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News • Market Intelligence • Rankings

November-December 2009

etfRADAR M

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Issue No. 4 ISSN 2150-9166

Snapshots

LONELY LISTINGS Insights&Strategy

THE CASE FOR EMERGING MARKET ETFS Marketplace

Coverstory

SIMPLIFYING THE ETF INVESTMENT PROCESS

AMERICAS, EUROPE AND ASIA-PACIFIC AT A GLANCE Ranking

GLOBAL ETF WEBSCAPE


Contents 3 EDITORIAL 5 MARKET SUMMARY Selected statistics and news from all over the world.

6 SECTOR MAP Performance of the 19 Supersectors represented by the Dow Jones Sector Titans IndexesSM.

8 COVERSTORY Simplifying the ETF Investment Process: How ratings can help investors clarifying the investment process in order to make better investment decisions.

12 MARKETPLACE

16 RANKING

Global ETF news and selected market statistics at a glance.

Global ETF Webscape 2009: Insights about rare pearls and junk in the World Wide Web.

10 INSIGHTS &

13 AMERICAS

18 CAREER & EVENTS

STRATEGY

14 EUROPE

A review of the current job market and an overview about upcoming events within the ETF industry.

15 MIDDLE EAST & ASIA-PACIFIC

20 GLOBAL PLAYERS

The case for Emerging Market ETFs:

The long term outlook for the Emerging Markets is still positive.

Comprehensive details about the world’s largest ETF providers.

COMPANY-INDEX (Name, page)

Bank of America Barclays Global Investors Bolsa de Madrid Borsa Italiana Commerzbank Deutsche Bank Dow Jones Emerging Global Advisors Facebook Google IndexIQ iShares LinkedIn London Stock Exchange Marco Polo XTF MarketAccess NYSE Euronext

ETF Radar Magazine • N o v e m b e r - D e c e m b e r

4 16, 17 4 4 14 7, 14 6 10 16 16 14 13 16 4 8 14 10

2009

Schwab Singapore Exchange Standard & Poor’s Stoxx Stuttgart Stock Exchange United Overseas Bank Wiener Börse Xing Yahoo

4 15 15 6 14 15 4 16 16

2


Editorial

How to navigate through the increasing product jungle?

M

aybe you have already cogitated about the problem, how to find the “right” - not to be confused with the “cheapest” Exchange Traded Fund from the pool of products offered? Meanwhile, private and institutional investors face some difficulties in distinguishing between all the different ETFs - especially if one use index-tracking products to replicate a blue chip index. What is the argument to track a blue chip index by using an ETF of issuer X, instead of investing into an ETF of issuer Z?

CONTACTS & INFORMATION

The ETF Radar Magazine NORTH AMERICA eMail: americas@etf-radar.com Phone: +1 239 384 6090 Mailing address: 2316 Pine Ridge Road #402 Naples, FL 34109 EUROPE, MIDDLE EAST and ASIA-PACIFIC eMail: europe.asiapacific@etf-radar.com Phone: +49 89 28744906 Mailing address: Postfach 101214 80086 Munich

One way to understand the strengths and weaknesses between specific Exchange Traded Funds is to use ratings. In our cover story, Mel Herman reports about the key benefits of using ETF ratings and tells investors which things they should gauge when choosing an ETF rating provider. One of the most important conclusions is that a rating should not be confused with a strict performance prediction. It’s more an appropriate way to navigate smoothly through the increasing ETF product jungle.

GLOBAL PUBLISHER Martin Raab, CAIA RESEARCH DIRECTOR Sebastian Stahn DESIGN DIRECTOR Cathrine Corbeau TECHNICAL DIRECTOR Tobias Stoeger

A clear view behind the threads and opportunities of emerging markets and how you can bypass or mitigate these risks accordingly, we provided within our Insights&Strategy section. Also a more or less dense jungle we explored during our research work for the “Global ETF Webscape”, an unique ranking of the best ETF related websites. We summarized the most useful offers on page 17. I’m sure you will benefit from the mentioned websites and of course from this issue of the ETF Radar Magazine!

M

Enjoy reading,

a rti n

Global Publisher

WEBSITE www.etf-radar.com ISSN 2150-9166 SINGLE ISSUE PRICE 12 USD SUBSCRIPTION Subscriptions to the magazine are complimentary for qualified readers and 72 USD for others. COPYRIGHT No part of this publication may be copied, photocopied or duplicated in any form or by any means without publisher’s prior written consent.

Ra a b

THE ETF RADAR MAGAZINE IS A PRIVATE AND INDEPENDENT PUBLICATION. 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. © 2009 ETF Radar Magazine. All rights reserved.

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2009

The pulp and paper industry as well as the printing industry are the third largest industrial polluters of air, water and land. Hence the ETF Radar Magazine is solely distributed as an electronic publication (PDF).

For all subscription enquiries, thoughts or general questions please contact us directly by email:

magazine@etf-radar.com

3


Snapshots NEWCOMER

LONELY LISTINGS (European ETFs/ETCs with no turnover on an exchange since three consecutive months; sorted by exchange)

Exchange Traded Funds

ISIN

Stock Exchange

ComStage ETF MSCI Europe Large Cap TRN Source DJ STOXX 600 Optim. Chemicals Source DJ STOXX 600 Optim. Financial Svcs. Source DJ STOXX 600 Optim. Travel & Leis. Source DJ STOXX 600 Optim. Retail ETFlab iBoxx Liquid Sovereign Diversified 10+ ETFlab MSCI USA MC PowerShares Dynamic US Market Fund ETFS Janney Global Water Fund JPMorgan ETF GBI EMU 7-10Y PowerShares Dynamic Europe Fund PowerShares Dynamic Glbl. Dev. Mkts. Fund PowerShares Dynamic US Market Fund PowerShares FTSE RAFI Dev. 1000 Fund PowerShares Palisades Global Water Fund ETFS Janney Global Water TR iShares DJ STOXX 600 Travel & Leisure db x-trackers S&P U.S. Carbon Efficient ETF Lyxor ETF DJ EURO STOXX 50 BuyWrite FTSE4GOOD IBEX ETF iShares DJ STOXX EU Enlarged 15 Lyxor ETF DJ Global Titans 50 Lyxor ETF Eastern Europe Market Access DJ Turkey Titans 20 ETF Market Access South-East Europe Traded ETF

