etfRadar
SM
Issue No. 12 ISSN 2150-9166 North American Edition
August/September 2011
Magazine Index Investor
S&P 500 Sector Map Tactical Portfolio Update ETF of the Month THE HOTSPOTS AT A GLANCE
Rankings The Global ETF Landscape At A Glance People Tom Lydon ETF Trends Feature
Defensive ETFs for Rattled Financial Markets www.etf-radar.com
etfRadar Global Investor Intelligence
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www.etf-radar.com ETF Radar Magazine | Issue August-September 2011
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Fast Lane
Contents Issue August-September 2011 Global Summary
4
Industry Highlights Global Round-Up Top20 Global Index Provider Hot Product Debuts Upcoming Events Number Cruncher
Index Investor
6
S&P 500 Sector Map Tactical Portfolio Update ETF of the Month
Feature
People
11
Tom Lydon, ETF Trends
Rankings
13
Assets under Management Top20 AuM Top20 ADV Best-Performer Worst-Performer
Dear Reader,
8
Defensive ETFs for Rattled Financial Markets
Last Friday, the United States lost their top credit rating and dropped from AAA to AA+. Standard & Poor's considered U.S. Treasuries to be no longer among the safest investments in the world. This will heat up the recent volatile financial markets even more.
Index Companies and People Absa (pg. 4) Barclays (pg. 4) BlackRock (pg. 4) Comstage (pg. 9) Deutsche Bank (pg. 4) ETF Securities (pg. 4, 7) Eurex (pg. 4) Global X (pg. 4) IndexIQ (pg. 5) iShares (pg. 7) Lyxor (pg. 5, 7) Natixis (pg. 11) SPDR (pg. 7)
Tokyo Stock Exchange (pg. 4) Tom Lydon (pg. 10)
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
We currently believe that there is too much uncertainty to maintain a pure buy & hold passive strategy. On page 8 David Cohne is focussing on Defensive ETF's giving some advice on how your ETF portfolio could withstand a potential large drop. Also he presents some hints how to make money in declining markets with inverse ETFs. Antoine Moreau, Deputy CEO of the new French ETF player Ossiam, speaks in our exclusive interview about their motivation to enter the market and their product strategy. This includes a new equal weight ETF that is based on a minimum variance strategy which is interesting for investors in shaky markets as they intend to keep volatility under control. Enjoy reading and let us know your thoughts.
Silvan Schelling Head of Relationship Management
ETF RADAR IS A PRIVATE AND INDEPENDENT INFORMATION PROVIDER. NO STATEMENT IN THIS ISSUE IS TO BE CONSTRUED AS A RECOMMENDATION TO BUY OR SELL SECURITIES OR TO PROVIDE INVESTMENT ADVICE. PLEASE SEE OUR DISCLAIMER PAGE FOR FURTHER INFORMATION. Š 2009-2011 ETF Radar Global Investor Services. All rights reserved.
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ETF Radar Magazine | Issue August-September 2011
3
Global Summary Industry Highlights ► OVERALL MARKET ETF/ETP
According to BlackRock‘s latest data, at the end of H1 2011, the global ETF industry had 2,825 ETFs with 6,229 listings and assets of US$ 1,442.7 Bn, from 146 providers on 49 exchanges around the world. This compares to 2,252 ETFs with 4,570 listings and assets of US$1,025.9 Bn from 130 providers on 42 exchanges at the end of H1 2010. In the first half of 2011, the ETF average daily trading volume in US dollars increased by +46.7% to US$68.0 Bn in June 2011. This compares to an average daily trading volume of US$77.9 Bn in June 2010.
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Taking ETFs and ETPs together, United States AUM should reach US$2 trillion in 2013, with European AUM reaching US$500 billion in 2012.
BOSTON 3rd Annual FundForum USA 07–09 November 2011 Westin Boston Waterfront
► ADVISERS CONCERNED ABOUT ETFS
Advisers are getting influenced by warnings issued by regulators about exchange-traded funds (ETFs), as per a survey conducted by Skandia, the FT reports. The survey reviewed 1,000 advisers, out of which 80% agreed with warnings from the Financial Stability Board (FSB) about the complexity of some of the products. The survey found that 46% of advisers have not used ETFs for any clients. However, out of those who had used the products, 75% said they found them suitable for just 10% of their clients.
NEW YORK CTIY ETF 360 October 12, 2011 The Metropolitan Club
Global Round-Up ► US: GLOBAL X BOOSTS INFRASTRUCTURE ETFS
► EUROPE: EUREX ADDS ETCS AS FUTURE-UNDERLYING
Global X is planning to roll out five new exchange-traded funds (ETFs). The global ETF issuer has also filed with the SEC for the Global X FTSE Toll Roads & Ports ETF, the Global X FTSE Railroads ETF, the Global X Farmland & Timberland ETF, the Global X Cement ETF and the Global X Advanced Materials ETF. With the launch of the new funds, the company will offer a total of 40 ETFs.
The international derivatives exchange Eurex announced that from 29 July 2011 it will be offering futures and options on two commodity ETCs: ETF Securities' Physical Gold ETC and the ETFS Crude Oil ETC. The Physical Gold ETP is one of the world’s largest with assets under management of over EUR 4 billion. The new derivatives complement the ETF derivatives segment of Eurex Exchange where 3 futures and 21 options on ETFs are currently tradable.
► AFRICA: GHANA TO SETUP ETF MARKET
The Ghana stock exchange has unveiled plans to list exchange-traded funds in a sign that the booming ETF market is making inroads into the African continent. The exchange has teamed up with ABSA Capital to list the commoditybacked NewGold ETF, which is already listed on the Johannesburg and Botswana Stock exchanges.
