
0.5%
$0.1
4
14
32.6%
$2.6
47.6%
0.1%
Source Markets
62
$7.8
0.5%
$0.4
15
6
10.7%
$2.9
57.9%
0.2%
ETFlab Investment
40
$7.4
0.5%
$0.1
0
5
14.3%
$0.7
9.8%
0.0%
Nikko Asset Management
20
$6.6
0.5%
$0.1
0
3
17.6%
$0.1
1.2%
0.0%
Claymore Investments
30
$6.5
0.4%
$0.0
5
1
3.4%
$1.0
18.5%
0.0%
Direxion Shares
42
$6.5
0.4%
$2.0
174
3
7.7%
-$0.1
-1.2%
-0.1%
EasyETF
48
$6.4
0.4%
$0.0
1
-1
-2.0%
$0.9
16.1%
0.0%
Rydex SGI
25
$5.6
0.4%
$0.1
95
1
4.2%
$0.6
12.6%
0.0%
WisdomTree Investments Bank of New York
Source: BlackRock Global ETF Research and Implementation Strategy Team
14
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ETF Radar Magazine | Issue June 2011
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Rankings Top 10/Top 5 ETFs by Assets under Management As at end April 2011
UNITED STATES ETF SPDR S&P 500 Vanguard MSCI Emerging Markets ETF iShares MSCI Emerging Markets Index Fund iShares MSCI EAFE Index Fund iShares S&P 500 Index Fund PowerShares QQQ Trust iShares Barclays TIPS Bond Fund Vanguard Total Stock Market ETF iShares Russell 2000 Index Fund iShares Russell 1000 Growth Index Fund
Bloomberg ticker SPY US VWO US EEM US EFA US IVV US QQQ US TIP US VTI US IWM US IWF US
AUM (US$ Mn) $95,287.1 $49,449.5 $41,760.0 $41,350.5 $29,024.4 $27,244.7 $20,475.7 $20,237.9 $19,144.0 $13,859.9
ADV ('000 shares) 131,642 15,088 51,364 12,886 2,830 47,605 673 1,292 46,905 1,748
ADV (US$ Mn) $17,532.1 $752.5 $2,536.2 $791.2 $384.5 $2,748.6 $73.9 $89.1 $3,946.7 $106.2
Bloomberg ticker IUSA LN ZGLD SW DAXEX GY MSE FP IEEM LN XDAX GY ISF LN SX5EEX GY XMEM GY IBCS GY
AUM (US$ Mn) $9,933.5 $8,547.4 $8,316.5 $7,321.5 $7,080.7 $6,638.8 $6,306.9 $5,976.7 $5,606.7 $4,849.0
ADV ('000 shares) 7,338 11 2,886 2,164 1,509 1,236 7,416 1,455 1,476 134
ADV (US$ Mn) $96.8 $25.9 $287.1 $95.4 $72.6 $131.8 $74.6 $63.8 $67.2 $23.5
Bloomberg ticker STX40 SJ STANSX SJ STXDIV SJ STXFIN SJ BIPINF SJ
AUM (US$ Mn) $1,014.8 $369.0 $160.0 $126.8 $126.5
ADV ('000 shares) 1,338 84 959 68 29
ADV (US$ Mn) $6.0 $0.1 $0.2 $0.1 $0.1
Bloomberg ticker 2823 HK 2800 HK 2833 HK 510050 CH 2828 HK 159901 CH STW AU 2821 HK 069500 KS 0050 TT
AUM (US$ Mn) $7,900.2 $7,419.8 $3,996.9 $3,266.3 $2,726.3 $2,679.7 $2,529.9 $2,434.8 $2,275.0 $1,958.6
ADV ('000 shares) 88,878 20,636 48 367,639 1,834 489,427 360 4 1,356 19,597
ADV (US$ Mn) $151.5 $63.6 $1.5 $119.4 $31.6 $59.6 $18.1 $0.5 $36.9 $42.6
Bloomberg ticker 1321 JP 1306 JP 1330 JP 1308 JP 1305 JP
AUM (US$ Mn) $6,923.5 $6,814.5 $3,113.7 $3,036.8 $2,655.6
ADV ('000 shares) 402 2,422 416 501 624
ADV (US$ Mn) $49.7 $26.0 $51.6 $5.3 $6.7
EUROPE ETF iShares S&P 500 ZKB Gold ETF (CHF) iShares DAX (DE) Lyxor ETF Euro STOXX 50 iShares MSCI Emerging Markets db x-trackers DAX ETF iShares FTSE 100 iShares EURO STOXX 50 (DE) db x-trackers MSCI Emerging Market TRN Index ETF iShares Markit iBoxx Euro Corporate Bond