LU0392496187 IE00B5MTY077 IE00B5MTYK77 IE00B5MJYC95 IE00B5MTZM66 DE000ETFL169 DE000ETFL276 IE00B23D9240 E00B3CNHB79 FR0010561258 IE00B23D9570 IE00B23D9463 IE00B23D9240 IE00B23D8W74 IE00B23D9026 IE00B3CNHB79 DE000A0F5UC2 LU0411076002 FR0010389205 ES0139761003 DE000A0D8Q15 FR0007075494 FR0010204073 LU0269999362 LU0259329869

Frankfurt/Xetra Frankfurt/Xetra Frankfurt/Xetra Frankfurt/Xetra Frankfurt/Xetra Frankfurt/Xetra Frankfurt/Xetra Frankfurt/Xetra Frankfurt/Xetra Frankfurt/Xetra Frankfurt/Xetra Frankfurt/Xetra Frankfurt/Xetra Frankfurt/Xetra Frankfurt/Xetra Borsa Italiana Borsa Italiana London SE SIX Swiss SE Bolsa de Madrid Wiener Börse Wiener Börse Wiener Börse Wiener Börse Wiener Börse

Source: ETF Radar Global Research, November 2009.

UP & DOWN

Angela Merkel the recently re-elected German chancellor is going to become one of Europe’s most important politicans - and perhaps a potential trendsetter for the elections in the UK. She will have a comfortable center-right majority in the Bundestag, Germany’s lower house of parliament, and ditched the center-left Social Democrats from her government. Alongside with Merkerl’s win, the liberal-democratic party (”FDP”), which had campaigned on a platform of tax cuts, gained nearly 15% of the voters shares - its best result in a federal election. The new balance of power in favour of the probusiness party FDP and Merkel’s CDU sparked new hopes within the German financial industry, that the regulation efforts could turn out less massive than initially expected.

ETF Radar Magazine • N o v e m b e r - D e c e m b e r

2009

“CHUCK” JOINED THE CLUB: FIRST SCHWAB ETFS HAVE BEEN LAUNCHED. The first four exchange traded funds managed by Charles Schwab Investment Management have been launched on November 3 2009. To boost sales, Schwab is waiving its trading fee of USD 12.95 if the ETFs change hands online for Schwab account holders. Obviously the commission-free feature will be permanent. The vast majority of these four new ETFs seem not to be different compared to already exisiting offers from competitors but the real opportunity rests with Schwab's advisor network and Schwab's huge 401k presence. Few 401ks, for example, even offer ETFs yet. But if Schwab starts to get its own ETFs into Schwab 401k plans, assets could grow largely. The new ETF unit is headed by Dustin Lewellyn, a former manager for ETFs at Northern Trust. The ETF Radar Magazine will report more details about Schawb’s new ETF business within the next issue.

Kenneth D. Lewis Bank of America’s embattled CEO will step down effective Jan. 1 2010, capping months of turmoil and intense scrutiny over the bank’s ill-fated merger last fall with Merrill Lynch. In ordinary times, he would leave the Charlotte (N.C.) based bank giant with a golden parachute but according to the the Obama administration's pay czar, Lewis will receive no compensation in 2009. At a shareholder meeting in Charlotte last December, one investor brought up the topic, asking Lewis if he'd work for one dollar a year. “No way”, he replied instantly. Even if he is now forced to leave the bank, there is no need for crying: His private wealth is expected to reach nearly 100 million USD.

4


Market Summary

THE GLOBAL MARKETS AT A GLANCE OCT

SEP

NOV

GLOBAL EXCHANGE TRADED FUND FLOWS (Net New Flows by region in USD bn.)

AUG

MAJOR EQUITY INDICES (performace in percent)

115%

+55.1 +18.4

110%

+7.7 105%

}

+76.8 New Flows

– 4.6 100%

+ 0.2

+56% vs. July 2009

YTD-AUG 2009

95%

90%

DOW JONES INDUSTRIAL AVERAGE (US) DOW JONES EUROSTOXX 50 (EUROZONE) DAX 30 (GERMANY) NIKKEI 225 (JAPAN) HANG SENG (HONG KONG)

2008

COMMODITIES -20 -10

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 UNITED STATES OFFSHORE EUROPE JAPAN ASIA PACIFIC

NOV

OCT

SEP

AUG

(performace in percent)

115%

110%

MARKET VOLATILITY NOV

OCT

SEP

100%

AUG

(performance in points) 32

30 95%

28

26 90%

24

22 85%

DOW JONES UBS COMMODITY INDEX WTI OIL FUTURE FEB 2010 (IPE) GOLD (SPOT) NATURAL GAS INDEX (AMEX)

20

VOLATILITY INDEX (CBOE)

Source: IDS, Barclays Global Investors | Data as of November 4, 2009.

Source: Interactive Data Solutions | Data as of November 4, 2009.

NUMBER CRUNCHER

999,800

Number of viewers watched BBC2's docudrama “The Last Days of Lehman Brothers”

9.2

Daily average working hours of Financial Services Employees in the U.S.

6

Expected total amount (in billions GBP) of annual bonus payments for London-based Investment Bankers for the year 2009. .

Source: ETF Radar, Centre for Economic & Business Research; Data as of October 2009.