4 ETF Radar Magazine | Issue August-September 2011
► ASIA: CHINA ETFS CAN TRADE ON MARGIN
Chinese ETFs will be permitted to trade on margin by August. To qualify for margin trading, ETFs must be listed for over three months with a net asset value greater than $147 million and a minimum of 4,000 clients. Less than half of the total 26 ETFs on the Shanghai and
Shenzhen exchanges are eligible for margin trading. The entitled ETFs include the China AMC Shanghai 50 ETF, the Efund Shenzhen 100 ETF and the Hua An Shanghai 180 ETF. ► ASIA: TOKYO STOCK
EXCHANGE LISTS NEW ETNS The Tokyo Stock Exchange has accepted the listing of Japanese depositary receipts whose indicator-tracking securities are exchange-traded notes. Barclays Bank will manage the nine freshly listed ETNs. The new products will lead the total number of Tokyo ETFs and ETNs to 112. The ETNs include the iPath S&P GSCI Total Return Index JDR and the iPath S&P 500 VIX Mid-Term Futures JDR.
Global Summary Top10 Global Index Provider
HONG KONG ETF Index Investment Summit 2011 31 Aug. - 1 Sept. 2011 JW Marriot Hotel
(Ranked by AuM; Data as of July, 29 2011)
MSCI 25.4% → S&P 22.6% → Barclays Capital 8.8% ↑ STOXX 7.3% ↑ Russell 5.9% FTSE 4.2% → Dow Jones 3.8% Markit 3.3%
LONDON ETF & Indexing Investments Europe 17–19 October 2011 Guoman Tower Hotel
NASDAQ OMX 2.3%
FRANKFURT Commodities Deutschland 20-22 September 2011 Le Meriden Parkhotel
NYSE Euronext 1.2% → Other 15.2%↑
Number Cruncher
LONDON European Cup of ETFs 19–20 September 2011 Great George Street Conference Hall
Hot Product Debuts
393
750
Number of new launched ETFs worldwide since January 1, 2011.
Number of new planned ETFs/ETPs worldwide as of July 29, 2011.
Sources: Event organizers, Reuters, Bloomberg, BusinessWire, BlackRock, ETF Radar Global Research
LY X O R
SOCIETE GENERALE GROUP
► EMMA STRATEGY ETF LAUNCHED
► SET OF NEW MSCI ETFS LISTED
► NEW EMMA IBOXX ETF LISTED
Emerging Global Advisors announced the successful launch of HILO, an emerging markets fund designed to be significantly less volatile than funds based on the broadbased MSCI Emerging Markets Index. HILO is passively managed and doesn't use options, swaps, or other derivatives in its portfolio. The underlying INDXX is rebalanced annually in September.
db x-trackers recently launched a set of new MSCI ETFs. Notable is the MSCI Malaysia ETF. The country is one of the most powerful economies in South-Asia. All funds have been tradable on Deutsche Börse’s XTF segment. The product offering in Deutsche Börse’s XTF segment currently comprises a total of 858 exchange-listed index funds, making it the largest offering of all European stock exchanges.
Lyxor has launched a new emerging market sovereign fund. The Lyxor ETF iBoxx $ Liquid Emerging Markets Sovereigns has started trading on the Xetra trading platform. The bond index ETF enables investors to participate in the performance of USD-denominated government bonds of 20 emerging market countries providing highest liquidity.
Van Eck recently launched its new Market Vectors CEF Municipal Income ETF. The fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the S-Network Municipal Bond Closed-End Fund Index. This is a rules based benchmark for U.S. closed-end funds that are principally engaged in asset management processes designed to produce federally tax-exempt annual yield.
Ticker/ISIN: HILO TER: 0.85% p.a. CCY: USD
Ticker/ISIN: LU0514694370 TER: 0.50% p.a. CCY: USD
Ticker/ISIN: FR0010967323 TER: 0.30% p.a. CCY: USD
Ticker/ISIN: XMPT TER: 1.43% p.a. CCY: USD
► NEW MUNI BOND ETF LAUNCHED
5 ETF Radar Magazine | Issue August-September 2011
Index Investor S&P 500 Sector Map
Industrials tumble, Information Technology leads. by Sebastian Stahn In July the S&P 500 Index dropped -2.03% due to the uncertainness about the US-American debt ceiling. Furthermore doubts about the development of the economy led to volatile markets. Having a look at the sector performances, the S&P 500 Industrials was the worst performing sector with a loss of -6.98% in July 2011. Generally cyclical stocks fell due to doubts about the economic recovery.
The Action Plan
If investors believe in a recovery of this sector, the contrarian pick with the Vanguard Industrials ETF (VIS) would be the best choice. Best performing sector with a performance of +1.61% in July 2011 was the S&P 500 Information Technology Index. Good quarterly results during the earnings season among the companies led to price appreciations. If you believe in an ongoing trend, the Vanguard Information Technology ETF (VGT) would be your best pick.n
CONTRARIAN PICK
BEST-TREND PICK
Vanguard Industrials ETF Symbol:VIS US TER / AUM: 0.24% / 560mn. 1 Year Return:+17.30% Last Price/High/Low: $ 64.67 / 72.13 / 51.57 Replication: Full replication to sampling
Vanguard Information Technology ETF Symbol: VGT US TER / AUM: 0.24% / 1.9bn. 1 Year Return: +20.00% Last Price/High/Low: $ 63.26 / 67.03 / 49.40 Replication: Full replication to
RISK-REWARD-ANALYSIS
RISK-REWARD-ANALYSIS
based on an investment horizon of one month
HIGH
VIS
based on an investment horizon of one month
LOW
HIGH
VGT
LOW
WORST PERFORMING SECTORS Industrials –6.98%
Materials -3.30%
Energy +0.71%
Consumer Staples -1.47%
Information Technology +1.61%
Mon thly P e
rform ance
. As o f July
Telecommunication Services –5.69%
29, 2 011.