MIDDLE-EAST/AFRICA ETF SATRIX40 STANLIB SWIX 40 Fund Satrix Dividend Plus SATRIX Financials Bips Government Inflation Linked Bond Fund
ASIA-PACIFIC ETF iShares FTSE A50 China Index ETF* Tracker Fund of Hong Kong (TraHK) Hang Seng Index ETF China AMC SSE 50 Hang Seng H-Share Index ETF E Fund SZSE 100 SPDR S&P/ASX 200 Fund ABF Pan Asia Bond Index Fund Samsung Kodex200 ETF Polaris Taiwan Top 50 Tracker
JAPAN ETF NIKKEI 225 ETF TOPIX ETF Listed Index Fund 225 Listed Index Fund TOPIX Daiwa ETF TOPIX Source: BlackRock Global ETF Research and Implementation Strategy Team
ETF Radar Magazine | Issue June 2011
15 10
Rankings Top 10 ETFs by Change in Average Daily Volume As at end April 2011
WORLDWIDE ETF SPDR S&P 500 iShares Russell 2000 Index Fund PowerShares QQQ Trust iShares MSCI Emerging Markets Index Fund Energy Select Sector SPDR Fund iShares MSCI Brazil Index Fund iShares MSCI EAFE Index Fund Vanguard MSCI Emerging Markets ETF SPDR Dow Jones Industrial Average ETF Financial Select Sector SPDR Fund
Bloomberg ticker SPY US IWM US QQQ US EEM US XLE US EWZ US EFA US VWO US DIA US XLF US
ADV (US$ Mn) $17,532.1 $3,946.7 $2,748.6 $2,536.2 $1,198.0 $893.0 $791.2 $752.5 $736.6 $686.1
ADV ('000 shares) 131,642 46,905 47,605 51,364 15,351 11,481 12,886 15,088 5,928 42,119
AUM (US$ Mn) $95,287.1 $19,144.0 $27,244.7 $41,760.0 $10,448.1 $13,348.4 $41,350.5 $49,449.5 $10,370.3 $7,965.5
AUM (US$ Mn) Apr-11 $41,760.0 $95,287.1 $27,244.7 $49,449.5 $41,350.5 $29,024.4 $6,638.8 $7,625.8 $12,019.8 $8,316.5
AUM (US$ Mn) Dec-10 47,551 89,915 22,070 44,570 36,923 25,799 3,693 4,883 9,332 5,918
Change (US$ Mn) -$5,791.5 $5,371.8 $5,174.8 $4,879.7 $4,427.4 $3,225.2 $2,945.8 $2,742.5 $2,687.8 $2,398.8
Top 10 ETFs by Change in Assets under Management As at end April 2011
WORLDWIDE ETF iShares MSCI Emerging Markets Index Fund SPDR S&P 500 PowerShares QQQ Trust Vanguard MSCI Emerging Markets ETF iShares MSCI EAFE Index Fund iShares S&P 500 Index Fund db x-trackers DAX ETF iShares MSCI Japan Index Fund iShares S&P MidCap 400 Index Fund iShares DAX (DE)
Bloomberg ticker EEM US SPY US QQQ US VWO US EFA US IVV US XDAX GY EWJ US IJH US DAXEX GY
Source: BlackRock Global ETF Research and Implementation Strategy Team
► DAX LOVERS
► SPY -30% ADV
A remarkable newcomer within the Top10 AuM list is the DAX index. Obviously an increasing number of buyers is convinced by the strongness of the German economy and its blue chips. The „German Angst“ seems to be a phrase of the past.
Even if it‘s still the number one in our ADV count, the SPY lost nearly 30% of its Average Daily Volume counted in USD. Some outflows and declining prices in the underlying stocks hit EEM‘s AuM.