ETF Radar Magazine • N o v e m b e r - D e c e m b e r

2009

5


Sector Map

THE GLOBAL SECTOR TITANS AT A GLANCE DOW JONES SECTOR TITANS INDEXES (Sector performace in percent – 3M and YTD) Official Index Partner of the ETF Radar Magazine

SM

The Dow Jones Sector Titans Indexes reflect the composition and performance of the 19 Supersectors defined by the Industry Classification Benchmark (ICB). Stocks are chosen based on float-adjusted market capitalization, revenue and net income. The top 30 companies are selected as index components.

WORST PERFORMING SECTORS

Automobiles –2.80%

Personal & Household Goods +4.34%

Chemicals

+6.24%

Health Care +2.50%

Telecommunications +2.21%

Construction & Materials +4.56%

Insurance

+6.20%

Utilities +1.64%

Financial Services

Technology +4.78%

+5.49%

Travel & Leisure

Retail +7.01%

+6.28%

Basic Resources +7.23%

Media +8.50%

Food & Beverage +7.31%

Real Estate +7.68%

Industrial Goods & Services +7.85%

Oil & Gas +9.80%

Source :

Dow Jo

nes Ind

exes/S

Banks +10.57%

TOXX L td

. as of

Octobe r 30, 2 009.

BEST PERFORMING SECTORS Sector Dow Jones Sector Titans World Automobiles & Parts Index Price Return (USD)

3-months

YTD

-2.80%

43.58%

Dow Jones Sector Titans World Utilities Index Price Return (USD)

1.64%

-5.66%

Dow Jones Sector Titans World Telecommunications Index Price Retur n (USD)

2.21%

3.96%

Dow Jones Sector Titans World Health Care Index Price Return (USD)

2.50%

4.96%

Dow Jones Sector Titans World Personal & Household Goods Index Price Return (USD)

4.34%

15.89%

Dow Jones Sector Titans World Construction & Materials Index Price Return (USD)

4.56%

17.09%

Dow Jones Sector Titans World Technology Index Price Return (USD)

4.78%

42.36%

Dow Jones Sector Titans World Financial Services Index Price Return (USD)

5.49%

42.22%

Dow Jones Sector Titans World Chemicals Index Price Return (USD) Dow Jones Sector Titans World Insurance Index Price Return (USD)

6.20%

33.62%

6.24%

7.37%

Dow Jones Sector Titans World Travel & Leisure Index Price Return (USD)

6.28%

5.94%

Dow Jones Sector Titans World Retail Index Price Return (USD)

7.01%

21.62%

Dow Jones Sector Titans World Basic Resources Index Price Return (USD)

7.23%

58.66%

Dow Jones Sector Titans World Food & Beverage Index Price Return (USD)

7.31%

19.56%

Dow Jones Sector Titans Real Estate Index Price Return (USD)

7.68%

21.52%

Dow Jones Sector Titans World Industrial Goods & Services Index Price Return (USD)

7.85%

16.78%

Dow Jones Sector Titans World Media Index Price Return (USD)

8.50%

20.16%

Dow Jones Sector Titans World Oil & Gas Index Price Return (USD)

9.80%

19.31%

10.57%

36.32%

Dow Jones Sector Titans World Banks Index Price Return (USD)

ETF Radar Magazine • N o v e m b e r - D e c e m b e r

2009

6


Market Summary

FOCUS: EUROPEAN ETFS FLOW-TRENDS FLOWS OF EUROPEAN ETFS BY ASSET CLASS

AUM FOR EUROPEAN ETFS BY ASSET CLASS

(in Euro million)

(in Euro million)

Commodity - ETF

Commodity - ETF

Commodity - ETC

Commodity - ETC

Credit

Credit

Equity

Equity

Debt

Debt

Money Market

Money Market

Other ETFs

Other ETFs

-3.000 -2.000 -1.000

0

1.000 2.000 3.000 4.000

1M Flow

AUM as on 30/09/2009 0

20.000 40.000 60.000 80.000 100.000 120.000

3M Flow

FLOWS OF EUROPEAN ETFS BY SECTOR

FLOWS OF EUROPEAN ETFS BY GEO FOCUS

(in Euro million)

(in Euro million) Americas

Automobiles & Parts Banks Basic Resources Chemicals Construction & Materials Food & Beverage Health Care Industrial Goods & Services Insurance Media Oil & Gas Personal & Household Retail Technology Telecom Travel & Leisure Utilities -30

Emerging Markets Euroland European Union France Germany Global Italy Japan Spain Sweden Switzerland UK Others -10 1M Flow

10

30

50

70

90

110

-500

3M Flow

0

500 1M Flow

1.000

1.500

2.000

2.500

3M Flow

All data as of September 30, 2009.

KEY FINDINGS  By Indices: Within the last six weeks the DJ Euro Stoxx 50 and the DAX 30 (represented within the category “Equity”) have the largest net inflows of respectively 561m EUR and 246m EUR.  By Asset-Class: Money-Market ETFs continued their losses of AuM, Equity ETF still gained assets.  By Sector: Unlike the last months, now the sector “Banks & Financials” was the biggest gainer, accompanied by the Telco’s and Oil & Gas.  By Fund: The three biggest asset gathering ETF brands were iShares, Deutsche Bank and Lyxor (1.1bn, 701m EUR and 594 EUR).

ETF Radar Magazine • N o v e m b e r - D e c e m b e r

2009

In association with

www.dbxtrackers.com Serivceline +44 20 7547 1747

7


Coverstory

Simplifying the ETF Investment Process In this rapidly-changing and increasingly challenging environment, ETF ratings can help investors clarify the investment process and make better informed investment-related decisions.