BEST PERFORMING SECTORS
6 ETF Radar Magazine | Issue August-September 2011
Health Care –3.87%
Consumer Discretionary -1.41%
Financials -3.61%
Utilities -0.92%
Index Investor Tactical Portfolio Update
Defensive Duo: Gold & TIPs are the Places to Be by David Cohne QUICK FACTS â–ş Increasing risks make defensive stocks and strategies attractive. â–ş Rising gold prices may heavily support gold mining stocks. The ETF Radar Tactical portfolio is a model portfolio that invests in five ETFs based on a tactical ETF rankings system. The portfolio trades at the end of each month. The holdings for August include SPDR Gold Shares (GLD), iShares Tips (TIP), SPDREnergy (XLE), iShares MSCI Japan (EWJ) & iShares Aggregate Bond (AGG). In the midst of the debt talk debacle, lingering economic issues and a not so rosy future; gold prices continue to hit record highs. Investors and traders are looking for
safe havens to put their money in. One of the oldest and most used safe havens is gold. In addition, many countries are buying gold in large quantities that is preventing gold prices to drop. The other place to be according to the ranking system is in Treasury Inflation Protected Securities or TIPs. Yields continue to drop in these bonds as prices are taking into account a very weak economy and persistent inflation fears. Based on the rankings SPDR-Gold Shares (GLD) is the ETF of the month. It tracks the price of gold bullion. It has an expense ratio of 0.40% and an average daily trading volume of 15.9 million shares.
P.S. If you are looking for leveraged gold exposure, see the ProShares Ultra Gold (UGL) or the FactorShares 2x Gold Bull (FSG). n
ETF of the Month SPDR Gold Shares Fund (GLD) 52-Week Range Market Cap Dividends TER Last Volume ETF Issuer Replication
$158.97 - $161.62 $66 billion 0.40% p.a. $24,159,629 SSgA Full Replication
ETF Radar Tactical Portfolio TICKER
ETF NAME
TER
AUM
WEIGHT
GLD
SPDR Gold Shares
0.40%
TIP
iShares Tips
0.20%
$66 billion $21.4 billion
20% 20%
XLE
SPDR-Energy
0.20%
$8.6 billion
20%
EWJ AGG
iShares MSCI Japan iShares Aggregate Bond
0.54% 0.22%
$8.4 billion $12.3 billion
20% 20%
Source: Cohne Investment Group, exclusively for ETF Radar / August 1, 2011 Ranking
7 ETF Radar Magazine | Issue August-September 2011
Feature
HIG
H
Defensive ETFs for Rattled Financial Markets Currently there is too much uncertainty to maintain a buy & hold passive strategy. As strategists revised their views on the economic outlook rapidly, investors should act now. S&P meanwhile cut the US credit rating to AA, which means there is some trouble ahead. by David Cohne QUICK FACTS ► All major equity markets suffered enormous losses during the last days. ► S&P’s downgrade of the US debt may have a large impact on the markets. ► Investors should protect their portfolios now.
As we end a volatile July and enter into uncertain August, the economy and the markets are weighing heavily on investors' minds. Much of the discussion over the summer has been related to the uncertainty over American debt. Even if the default risk is meanwhile banned, the markets reacted very negative. A similar picture in Europe: All major equity markets were hammered. What 8 ETF Radar Magazine | Issue August-September 2011
does this mean for the average investor or financial professional? At the very least, it means we should really start considering defensive positions in our portfolios. Shaky markets ahead – in the US and Europe In our opinion there is too much uncertainty to maintain a buy & hold passive strategy. Too much is at risk. Even with the new debt deal, government spending is out of control. The Fed continues to print money at the cost of the buying power of the middle class American. Whether or not there is a default, American debt is likely to get downgraded to an AA rating, meaning the United States will have to pay even more interest on their debt, raising government
Feature THE PARTY IS OVER – FOR NOW
Weekly Performance (Aug 1 - Aug 5)
Performance comparison S&P500 Ultra-Short vs. S&P500, DIJA and DAX
6% 4% 2%
DAX30
0% -2%
S&P500 Ultra-Short
-4% -6%
-7,00 %
-7,73 % DAX30
8%
S&P500
DJIA
Dow Jones Ind. Av.
10%
S&P500
-12,89 %
-8% -10% -12% Jan
2011
Feb
Mar
Apr
May
costs and eventually prices of everyday goods. There is unrest in the Middle East and Northern Africa that can largely be attributed to poor economic situations in the respective countries. In addition to the United States, Europe has its own economic and austerity problems. How to defend your portfolio… This is enough to scare me. Being a quant, my portfolio decisions are based on my proprietary signals, but whether or not you invest using formulas or gut feeling, you should definitely reevaluate your ETF holdings to make sure your portfolio can withstand a large market drop. Now I am not saying that the market will indeed plummet, but you should at least very prepare. The easiest way to defend your portfolio is to go to Cash when things start getting bad. A good hint would be when interest start to skyrocket. If you don't follow any type of market timing methodology or believe in it, you could also apply a decent size hedge in your portfolio.
Jun
Jul
You should definitely re-evaluate your ETF holdings to make sure your portfolio can withstand a large drop. This can be done with inverse ETFs. We recommend the ProShares Short S&P 500 (SH) and the ProShares Short Russell 2000 (RWM). If you want to be more aggressive you could consider the double leveraged versions of those indexes with the ProShares Ultra Short S&P 500 (SDS) and the ProShares Ultra Short Russell 2000 (TWM). With focus on the European blue chip indices the DB xtrackers Short EuroStoxx 50 (LU0292106753) and the Comstage Short Dax ETF (LU0603940916) would be attractive products to defend your European equity portfolio – or just to participate on weak stock markets. Especially Germany's DAX index could test new lows near the 6.600 points level as soon as new bad news from the Southern member states of the Eurozone arrive.