16 ETF Radar Magazine | Issue June 2011
Rankings Top 30 Best Performing ETPs As at end of May 2011
WORLDWIDE ETF/ETP
Listing Region 1 Mth
ProShares Ultra Silver ETFS Leveraged Silver ETC Horizons BetaPro COMEX Silver Bull ETFS Leveraged Silver (DE) ETC ETFS Physical Silver Shares ETFS Leveraged PrecMtls DJ-UBSCI ETC iShares Silver Trust ETFS Physical Silver ETC JB Physical Silver Fund A (USD) JB Physical Silver Fund A (GBP) PowerShares DB Silver JB Physical Silver Fund A (EUR) Horizons BetaPro COMEX Silver ETF ETFS Silver ETC ZKB Silver ETF (USD) ETFS Leveraged Cocoa ETC ETFS Leveraged Corn ETC UBS Bloomberg CMCI Silver EUR Hdgd ETC UBS Bloomberg CMCI Silver USD ETC ETFS Leveraged Coffee ETC ETFS Leveraged PrecMtls DJ-UBSCI(DE) ETC ETFS Physical Silver (DE) ETC ETFS Silver (DE) ETC ETFS Physical Silver (AU) ETC ZKB Silver ETF (EUR) ETFS Short Cotton ETC UBS E-TRACS CMCI Silver TR ETN ETFS Leveraged Gasoline ETC Direxion Daily Real Estate Bull 3X Shrs ProShares Ultra MSCI Europe
North America Europe North America Europe Europe Europe North America Europe Europe Europe North America Europe North America Europe Europe Europe Europe Europe Europe Europe Europe Europe Europe Asia-Pacific Europe Europe North America Europe North America North America
12 Mth 62.43% 62.39% 62.34% 55.33% 29.68% 28.77% 28.57% 28.55% 28.51% 28.29% 28.28% 28.25% 28.09% 28.08% 27.16% 26.48% 26.06% 25.51% 25.48% 25.08% 23.17% 22.96% 22.51% 21.78% 21.63% 20.25% 19.75% 18.08% 17.41% 17.14%
Inception
468.60% 487.40% 476.65% 426.44% 160.65% 136.86% 160.38% 160.27% 158.90% 155.81% 157.87% 155.59% 154.10% 156.02% 155.60% -9.93% 182.53% n/a n/a 289.80% 112.28% 133.26% 129.45% 121.93% 129.07% -60.49% 141.52% 70.94% 47.48% 50.20%
205.73% 42.40% 237.23% 69.02% 103.74% 30.64% 31.11% 35.65% 112.25% 109.67% 35.37% 109.03% 89.87% 34.49% 93.00% -9.60% -23.15% n/a n/a 14.83% 48.51% 30.25% 55.07% 79.37% -24.40% 35.99% -20.53% 163.42% 50.14%
Net assets (USD) 1,090,646,365 41,856,559 113,962,424 31,479,481 n/a 3,897,651 n/a 1,221,002,822 626,476,652 375,597,812 n/a 422,270,322 26,164,112 130,399,173 832,245,652 7,451,663 7,008,196 n/a n/a 2,503,605 2,931,345 823,004,742 87,894,259 n/a 615,062,827 42,950,870 n/a 918,041 n/a n/a
Source: GlobalFundData/Morningstar as of May 31, 2011
â–ş SILVER: BACK IN THE RACE? After a hard hit silver is back in the race and one of the best performing underlyings of the last month. Still opinions are largely divided if prices will climb back above USD 45 and beyond.
17 ETF Radar Magazine | Issue June 2011
Rankings Top 30 Worst Performing ETPs As at end of May 2011
WORLDWIDE ETF/ETP
Listing Region 1 Mth
ProShares UltraShort Silver Horizons BetaPro COMEX Silver Bear ETFS Leveraged Cotton (DE) ETC Barclays Short D Lvgd Inv S&P 500 TR ETN ETFS Leveraged Sugar ETC ETFS Short Silver ETC iPath S&P 500 VIX Short-Term Futures ETN Source S&P 500 VIX Futures ETF ETFS Leveraged Lean Hogs (DE) ETC ETFS Cotton (DE) ETC ETFS Sugar (DE) ETC ETFS Leveraged Lvstck DJ-UBSCI (DE) ETC ETFS Short Corn (DE) ETC iPath VSTOXX Sh-Term Futures TR (DE) ETN ETFS Leveraged Live Cattle (DE) ETC Direxion Daily Real Estate Bear 3X Shrs ETFS Short Precious Mtl DJ-UBSCI(DE) ETC PowerShares DB Gold Double Short ETN Direxion Daily Dev Mkts Bear 3X Shrs ProShares UltraShort MSCI Europe ETFS Short Cocoa (DE) ETC ETFS Short Coffee (DE) ETC ETFS Leveraged Softs DJ-UBSCI (DE) ETC Source S&P GSCI Cotton TR T-ETC ETFS Leveraged Lead ETC iPath DJ-UBS Cotton TR Sub-Idx ETN ETFS Cotton ETC UBS Bloomberg CMCI Cotton CHF Hdgd ETC Horizons BetaPro COMEX Gold Bullion Bear UBS Bloomberg CMCI Cotton USD ETC
North America North America Europe Europe North America Europe Europe Europe Europe Europe Europe Europe Europe Europe Europe North America Europe North America North America North America Europe Europe North America North America North America North America North America Europe North America Europe
Source: GlobalFundData/Morningstar as of May 30, 2011
â–ş VOLA BETS UNDER FIRE Volatility levels in North America and Europe decreased despite bad signals from Greece and Ireland in the last days which may lead to a new episode in the European debt drama. Perhaps, now is the best time to think about a vola shift and positioning on the long side.