BY MEL HERMAN | MARCO POLO XTF | NEW YORK

D

uring the past 15 years, the proliferation of Exchange Traded Funds (ETFs) continues to accelerate with total assets now approaching 1 trillion US Dollars. There are now over 4,500 Exchange Traded Products - including ETFs and Exchange Traded Notes - globally, from more than 90 ETF provider. ETFs track thousands of unique indexes and the investment philosophies can run the gamut from passive management, socially responsible, and recently even active management - or a blend somewhere in-between. Nowadays Exchange Traded Funds and Exchange Traded Notes provide exposure now to every geographic region and country and every asset-class including equity, currencies, fixed income, real estate, and commodities. Within equity they provide access to nearly every sector and industry. Among these the index compositions can be managed in completely different ways including: Market-cap weighted, price weighted, or weighted according to fundamentals such as historical dividend yield. Amazingly, even with all these options, the market continues to show strong demand for new Exchange Traded Products and the best way to gain insight is to get the best possible information from your wealth manager and utilize the research provided by industry experts. How can investors distinguish among ETFs? While ETF innovation was initially US-driven and based on its markets, both US-listed and ex-US Exchange Traded Funds now provide very good global coverage via the ETF constituents. There are ETFs based on indexes with exposure to dozens of countries around the world. Commodity and currency ETFs are global in focus and provide exposure to both the spot and futures market. Currency Exchange Traded Funds give exposure ETF Radar Magazine • N o v e m b e r - D e c e m b e r

2009

to 14 of the most important currencies around the world, including those of all four BRIC countries - Brazil, Russia, India and China - whose economies are rising in importance. One resource that can be useful in simplifying the process and cutting through all the confusion is XTF's ETF ratings. An investor can take advantage of the most comprehensive ETF ratings and research tools available today. XTF's ETF rating methodology is rapidly becoming the industry standard for evaluating Exchange Traded Products. Utilizing ETF Ratings ETF ratings can help an investor evaluate an ETF's quantitative and qualitative components. The primary aspects to be analyzed are structural integrity and performance. The structural aspect has to do with expense, how well the Exchange Traded Products

“An ETF rating should not be confused with a performance prediction – unless explicitly advertised as such.” (ETPs) tracks its index, how liquid it is, and in the US market, how tax efficient. Some of these factors are related to the relative strengths of ETPs over mutual funds: more transparency, lower expense ratios, tighter tracking error, and superior tax efficiency. These factors allow investors to compare an ETP to mutual funds that track the same index. Performance of ETPs also has several possible input metrics that can vary in importance from investor to investor. Predicting ETF performance »

8


Coverstory THE KEY BENEFITS OF USING EXCHANGE TRADED FUND RATINGS TO AID INVESTMENT DECISIONS Benefit Assess the structural integrity

Evaluate the historical performance

Comparison of ETPs with mutual funds tracking the same index

Understand relative strengths and weaknesses between ETPs

Evaluating the underlying holdings of an ETF

Distillation of Information and Expertise

Comment Is an ETP expensive? Or, conversely, is it charging enough to cover the risks of the particular market? Is the ETP providing the targeting it is advertising? How much diversification is each ETP providing? Although past performance is not guarantee of future performance, it can be indicative and, at a minimum, should be taken into account. ETPs are marketed as alternatives to mutual funds. If you are a mutual fund investor thinking of switching to ETFs, ratings can help you assess the relative merits. For ETPs competing in the same index/market, which one is “better” (e.g. more liquid, more or less targeted, more diversified, more accurately tracking the index)? A good ratings provider will show the underlying holdings and their weights of each ETF and answer the question, is there additional exposure to derivatives and/or swaps? Investors don’t always have the time or knowledge to make informed decisions. This is a relatively new market with many players that is quickly changing. Keeping up requires constant effort. Most investors cannot devote sufficient effort to the degree necessary to make the right choices.

Source: Marco Polo XTF | XTF’s ETF Ratings, Research Tools and Data can be accessed at www.xtf.com

is as difficult an undertaking as it is for a single equity or bond. An Exchange Traded Fund rating should not be confused with a performance prediction unless explicitly advertised as such. Ratings should be used as guides not crystal balls. The structural and performance factors should be used by investors to compare and distinguish between ETPs. The challenges to those creating ratings are to provide this information for the investor on a level playing field and to help make fair comparisons among all Exchange Traded Products. It must also distinguish among different investment outlooks; investors have different risk tolerance, needs, desires, outlooks and time horizons.

Ratings providers must use their knowledge of the ETF markets and finance in association with historical data to guide the general investor as well as the professional money manager. As in anything else, there is a tradeoff between being too specific to maintain relevance and being a jack of all trades but a master of none. Using ETF ratings allows the investor to make more informed investment related decisions. The degree to which ratings providers gain your trust will determine whether or not they survive in the competitive Exchange Traded Funds marketplace.

“Investors should insist that the components of the ratings be explicitly tabulated – not just the end result.”

ETF Radar Magazine • N o v e m b e r - D e c e m b e r

2009

What to watch out for when choosing an ETF Ratings Provider There are five main features to gauge when choosing an ETF Ratings provider: • Ratings methodology, • Coverage, • Transparency, • Provider independence • Powerful, user-friendly tools Choose a provider with a methodology that is as quantitative and detailed as possible and whose ratings are not limited to a certain region or market segment. Many raters give a number or a more qualitative rating without explaining anything about what inputs were used. Insist that the components of the ratings be explicitly tabulated not just the end result. Stay away from firms that have a profit incentive to rate certain ETFs higher than others. Finally, look at the support tools the rater provides. Some will be too simple to be useful or provide too many insignificant options. You want tools that can help you quickly narrow your focus and answer relevant questions giving you the results you require without distraction. Start Using ETF Ratings In conclusion, the Exchange Traded Products market has shown significant innovation and growth over the past decade and will continue to expand into the foreseeable future. Many new ETFs are due to come on-line as of this writing while net flows of funds into ETFs continue to increase despite the market turbulence during the past 12 months. In this rapidly-changing and increasingly challenging environment, providers like XTF ratings can help investors clarify the investment process and make better i n f o r m e d i nve s t m e n t - r e l a t e d decisions. 

9


Insights&Strategy

THE CASE FOR

Emerging Market ETFS

Although near term uncertainty is present due to the slowing global economy and persistent inflation, long term outlook for the Emerging Markets is positive.