9 ETF Radar Magazine | Issue August-September 2011
Feature …also on the long run If you plan on keeping some long holdings, you should consider defensive sectors such as consumer staples, health care, and utilities that typically don't get hit as bad. You can access these sectors through the following ETFs: SPDR Consumer Staples (XLP), Stoxx Europe 600 Optimised Health Care Source ETF (IE00B5MJYY16), SPDR Health Care (XLV), MSCI Europe Health Care (FR0000001737) and the SPDR Utilities (XLU) or the STOXX Europe 600 Optimised Utilities Source ETF (IE00B5MTXK03). Companies in these sectors typically have steady and predictable earnings in both bull and bear markets. Another defensive holding is gold. Some analysts believe that gold is overpriced and some believe that it can still climb, but exposure to gold in a downturn can better help protect your portfolio. This can be accessed with the SPDR Gold (GLD).
S&P 500 & the Russell 2000. In this strategy we want to analyze what will be affected most by another financial disaster or serious market downturn. Right off the bat I would say that financial companies, real estate and the dollar could be hit hardest. Large financial firms such as banks are probably in no better shape than they were before 2008, so betting against financial firms could prove to be a nice defensive play. This can be done with the North American picks: The ProShares Short Financials (SEF) or the leveraged version, the ProShares Ultra Short Financials (SKF). Real Estate is another area that will continue to bear the b r u n t o f a n o t h e r e co n o m i c d ow n t u r n . Unemployment is still up, so people aren't buying homes and if things get worse, home prices may continue to drop, so betting against real estate is also an interesting but opportunistic defensive play. This can be down through the ProShares Short Real Estate (REK). Finally, better against the dollar can be used as a defensive play. As the Fed continues to print money and inflation takes hold, the value of the dollar will drop which makes a short or intermediate term play against the dollar another interesting opportunity. n
HIG
Some hot alternative plays The third type of defensive strategy is with specific inverse funds. In the first strategy, I covered inverse index funds that tracked the inverse return of the
H
THE CLUB OF LONELY TRIPLE-A‘S Selected sovereign S&P credit ratings (AAA and lower) Country Australia Canada Denmark Finland France Germany Hong Kong Netherlands New Zealand Norway Singapore Sweden Switzerland United Kingdom Belgium United States Abu Dhabi Kuwait Qatar China Israel Saudi Arabia Taiwan
Sovereign local currency ratings (LT/Outlook/ST) AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AA+/Negative/A-1+ AA+/Negative/A-1+ AA/Stable/A-1+ AA/Stable/A-1+ AA/Stable/A-1+ AA-/Stable/A-1+ AA-/Stable/A-1+ AA-/Stable/A-1+ AA-/Stable/A-1+
Sovereign foreign currency ratings (LT/Outlook/ST) AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AA+/Negative/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AAA/Stable/A-1+ AA+/Negative/A-1+ AA+/Negative/A-1+ AA/Stable/A-1+ AA/Stable/A-1+ AA/Stable/A-1+ AA-/Stable/A-1+ A/Stable/A-1 AA-/Stable/A-1+ AA-/Stable/A-1+ Source: Standard&Poor‘s as of Aug 5, 2011.
10 ETF Radar Magazine | Issue August-September 2011
People Expert Talk with
Tom Lydon CEO, ETF Trends
“The economy is teetering on doubledip territory .” by Silvan Schelling
VITA ► Lives in: Irvine (California) ► Career: Tom Lydon is president of Global Trends Investments, editor and proprietor of ETFtrends.com. With more than 25 years experience in asset management, Mr. Lydon began his career with Fidelity Investments Institutional Division prior to launching Global Trends Investments and ETF Trends. Tom is a frequent contributor to major print, radio and television media in-cluding Forbes, The Wall Street Journal, Investor’s Business Daily, Barron’s, MarketWatch and Investment News. His popular seminar, “How to Manage a Million Dollar Portfolio” has been attended by thousands of investors around the country. As the author of iMoney and The ETF Trend Following Playbook Tom Lydon is a highly sought after speaker. His frequent appearances on CNBC make him one of the most recognized and well-respected commentators in the ETF industry. Tom has been a high profile presenter at the largest industry trade shows and invest-ment conferences as well as a moderator of webinars.
Tom, how would you describe the current market sentiment in the US? Today, investor sentiment is weak at best. While investors are constantly on the lookout to make more profit, people are equally, if not more, concerned about asset protection and diversification. Investors and market observers are relieved that a resolution to the debt ceiling drama in Congress has been made. Everyone's fears of a worsecase scenario have been allayed, where the U.S. would default and send the economy into another depression-esque state. However, people are still worried that the weaker-than-expected economic growth figures may portend to a slowing economy. The problems in the Eurozone have not been resolved, and the region still poses a major threat to the wellbeing of the global economy. We might not like it but the economy is teetering on double-dip territory. Which asset classes/ sectors saw the most inflows – which saw the most outflows? Surprisingly, U.S. equity ETFs outpaced fixed-income ETFs
$25.8 billion to $21.4 billion, respectively, year-to-date. Over the last few years, bond funds have enjoyed around $700 billion in inflows as investors, frustrated with the equity markets, demanded more bonds and settled for historically low yields. There was also quite a surprise in the commodities numbers. Despite the strengthening gold and silver markets, precious metals ETFs experienced net cash outflows for the first half, as well as energy ETFs. Let's focus the ETF industry in North America. Are there any product or index trends? Since all the major index landscapes have already been populated, fund providers are now focusing more on niche investment styles to differentiate their products from the rest and capture market share in untapped areas. The new breed of ETFs will be driven by new asset classes, new custom tailored indices and new ways to implement ETFs in portfolio construction. For example, some new ETFs coming out are based on hedge fund strategies, as well as other alternative strategy 11
ETF Radar Magazine | Issue August-September 2011
People
themes as seen from WisdomTree. In addition, competition among major asset class providers in the fund industry has driven down prices. Fund providers like Schwab and Vanguard who offer the products with very low expense ratios are also experiencing decent growth. The ETF industry is also opening a crack into the trillion dollar 401(k) industry as more companies become aware of ETF options for their retirement plans.