18 ETF Radar Magazine | Issue June 2011
-42.41% -41.02% -37.42% -34.29% -27.09% -22.88% -21.52% -20.02% -19.97% -18.82% -18.00% -17.78% -17.03% -16.80% -16.31% -16.28% -16.24% -16.20% -16.20% -16.11% -15.80% -15.53% -15.51% -15.47% -15.41% -15.25% -15.13% -14.86% -14.83% -14.81%
12 Mth -90.54% -88.98% 234.68% -73.73% 120.25% -65.72% -72.64% n/a -33.67% 95.23% 48.88% -13.75% -57.03% -63.73% 0.30% -65.17% -46.28% -46.30% -59.73% -54.65% -18.65% -62.31% 197.39% 117.72% 3.06% 120.18% 117.84% n/a -45.94% n/a
Inception -83.36% -81.05% 35.33% -67.09% -10.46% -37.84% -71.85% n/a -37.73% 9.17% 1.98% -24.05% -8.73% -62.35% -15.97% -83.26% -26.30% -34.89% -62.74% -51.90% -12.92% -24.64% 42.46% 75.65% -36.57% 21.77% 12.71% n/a -37.46% n/a
Net assets (USD) 552,859,484.50 18,381,447 1,771,943 n/a 6,293,419 5,098,477 n/a 22,526,373 1,369,318 31,741,051 30,365,989 783,238 2,826,504 n/a 953,651 n/a 548,094 n/a n/a n/a 954,644 4,146,611 1,122,984 1,789,992 3,015,180 n/a 47,090,753 n/a 3,448,901 n/a
Disclaimer Important notice to our readers General Information The views and expectations presented in the analyses, data and product presentations in this publication should not be viewed as investment recommendations of and by the ETF Radar Magazine or any of affiliates or associates. Investors should seek independent professional advice. Contributors of this publication and/or its affiliates may invest in or act as a market maker for the securities or indices or other products referred to in this publication for own account or the account of a third party. Editorial contributors may also have a business relationship with issuers of such securities or providers of such indices or products and may represent members of such issuers' or providers' decision-making bodies. While the information in this publication has been obtained from sources believed to be reliable, neither the ETF Radar Magazine nor any contributor makes any representation as to accuracy or completeness. The ETF Radar Magazine does not act as an registered investment advisor or fiduciary for anyone unless otherwise agreed. Any evaluations in this publication reflect only the author's opinion at the time of the analysis. The opinions, forecasts, assumptions, estimates, derived valuations and target price(s) contained in this material are as of the date indicated and are subject to change at any time without prior notice. This publication is general and for information only and does not constitute any form of recommendation, an offer to sell or a solicitation to buy any security or other financial instrument. Prospective investors should understand the risks associated with the products mentioned in this publication and should reach an investment decision on the basis of the information in the relevant offering circulars. Neither the staff of the ETF Radar Magazine nor any other person shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary loss or damages, including without limitation lost profits arising in any way from the information contained in the material. All designated trademarks and brands are the property of their respective owners. Additional Information All figures are subject to market fluctuation and change. Investments that are concentrated in a specific sector or industry may be subject to a higher degree of market risk than investments that are more diversified. An index is not managed and is unavailable for direct investment. Total returns assume reinvestment of all distributions, including dividends and capital gains. Reinvestment does not assure a profit or protect against a loss in declining markets. Total returns do not include commissions, fees, other transaction variables or the effects of taxation. Past performance does not guarantee or predict future results. The investment discussed may not be suitable for all investors. Investors must make their own decisions based on their specific investment objectives and financial circumstances. This communication is not an offer to sell or solicitation of offers to buy any securities mentioned herein. This report is not a complete analysis of every material fact in respect to any fund or fund type. The opinions expressed here reflect the judgment of the author as of the date of the report and are subject to change without notice. Statistical information has been obtained from sources believed to be reliable but its accuracy is not guaranteed. The ETF Radar Magazine does not render legal, accounting or tax advice. Please consult your tax or legal advisors before taking any action that may have tax consequences. The performance provided is past performance, which does not guarantee future results and current performance may be lower or higher than the performance data quoted. The investment return and principal value will fluctuate when sold and may be worth more or less than the original cost. EXCHANGE TRADED FUNDS ARE SOLD BY PROSPECTUS. PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISK, CHARGES AND THE PROSPECTUS, WHICH CONTAINS THIS AND OTHER INFORMATION, CAN BE OBTAINED FROM THE ETF SPONSOR OR YOUR FINANCIAL ADVISOR. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. EXPENSES CAREFULLY BEFORE INVESTING.
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