BY RICHARD KANG | EMERGING GLOBAL ADVISORS | NEW YORK

A

s we move further away from the financial crisis of 2008 and begin to look at where investors stand today, it becomes clear that we have lived through a sea change event. Clearly, the Western world has been hit hard. For example, as recently as two years ago the list of the world's largest financial institutions was dominated by U.S.-based names, with a few others located in the UK, continental Europe and Japan thrown in for good measure. Now, following the collapse of some of the oldest and most venerable firms on Wall Street, we find such lists welcoming newcomers from emerging market nations, especially China. Changing the investment approach The most basic of factors seem to favor the ascension of the developing world. Whether it be economic growth through various GDP measures or the demographic outlook that drives increased consumerism, these countries appear poised to remain growth stories for the foreseeable future. Recognizing this, individuals need to change their approach to investing in two basic ways: 1) by considering tactical changes with regards to their overall allocations to emerging markets; and, 2) by managing their exposure to the so-called “developed world”, since the systemic dominoes which fell over the past several months have highlighted the very real risks of “first-world” investing. Making such changes to investors' approach is unlikely to be a short-term effort since there remain worthy considerations and concerns regarding emerging markets investing. However, one must move beyond the simple generalizations of the past (i.e “Emerging ETF Radar Magazine • N o v e m b e r - D e c e m b e r

2009

markets are more risky than developed markets”) and gain a more nuanced understanding of emerging markets investing to truly manage such risks. Do Emerging Markets really bear more risk? If risk is simply volatility, which it is not, then the oftrepeated adage above would hold true. A country that, for example, had two 50 percent declines in its major equity markets over the course of the last decade would likely cause investors with even the strongest stomachs to stream for the exits. However, if I told you that country was not an emerging market at all, but rather the United States, which has in fact seen two such drops in the decade, your perspective on the inherent risk of the market in question might start to shift. Given what has happened in the U.S and the rest of the developed world, one must wonder if developed markets are in fact significantly better from a traditional risk-return perspective. This is not to say that emerging markets are not risky. On the contrary, the truth is that any reallocation of assets from the developed markets to the developing markets introduces an investor's portfolio to a number of different and unique risks. These include: • Political risk • Currency risk • Regulatory risk • Illiquidity risk • Lack of transparency • Other idiosyncratic risks associated with each particular emerging market economy In 2008, the Russian stock markets shut down during »

10


Insights&Strategy

the invasion of Georgia. This was not a long-term event, but it still had widespread repercussions that were felt by investors around the globe who had Russian exposure. Developed countries are not immune to market closings due to extraneous events, as happened to the New York Stock Exchange in the days after 9/11, but it's undeniable that this type of scenario unfolds more often in the emerging markets. Investors, therefore, cannot realistically be guaranteed trading and liquidity but they can limit single-country exposure to protect themselves from the unforeseen. Diversification can, in fact, help in negating many, but not all, of the risks listed above. What also helps is access to an investment vehicle that, through its very structure, can allow for tangible benefits to its user. The Exchange-Traded Fund, one of the most innovative financial instrument created over the past two decades, is ideal for this purpose.

close down for a day or more, investors with Russia exposure via their ETFs can trade as they normally would on the NYSE Arca or other major exchange. Nevertheless investors should be aware of sometimes massive enlarg ed bid/ask-spreads in such extreme market events. Usually the market maker is no longer able to hedge itself and therefore will increase the difference between the buying and selling price of the specific Exchange Traded Fund. Transparency is perhaps the greatest innovation that ETFs bring to the table. Since the underlying index of such a fund is fully transparent, investors are able to track portfolio constituents on an ongoing basis, a far superior approach to the murky exposure breakdowns investors may get from hedge funds (if they get any at all), and even besting the information shared with investors by mutual funds.

ETFs as a convenient way to Let's revisit our list of emerging invest in exotic underlyings markets risks and see how the ETF Emerging markets investing may structure helps to address each one. come with a unique set of risk factors Political, currency, and regulatory but savvy investors realize that risk are mitigated in part by using a investing is about pricing these risks fund that diversifies across different and determining the appropriate countries and regions. ETFs have the levels of return at which one will be flexibility and capacity to be more rightly compensated. Unfortunately industry- or sector-focused in such a for investors new to emerging way that any upheaval (i.e. military markets, sometimes the volatility coup, spike in inflation) can be lessened by SELECTED EMERGING MARKETS ETFS Ticker having that country be ETF Name just one of many with FTSE RAFI Emerging Markets Portfolio PXH equities included in a Emerging Global Shares EM Index Composite Fund EEG single ETF. MSCI Emerging Markets Index Fund EEM Illiquidity risk is addressed by the fact that ETFs do not trade on the exchange of the country or countries upon which they may be focused. So while the Russian markets may

turns out to be too much and they tend to exit quickly. But volatility is not the only measure of risk. Underweighting the fastest growing segments of the global economy is a form of risk as well. In our view, the fundamentals support a long-term commitment to these rapidly growing economies. ETFs, with all their inherent advantages, provide an excellent vehicle for gaining that exposure. ď Ž

Expense Market Cap. Ratio (%) (million USD) 0.85

190

0.75

5

0.74

36

ETF Issuer

PowerShares Emerging Global Shs. iShares

Market Vectors Russia ETF

RSX

0.69

1009

WisdomTree Emerging Markets Equity Income Fund

DEM

0.63

416

Van Eck Global WisdomTree

WisdomTree Emerging Markets SmallCap Dividend Fund

DGS

0.63

238

WisdomTree

SPDR S&P Emerging Middle East & Africa ETF

GAF

0.60

138

State Street

SPDR S&P Emerging Latin America ETF

GML

0.60

148

State Street

SPDR S&P Emerging Asia Pacific ETF

GMF

0.60

477

State Street

JPMorgan USD Emerging Markets Bond Fund

EMB

0.60

826

iShares

Emerging Markets Sovereign Debt Portfolio

PCY

0.50

431

PowerShares

PowerShares BLDRS Emerging Markets 50 ADR Index Fund

ADRE

0.30

698

PowerShares

Vanguard Emerging Markets ETF

VWO

0.25

13

Vanguard

Source: ETF Radar Global Research; October 2009

ETF Radar Magazine • N o v e m b e r - D e c e m b e r

2009

11


Marketplace

Global

TOP 10 GLOBAL EXCHANGES BY TURNOVER

TOP 25 ETF PROVIDER WORLDWIDE

(Total Value of Share Trading; USD millions)

(sorted descending by Assets-under-Management, in USD bn.)