Fund providers are now focusing more on niche investment styles to differentiate from the rest. How about your thoughts about leveraged ETF/ETPs? These products are innovative but whether they are long/short, 2x/3x, 2 beta or 3 beta, leveraged funds are doing exactly what they are designed to do on a daily basis. The key is understanding the daily basis aspect of these types of funds. Investors, advisors or institutions who are looking to hedge for the short-term may find that leveraged ETFs are excellent tools. Leveraged ETFs are meant for active traders and require regular monitoring and rebalancing. What about long-term oriented investors? Investors with long-term bets on trends, though, should avoid the buyand-forget mantra with this type of investment. Due to the consequences of compounding, these ETFs that reset daily will not perfectly mimic the desired leverage over the long-term as compared to the underlying index – the ETF will begin to deviate from 2x or 3x the benchmark index over time. Which asset class/sectors investors should overweight for the next months? For starters, commodities show strong fundamental support: pure demand for energy, food and metals is up; 12 ETF Radar Magazine | Issue August-September 2011
commodities are also a safe store of wealth and a hedge against potential inflation down the road; despite what the government may tell you, everyone is feeling it at the gas pumps and the supermarkets. Additionally, the emerging markets are still posting robust growth as compared to developed economies. More sophisticated investors who are highly invested in Treasuries may start instituting hedge positions with short Treasury strategies in the coming six to twelve months. It is not a question of if higher rates are coming, but when. You recently published a white paper called “Social Media's impact on Wall Street. What are the key results of the study? The paper highlights the growth of social media, how it has fundamentally changed communication, and how Wall Street is capitalizing on social media, subsequently affecting the ways investors make decisions about their portfolios. More investors are using social media to get news on their favorite stock holdings and funds. One particular study used a sophisticated sentiment analysis on Twitter to predict how the Dow Jones Industrial Average moves on any given day, up to four days in advance, with 80% accuracy. Indeed, social media has become omnipresent, putting companies that have not developed a social media presence at a distinct disadvantage. If you compare the North American ETF/ETP business with Europe and Asia-Pacific. What are the main differences, advantages and shortcomings? In the U.S., we see that growth has been focused around traditional asset backed ETFs based on seasoned indices. Investors enjoy this investment tool because of the volume, liquidity and number of available ETF products available. Furthermore, the efficiency of the
technology in the marketplace and the growing demand during uncertainty have attributed to the growth of the ETF industry in the U.S. Even if the economy hits a rough patch, other assets, like commodities, and alternative investment styles continue to attract investor interest. What is the down side? The down side to ETFs in the U.S. come from challenges in bringing ETFs to market since regulatory constraints are cumbersome. However, investors may be relieved to know that the industry is wellregulated and the Securities and Exchange Commission has the investor's best interests in mind. Ironically, in Asia and Europe, mutual funds have been struggling but ETFs appear to be penetrating the fund space, whereas the mutual fund industry is well established in the U.S. The ETF trend has not caught on as much with the average retail investor among European and Asia-Pacific investors, with the U.K. and a few others being the exceptions, as ETFs are traded among large institutions in these regions. Thank you! n
Across the Atlantic:
People
Interview with Antoine Moreau, Ossiam ETF in the Magazine’s European Edition. www.etf-radar.com
Rankings
In association with
Top 25 ETF providers around the world ranked by Assets under Management As at end June 2011
WORLDWIDE H1-11
YTD change
# ETFs
AUM (US$ Bn)
% total
ADV (US$ Mn)
# planned
iShares
474
$620.7
43.0%
$17,801.2
16
State Street Global Advisors
137
$204.2
14.2%
$33,776.9
37
Vanguard
69
$175.5
12.2%
$1,575.2
1
Lyxor Asset Management
163
$54.4
3.8%
$941.2
1
db x-trackers
201
$52.3
3.6%
$481.4
PowerShares
142
$45.7
3.2%
ProShares
107
$23.5
1.6%
Van Eck Associates Corp
34
$23.0
1.6%
Provider
# ETFs
% ETFs
AUM (US$ Bn)
% AUM
% market share
1
0.2%
$42.1
7.3%
-1.1%
24
21.2%
$13.6
7.1%
-0.4%
4
6.2%
$27.0
18.2%
0.8%
7
4.5%
$1.0
1.9%
-0.3%
16
22
12.3%
$3.2
6.5%
-0.1%
$2,843.7
49
12
9.2%
$2.9
6.8%
-0.1%
$3,424.6
93
7
7.0%
$2.0
9.1%
0.0%
$877.0
38
5
17.2%
$3.0
15.2%
0.1%
Credit Suisse Asset Management
58
$18.3
1.3%
$89.6
0
4
7.4%
$2.7
17.1%
0.1%
Nomura Asset Management
34
$16.0
1.1%
$82.2
0
2
6.3%
-$0.4
-2.4%
-0.1%
WisdomTree Investments
46
$13.0
0.9%
$165.8
71
2
4.5%
$3.1
31.1%
0.1%
Zurich Cantonal Bank
7
$12.9
0.9%
$43.4
0
0
0.0%
$1.1
9.5%
0.0%
UBS Global Asset Management
50
$11.4
0.8%
$43.5
0
21
72.4%
$4.8
73.8%
0.3%
Bank of New York
1
$11.1
0.8%
$404.4
0
0
0.0%
-$1.1
-9.2%
-0.2%
Amundi ETF
99
$10.1
0.7%
$107.9
0
7
7.6%
$2.9
40.7%
0.2%
Commerzbank
94
$9.6
0.7%
$44.3
0
4
4.4%
$1.0
11.1%
0.0%
HSBC/Hang Seng
32
$8.6
0.6%
$70.1
4
15
88.2%
$1.2
16.1%
0.0%
Source Markets
64
$7.8
0.5%
$346.3
15
8
14.3%
$2.8
57.2%
0.2%
First Trust Advisors
59
$7.7
0.5%
$105.5
5
16
37.2%
$2.3
41.9%
0.1%
Nikko Asset Management
20
$6.9
0.5%
$55.1
0
3
17.6%
$0.3
5.1%
0.0%
Direxion Shares
51
$6.8
0.5%
$3,036.7
176
12
30.8%
$0.2
2.8%
0.0%
Claymore Investments
31
$6.5
0.5%
$27.6
9
2
6.9%
$1.0
18.3%
0.0%
EasyETF
48
$6.2
0.4%
$19.9
1
-1
-2.0%
$0.7
12.1%
0.0%
Daiwa Asset Management
23
$6.1
0.4%
$13.7
1
0
0.0%
-$0.8
-11.0%
-0.1%
ETFlab Investment
40
$5.8
0.4%
$42.6
0
5
14.3%
-$1.0
-14.2%
-0.1%
Source: BlackRock Global ETF Research and Implementation Strategy Team
13
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ETF Radar Magazine | Issue August-September 2011
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Rankings Top 10/Top 5 ETFs by Assets under Management As at end June 2011
UNITED STATES ETF SPDR S&P 500 Vanguard MSCI Emerging Markets ETF iShares MSCI EAFE Index Fund iShares MSCI Emerging Markets Index Fund iShares S&P 500 Index Fund PowerShares QQQ Trust iShares Barclays TIPS Bond Fund Vanguard Total Stock Market ETF iShares Russell 2000 Index Fund iShares Russell 1000 Growth Index Fund
Bloomberg ticker SPY US VWO US EFA US EEM US IVV US QQQ US TIP US VTI US IWM US IWF US
AUM (US$ Mn) $89,227.2 $48,702.2 $40,810.7 $40,204.7 $28,279.8 $24,368.2 $20,509.1 $20,338.2 $16,683.8 $13,981.6
ADV ('000 shares) 148,564 19,791 17,529 58,105 2,715 45,740 746 1,297 59,529 1,867
ADV (US$ Mn) $19,913.5 $954.6 $1,075.8 $2,777.4 $365.0 $2,666.9 $82.6 $90.5 $4,976.4 $115.2
Bloomberg ticker DAXEX GY IUSA LN ZGLD SW IEEM LN MSE FP XDAX GY ISF LN XMEM GY SX5EEX GY IBCS GY
AUM (US$ Mn) $10,719.7 $9,573.8 $8,445.9 $7,060.0 $6,723.6 $6,269.3 $6,003.2 $5,568.2 $5,560.1 $4,614.0
ADV ('000 shares) 3,503 7,530 12 1,187 3,301 686 10,024 900 1,246 116
ADV (US$ Mn) $343.0 $100.5 $31.1 $55.5 $140.5 $72.2 $98.3 $41.5 $53.0 $19.9
Bloomberg ticker STX40 SJ STANSX SJ STXDIV SJ STXFIN SJ BIPINF SJ
AUM (US$ Mn) $1,016.4 $348.8 $156.7 $124.6 $123.9
ADV ('000 shares) 1,136 1 730 85 51
ADV (US$ Mn) $4.9 $0.0 $0.2 $0.1 $0.1
Bloomberg ticker 2823 HK 2800 HK 2833 HK 510050 CH 2828 HK 159901 CH 2821 HK STW AU 0050 TT 069500 KS
AUM (US$ Mn) $7,849.4 $7,532.7 $4,097.9 $3,141.8 $2,840.8 $2,708.8 $2,450.1 $2,412.1 $2,292.5 $2,267.7
ADV ('000 shares) 65,926 19,653 62 263,678 1,432 480,861 2 199 15,936 1,445
ADV (US$ Mn) $111.4 $60.8 $1.9 $81.3 $24.6 $56.0 $0.3 $9.5 $34.5 $38.2