1.398.118,3 1.933.645,0

1.235.044,6

1.160.636,0

1.780.244,6

2.633.328,2 21.767.906,1

2.994.843,1 3.730.036,1

13.590.105,5

1| 3| 5| 7| 9|

NASDAQ OMX Shanghai SE London SE Deutsche Börse Korea Exchange

2 | NYSE Euronext (US) 4 | Tokyo SE 6 | Shenzhen SE 8 | NYSE Euronext (Europe) 10 | BME Spanish Exchanges Source: WFE, ETF Radar | Data as of October 2009.

TOP 10 ETFS WORLDWIDE (TOTAL AUM) (sorted descending by Assets-under-Management, in USD mn.) ETF NAME

TICKER

SSGA SPDR S&P 500 SPY US ISHARES MSCI EAFE INDEX FUND EFA US ISHARES MSCI EMGING MKTS INDEX FUND EEM US ISHARES S&P 500 INDEX FUND IVV US POWERSHARES QQQ TRUST QQQQ US ISHARES BARCLAYS TIPS BOND FUND TIP US ISHARES IBOXX USD INVSTM. GRD. CORP. BND FD LQD US VANGUARD EMGING MKTS ETF VWO US ISHARES RUSSELL 2000 INDEX FUND IWM US VANGUARD TOTAL STOCK MARKET ETF VTI US

AUM 70,636 34,317 33,881 20,481 17,042 16,471 13,858 13,468 12,843 12,350

ADV          

18,863 1,077 2,568 343 4,191 132 96 268 2,759 85

         

NR. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

                        

PROVIDER iShares State Street (SSGA) Vanguard Lyxor Asset Management db x-trackers PowerShares ProShares Nomura Asset Mgmt. Van Eck Associates Corp Bank of New York Credit Suisse AM Zurich Kantonalbank Easy ETF Nikko Asset Management WisdomTree Investment ETFlab Investment Hang Seng Inv. Mgmt. Claymore Securities Daiwa AM Direxion Shares Commerzbank Credit Agricole AM China Asset Management UBS Global Asset Mgmt. Rydex

# of ETFs 403 106 40 102 118 124 78 29 21 1 24 4 64 10 51 30 3 57 23 22 51 63 2 8 31

AUM (US BN) 451.87 138.32 77.15 42.92 33.86 32.03 23.76 15.51 9.70 7.93 7.59 6.19 5.90 5.72 5.38 5.19 4.91 4.78 4.72 4.45 4.22 3.90 3.23 2.88 2.85

% TOTA L 48.4% 14.8% 8.3% 4.6% 3.6% 3.4% 2.5% 1.7% 1.0% 0.8% 0.8% 0.7% 0.6% 0.6% 0.6% 0.6% 0.5% 0.5% 0.5% 0.5% 0.4% 0.4% 0.3% 0.3% 0.3%

Source: Barclays Global Investors| Data as of 30 September 2009.

Source: Barclays Global Investors| Data as of September 30, 2009.

TOP 10 ETFS WORLDWIDE (CHANGE IN AUM)

TOP 10 ETF PRODUCT-PIPELINE WORLDWIDE

(sorted descending by largest change in Assets-under-Management, in USD mn.)

(sorted descending by number of planned ETFs)

ETF NAME

TICKER

SSGA SPDR S&P 500 ISHARES MSCI EMERGING MARKETS INDEX FUND VANGUARD EMERGING MARKETS ETF ISHARES BARCLAYS TIPS BOND FUND ISHARES IBOXX USD INVSTM. GRD. CORP. BND FD ISHARES MSCI BRAZIL INDEX FUND ISHARES S&P 500 INDEX FUND POWERSHARES QQQ TRUST ISHARES CDN LARGECAP 60 INDEX FUND DB X-TRACKERS II EONIA TR INDEX ETF

SPY US EEM US VWO US TIP US LQD US EWZ US IVV US QQQQ US XIU CN XEON GY

AUM

CHNGE.

NR.

PROVIDER

70,636 33,881 13,468 16,471 13,858 10,156 20,481 17,042 10,036 3,260

–23,270 +14,408 +8,431 +7,569 +6,620 +6,612 +4,858 +4,521 +4,418 –3,681

1 2 3 4 5 6 7 8 9 10

DIREXION SHARES PROSHARES RYDEX WISDOM TREE INVESTMENTS INDEXIQ ADVISORS POWERSHARES XSHARES ADVISORS STATE STREET GLOBAL ADVISORS FACTOR ADVISORS SOURCE

Source: Barclays Global Investors| Data as of September 30, 2009.

ETF Radar Magazine • N o v e m b e r - D e c e m b e r

2009

# OF PLANNED ETFS 112 96 82 68 38 38 34 27 22 21

Source: Barclays Global Investors| Data as of September 30, 2009.

12


Marketplace

Americas AMERICAN EXCHANGES AT A GLANCE (sorted descending by total turnover, in EUR mn.) # of ETFs

Tota l turnover (USD millions)

Exchange August

September

August

# of Trades (in thousands)

September

August

September

BM&FBOVESPA

4

4

241.3

313.1

5.8

Lima SE

4

4

0.4

0.6

0.1

0.1

205

214

3,842.1

2,837.6

17.5

14.5

Mexican Exchange NASDAQ OMX NYSE Euronext (US) TSX Group

8.4

41

41

91,546.0

89,904.0

2,890.0

2,818.0

1025

1034

302,093.3

295,727.8

20,769.3

19,451.2

119

119

13,342.0

17,704.7

968.1

1,524.5

Source: World Federation of Exchanges| Data as of October 2009.