Bloomberg ticker 1321 JP 1306 JP 1330 JP 1308 JP 1320 JP
AUM (US$ Mn) $6,883.5 $6,874.9 $3,130.7 $3,095.8 $2,691.1
ADV ('000 shares) 368 2,636 271 249 72
ADV (US$ Mn) $44.7 $28.0 $33.0 $2.6 $8.8
EUROPE ETF iShares DAX (DE) iShares S&P 500 ZKB Gold ETF (CHF) iShares MSCI Emerging Markets Lyxor ETF Euro STOXX 50 db x-trackers DAX ETF iShares FTSE 100 db x-trackers MSCI Emerging Market TRN Index ETF iShares EURO STOXX 50 (DE) iShares Markit iBoxx Euro Corporate Bond
MIDDLE-EAST/AFRICA ETF SATRIX40 STANLIB SWIX 40 Fund Satrix Dividend Plus SATRIX Financials Bips Government Inflation Linked Bond Fund
ASIA-PACIFIC ETF iShares FTSE A50 China Index ETF* Tracker Fund of Hong Kong (TraHK) Hang Seng Index ETF China AMC SSE 50 Hang Seng H-Share Index ETF E Fund SZSE 100 ABF Pan Asia Bond Index Fund SPDR S&P/ASX 200 Fund Polaris Taiwan Top 50 Tracker Samsung Kodex200 ETF
JAPAN ETF NIKKEI 225 ETF TOPIX ETF Listed Index Fund 225 Listed Index Fund TOPIX Daiwa ETF NIKKEI 225 Source: BlackRock Global ETF Research and Implementation Strategy Team
ETF Radar Magazine | Issue August-September 2011
14 10
Rankings Top 20 ETFs by Assets-under-Management and Average Daily Volume As at end June 2011
WORLDWIDE
ETF
Bloomberg AUM ADV ticker (US$ Mn) (US$ Mn)
ETF
Bloomberg ticker
ADV ADV (US$ Mn)
AUM (US$ Mn)
SPDR S&P 500
SPY US
$92,053.3 $25,886.6
SPDR S&P 500
SPY US
$25,886.6
$92,053.3
Vanguard MSCI Emerging Markets ETF
VWO US
$50,280.3
iShares Russell 2000 Index Fund
IWM US
$5,134.9
$16,618.0
iShares MSCI EAFE Index Fund
EFA US
$39,620.2 $1,119.7
PowerShares QQQ Trust
QQQ US
$2,673.9
$22,845.7
iShares MSCI Emerging Mkts Index Fund EEM US
$38,748.8 $2,245.3
iShares MSCI Emerging Markets
EEM US
$2,245.3
$38,748.8
iShares S&P 500 Index Fund
$27,609.6
Energy Select Sector SPDR Fund
XLE US
$1,535.4
$9,009.9
$22,845.7 $2,673.9
Financial Select Sector SPDR Fund
XLF US
$1,166.8
$7,308.8
IVV US
PowerShares QQQ Trust
QQQ US
$742.4
$358.6
iShares Barclays TIPS Bond Fund
TIP US
$20,944.2
$83.7
iShares MSCI EAFE Index Fund
EFA US
$1,119.7
$39,620.2
Vanguard Total Stock Market ETF
VTI US
$20,077.0
$129.3
iShares MSCI Brazil Index Fund
EWZ US
$891.4
$12,781.2
iShares Russell 2000 Index Fund
IWM US
$16,618.0 $5,134.9
iShares Barclays 20+ Yr Treasry Bd
TLT US
$839.0
$2,888.9
iShares iBoxx $ Investm. Grd. Corporate
LQD US
$13,777.3
$88.2
SPDR Dow Jones Ind. Av. ETF
DIA US
$742.8
$9,639.3
iShares Russell 1000 Growth Index Fund
IWF US
$13,554.9
$119.6
Vanguard MSCI Emerging Mkt ETF VWO US
$742.4
$50,280.3
iShares MSCI Brazil Index Fund
EWZ US
$12,781.2
$891.4
Direxion Daily Small Cap Bull 3x Shs TNA US
$725.0
$764.2
iShares Barclays Aggregate Bond Fund
AGG US
$11,851.0
$115.2
Industrial Select Sector SPDR Fund
XLI US
$675.4
$4,004.3
iShares Russell 1000 Value Index Fund
IWD US
$11,638.3
$103.8
Direxion Daily Small Cap Bear 3x Shs TZA US
$658.8
$612.3
iShares S&P/TSX 60 Index Fund
XIU CN
$11,504.6
$361.9
iShares FTSE China 25 Index Fund
FXI US
$643.7
$7,157.6
iShares S&P MidCap 400 Index Fund
IJH US
$11,479.8
$76.9
ProShares Ultra S&P500
SSO US
$628.7
$1,681.9
IYR US
$572.0
$3,795.9
MDY US
$11,086.3
$404.4
iShares Dow Jones US Real Estate
DAXEX GY
$10,877.3
$129.2
SPDR S&P Retail ETF
XRT US
$563.1
$568.5
Vanguard Total Bond Market ETF
BND US
$10,242.4
$70.5
Materials Select Sector SPDR Trust XLB US
$532.7
$2,666.3
iShares S&P 500
IUSA LN
$9,907.5
$88.1
Market Vectors Gold Miners
$500.3
$6,832.1
S&P 400 MidCap SPDR iShares DAX (DE)
Source: BlackRock Global ETF Research and Implementation Strategy Team
► EMERGING MARKETS AND BOND EXPOSURE EN VOUGE
► LEVERAGED ETFS STILL DESIRED BY TRADERS
Within the Assets-under-Management rankings a couple of Emerging Markets funds like VWO, EFA, EMM still dominate the league table. Also ETFs linked to fixed-income indices attracted some inflows.
With regards to the most liquid ETFs in the market (measured by the ADV), interestingly one could see an increased usage of leveraged funds like the TNA, TZA and SSO.