ON THE RADAR +++ SELECTED ETF NEWS

TOP 10 ETFS IN THE U.S. (TOTAL AUM) (sorted descending by Assets-under-Management, in USD mn.) ETF NAME

TICKER

SSGA SPDR S&P 500 SPY US ISHARES MSCI EAFE INDEX FUND EFA US ISHARES MSCI EMGING MKTS INDEX FUND EEM US ISHARES S&P 500 INDEX FUND IVV US POWERSHARES QQQ TRUST QQQQ US ISHARES BARCLAYS TIPS BOND FUND TIP US ISHARES IBOXX USD INVSTM. GRD. CORP. BND FD LQD US VANGUARD EMGING MKTS ETF VWO US ISHARES RUSSELL 2000 INDEX FUND IWM US VANGUARD TOTAL STOCK MARKET ETF VTI US

AUM 70,636 34,317 33,881 20,481 17,042 16,471 13,858 13,468 12,843 12,350

USA: NEW INDEX IQ ETFS FIGHT AGAINST INFLATION

ADV          

18,863 1,077 2,568 343 4,191 132 96 268 2,759 85

         

Source: Barclays Global Investors| Data as of Data as of September 30, 2009.

TOP 10 ETFS IN THE U.S. (CHANGE IN AUM) (sorted descending by largest change in Assets-under-Management, in USD mn.) ETF NAME

TICKER

SSGA SPDR S&P 500 ISHARES MSCI EMERGING MARKETS INDEX FUND VANGUARD EMERGING MARKETS ETF ISHARES BARCLAYS TIPS BOND FUND ISHARES IBOXX USD INVSTM. GRD. CORP. BND FD ISHARES MSCI BRAZIL INDEX FUND ISHARES S&P 500 INDEX FUND POWERSHARES QQQ TRUST VANGUARD TOTAL STOCK MARKET ETF ISHARES FTSE/XINHUA CHINA 25 INDEX FUND

SPY US EEM US VWO US TIP US LQD US EWZ US IVV US QQQQ US VTI US FXI US

AUM

CHNGE.

70,636 33,881 13,468 16,471 13,858 10,156 20,481 17,042 12,350 9,840

–23,270 +14,408 +8,431 +7,569 +6,620 +6,612 +4,858 +4,521 +3,256 +3,084

IndexIQ, a Rye Brook (NY) based alternative index provider, has introduced the “IQ CPI Inflation Hedged ETF” and “IQ ARB Global Resources ETF”, two new Exchange Traded Funds that seek to provide investors with protection against inflation. The IQ CPI Inflation Hedged ETF (NYSE Arca: CPI), the first US-listed real return ETF, seeks to replicate, before fees and expenses, the performance of the IQ CPI Inflation Hedged Index. The index strives to give investors a hedge against changes in the U.S. inflation rate by providing a “real return,” or a return above the rate of inflation as measured by changes in the Consumer Price Index. The Total Expense Ratio (TER) is 0.65% per year. If the new ETF from IndexIQ will achive its goal, and grant the investor a return above the CPI the TER is justified - if not one could think about investing in a cheaper passive index product like the iShares Global Inflation-Linked Bond (London Stock Exchange: IGIL). It’s annualized TER is 0.25%.

Source: Barclays Global Investors| Data as of Data as of September 30, 2009.

ETF Radar Magazine • N o v e m b e r - D e c e m b e r

2009

13


Marketplace

Europe EUROPEAN EXCHANGES AT A GLANCE (sorted descending by total turnover, in EUR mn.) # of ETFs

Total turnover (USD millions)

Exchange August Athens Exchange

September

August

# of Trades (in thousands)

September

August

September

2

2

8.7

6.0

0.3

0.2

32

32

293.4

409.6

n/a

n/a

368

371

5,736.2

7,691.3

196.6

242.5

1

1

0.7

0.3

0.1

0.1

481

496

18,020.5

18,249.2

156.3

148.0

Irish SE

14

14

5.0

18.7

0.1

0.2

Istanbul SE

10

10

941.7

713.1

26.8

25.2

Johannesburg SE

24

24

384.6

467.9

5.8

6.5

3

3

0.0

0.0

0.0

0.0

321

341

8,494.6

10,405.4

74.9

105.5

9

11

1,746.0

1,786.0

69.9

55.1

465

480

7,916.2

9,393.4

145.0

154.3

BME Spanish Exchanges Borsa Italiana Budapest SE Deutsche Börse

Ljubljana SE London SE NASDAQ OMX Nordic NYSE Euronext (Europe) Oslo Børs SIX Swiss Exchange Wiener Börse

8

8

1,881.7

1,937.2

73.5

73.3

183

177

3,441.5

4,336.3

37.9

44.0

22

22

4.2

6.6

0.2

0.2

Source: World Federation of Exchanges| Data as of October 2009.

TOP 10 ETFS IN EUROPE (TOTAL AUM)

ON THE RADAR +++ SELECTED ETF NEWS

(sorted descending by Assets-under-Management, in USD mn.) ETF NAME

TICKER

AUM

LYXOR DJ EURO STOXX 50 ISHARES DJ EURO STOXX 50 (DE) ISHARES S&P 500 ISHARES DJ EURO STOXX 50 ISHARES FTSE 100 ZKB GOLD ETF ISHARES CORP. BOND FUND LYXOR CAC40 XMTCH ON SMI ISHARES DAX (DE)

MSE FP SX5EEX GY IUSA LN EUN2 GY ISF LN ZGLD SW IBCS GY CAC FP XMSMI SW DAXEX GY

7,408 6,287 6,085 5,660 5,607 4,860 4,691 4,597 3,937 3,842

ADV          

72 62 46 59 71 22 33 56 20 153

         

Source: Barclays Global Investors| Data as of Data as of September 30, 2009.