15 ETF Radar Magazine | Issue August-September 2011
GDX US
Rankings Top 30 Best Performing ETPs As at end of June 2011
WORLDWIDE
ETF/ETP ETFS Leveraged Sugar ETC ETFS Leveraged Sugar (DE) ETC ETFS Short Wheat ETC ETFS Short Wheat (DE) ETC iPath DJ-UBS Sugar TR Sub-Idx ETN Source S&P GSCI Sugar TR T-ETC ETFS Sugar ETC Direxion Daily Semicondct Bear 3X Shares Horizons BetaPro COMEX Silver Bear ETFS Sugar (DE) ETC ProShares UltraShort Silver iPath Short Extended Russell 2000 TR ETN PowerShares DB Crude Oil Dble Short ETN Horizons BetaPro NYMEX Crude Oil Bear ProShares UltraShort DJ-UBS Crude Oil PowerShares DB Commodity Dble Short ETN UBS Bloomberg CMCI Sugar EUR Hdgd ETC UBS Bloomberg CMCI Sugar CHF Hdgd ETC UBS Bloomberg CMCI Sugar USD ETC iPath Pure Beta Sugar ETN NEXT FUNDS TOPIX-17 Electric Power & Gas Daiwa ETF TOPIX-17 Electric Power & Gas ETFS Leveraged Lead ETC ETFS Short Grains DJ-UBSCI ETC Hyundai Hi Shares Insurance ETF Equity Horizons BetaPro NYMEX Natural Gas Bear ETFS Short Cotton ETC EasyETF Dow Jones Luxury EUR Lyxor ETF Daily Double Short SMI A Horizons BetaPro S&P/TSX Glbl Gold Bear
Listing Region Europe Europe Europe Europe North America Europe Europe North America North America Europe North America North America North America North America North America North America Europe Europe Europe North America Asia-Pacific Asia-Pacific Europe Europe Asia-Pacific North America Europe Europe Europe North America
1 Mth 38.46% 37.29% 20.44% 19.43% 18.67% 18.32% 18.31% 17.94% 17.50% 17.31% 16.50% 15.96% 15.19% 14.30% 13.87% 13.82% 13.46% 13.21% 13.20% 13.20% 13.07% 12.96% 12.33% 12.29% 12.11% 12.07% 11.77% 11.64% 11.56% 11.52%
12 Mth 208.14% 160.34% -24.81% -36.47% 98.15% 95.72% 95.73% -65.01% -80.17% 65.36% -85.42% -31.43% -37.45% -36.03% -45.42% -39.54% -39.57% 105.82% -35.80% 16.98% 27.18% -59.05% 58.83% -13.35% -8.30%
Net assets Inception (USD) 1.34% 8,849,032 33.80% 6,103,443 13.03% 8,186,638 7.87% 5,646,570 20.86% 38.05% 4,168,473 9.82% 62,472,778 -56.98% -71.63% 31,511,187 6.98% 43,089,349 -78.67% -45.03% 27.23% -11.51% 69,701,952 -30.69% 8.26% 11.19% 6,883,206 -16.99% -18.19% -32.47% 4,147,102 -2.04% 1,132,639 11.06% 1,961,555,136 48.71% 77,616,015 -21.24% 20,812,617 16.40% 10,132,985 3.34% -59.61% 33,218,139
Source: GlobalFundData/Morningstar as of August 3, 2011
► SUGAR, WHEAT AND SILVER This month selected agricultural goods performed very well again – especially for long sugar and short wheat. Also Short-ETPs on Silver still rank on the top even if the spot price rose within July.
16 ETF Radar Magazine | Issue August-September 2011
Rankings Top 30 Worst Performing ETPs As at end of June 2011
WORLDWIDE
ETF/ETP ETFS Leveraged Wheat (DE) ETC ETFS Leveraged Wheat ETC UBS Bloomberg CMCI Wheat CHF Hdgd ETC UBS Bloomberg CMCI Wheat EUR Hdgd ETC UBS Bloomberg CMCI Wheat USD ETC ETFS Leveraged Cotton (DE) ETC ETFS Wheat (DE) ETC UBS Bloomberg CMCI Platinum EUR Hdgd ETC ETFS Leveraged Cotton ETC Source S&P GSCI Wheat TR T-ETC ETFS Wheat ETC ETFS Leveraged Grains DJ-UBSCI (DE) ETC ETFS Leveraged Grains DJ-UBSCI ETC ETFS Carbon ETC iPath Global Carbon ETN Direxion Daily Semicondct Bull 3X Shares ProShares Ultra Silver ETFS Leveraged Silver (DE) ETC Horizons BetaPro COMEX Silver Bull ETFS Leveraged Silver ETC ETFS Short Sugar (DE) ETC ETFS Leveraged Agri DJ-UBSCI (DE) ETC ETFS Cotton (DE) ETC ETFS Short Sugar ETC ETFS Leveraged Agri DJ-UBSCI ETC ETFS Leveraged Crude Oil (DE) ETC iPath DJ-UBS Cotton TR Sub-Idx ETN ETFS Cotton ETC Source S&P GSCI Cotton TR T-ETC Horizons BetaPro NYMEX Crude Oil Bull Source: GlobalFundData/Morningstar as of August 4, 2011
â–ş WEAK WHEAT PRICES Wheat prices in western Europe and the US were lower as worries about the outlook for both economies rose.
17 ETF Radar Magazine | Issue August-September 2011
Listing Region Europe Europe Europe Europe Europe Europe Europe Europe Europe Europe Europe Europe Europe Europe North America North America North America Europe North America Europe Europe Europe Europe Europe Europe Europe North America Europe Europe North America
1 Mth -34.15% -33.59% -28.86% -28.40% -28.29% -26.28% -25.96% -25.73% -25.65% -25.34% -25.33% -23.48% -22.83% -20.38% -20.00% -19.80% -19.37% -19.17% -18.71% -18.48% -17.30% -16.98% -16.70% -16.60% -16.27% -16.18% -16.16% -15.99% -15.99% -15.95%
12 Mth -11.02% 5.33% 166.70% -14.54% 215.68% 1.37% 1.16% 50.52% 78.16% -13.62% -13.49% 62.53% 164.47% 145.69% 185.87% 190.81% -65.73% 71.58% 65.55% -59.43% 103.08% -7.56% 97.84% 95.95% 96.52% 6.57%
Inception -45.85% -58.98% 21.44% -10.71% -1.59% -12.86% -8.33% -23.21% -29.60% -13.37% -21.60% 11.86% 109.50% 30.73% 111.25% 12.32% -34.03% -6.32% 5.52% -25.06% -16.75% -57.89% 13.74% 8.29% 55.94% -53.78%
Net assets (USD) 49,970,019 72,448,667 1,476,502 95,351,501 2,140,695 3,641,700 138,244,677 2,521,843 3,353,158 1,002,019 31,479,481 99,338,590 41,856,559 9,247,651 11,078,136 24,685,925 13,407,639 16,061,555 89,734,401 35,790,708 13,708,445 279,658,686
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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