TOP 10 ETFS IN EUROPE (CHANGE IN AUM) (sorted descending by largest change in Assets-under-Management, in USD mn.) ETF NAME

TICKER

AUM

DB X-TRACKERS II EONIA TR INDEX ISHARES CORP. BOND. ZKB GOLD ETF ISHARES DJ EURO STOXX 50 (DE) ISHARES MSCI EMERGING MARKETS ISHARES FTSE 100 DB X-TRACKERS EURO STOXX 50 ETF DB X-TRACKERS MSCI EMGNG. MKTS. TR INDEX ISHARES S&P500 ISHARES MSCI WORLD

XEON GY IBCS GY ZGLD SW SX5EEX GY IEEM LN ISF LN XESX GY XMEM GY IUSA LN IWRD LN

3,260 4,691 4,860 6,287 2,665 5,607 3,388 2,859 6,085 2,700

CHNGE. –3,681 +2,480 +2,124 +1,696 +1,696 +1,686 +1,456 +1,382 +1,291 +1,063

Source: Barclays Global Investors| Data as of Data as of September 30, 2009.

ETF Radar Magazine • N o v e m b e r - D e c e m b e r

2009

GERMANY: STUTTGART SE INTRODUCES NEW ETF SEGMENT FOR RETAIL INVESTORS

Since October 13 2009, Stuttgart Stock Exchange (”Börse Stuttgart”), main rival of Frankfurt SE, started its new ETF segment called “Bestx”. From launch day onwards, Commerzbank AG and Deutsche Bank AG will continuously provide binding buy and sell quotes for the ETFs listed in this segment. With the introduction of ”ETF Bestx”, Börse Stuttgart has set itself the target of guaranteeing best prices and highest execution reliability during regular trading sessions from 9 AM to 8 PM CET. Transaction fees will be equivalent to 0.119% of the order volume with a cap of EUR 12.18 (plus 19% VAT). Michael Görgens, Head of Investment Fund and ETF Trading, will oversee Börse Stuttgart’s new business unit. Currently there are 540 ETFs listed within the new segment, the offer is dominated by well-known names like iShares and db x-trackers, but there are also some ETFs from smaller players like MarketAccess available. Some of the biggest turnover producing funds are db x-trackers and yet, the general turnover on “ETF Bestx” in continues to grow. How fast and how sustainable Börse Stuttgart could gain a significant market share is very difficult to forecast, as the other, competing stock exchanges (Frankfurt and Munich), will also continue their efforts to attract more retail clients.

14


Marketplace

Middle East & Asia-Pacific MIDDLE AND FAR EAST EXCHANGES AT A GLANCE (sorted descending by total turnover, in EUR mn.) # of ETFs

Total turnover (USD millions)

Exchange August Australian SE

September

August

# of Trades (in thousands)

September

August

September

25

25

460.1

598.0

0.0

0.0

Bombay SE

2

2

0.1

0.1

0.3

0.5

Bursa Malaysia

3

3

2.2

0.7

0.3

0.1

37

37

8,454.8

7,321.9

307.1

251.3

Hong Kong Exchanges Indonesia SE

2

2

0.0

0.0

0.1

0.0

Korea Exchange

42

43

2,709.4

1,888.0

344.8

380.8

National SE India

16

16

87.7

118.0

87.0

101.7

6

6

6.5

7.1

0.5

0.6

12

12

1,884.1

1,965.9

0.0

0.0

3

3

12,616.6

9,065.4

1,431.0

1,022.0 401.6

New Zealand Exchange Osaka SE Shanghai SE Shenzhen SE

2

2

4,002.9

3,645.5

393.9

Singapore Exchange

40

40

220.8

278.3

n/a

n/a

Taiwan SE Corp.

14

14

417.1

679.4

80.3

107.6

Thailand SE Tokyo SE

3

3

12.2

11.9

12.6

10.1

67

68

1,627.8

1,423.8

0.0

0.0

Source: World Federation of Exchanges| Data as of October 2009.

TOP 10 ETFS IN ASIA-PACIFIC (TOTAL AUM)

ON THE RADAR +++ SELECTED ETF NEWS

(sorted descending by Assets-under-Management, in USD mn.) ETF NAME

TICKER

AUM

TSE TOPIX ETF OSE NIKKEI 225 ETF TRACKER FUND OF HONG KONG ISHARES FTSE/XINHUA A50 CHINA TRACKER TRACKER FUND OF HONG KONG LISTED INDEX FUND TOPIX HANG SENG INDEX ETF CHINA 50 ETF DAIWA ETF-NIKKEI 225 DAIWA ETF TOPIX

1306 JP 1321 JP 2800 HK 2823 HK 2800 HK 1306 JP 2833 HK 510050 CH 1320 JP 1305 JP

7,707 6,337 5,121 5,920 5,101 3,455 3,025 2,826 2,213 2,003

ADV          

67 26 40 228 23 26 2 306 16 4

         

Source: Barclays Global Investors| Data as of Data as of September 30, 2009.

TOP 10 ETFS IN ASIA-PACIFIC (CHANGE IN AUM) (sorted descending by largest change in Assets-under-Management, in USD mn.) ETF NAME ISHARES FTSE/XINHUA A50 CHINA TRACKER CHINA 50 ETF HANG SENG INDEX ETF SPDR S&P/ASX 200 FUND TRACKER FUND OF HONG KONG HANG SENG H-SHARE INDEX ETF POLARIS TAIWAN TOP 50 TRACKER BANKING INDEX BENCHMARK BEES INDIA WOORI CREDIT SUISSE KOSPI 200 FUBON MSCI TAIWAN

TICKER 2823 HK 510050 2833 HK STW AU 2800 HK 2828 HK 0050 TT BBEES IN 069660 KS 159902 CH

AUM 5,920 2,826 3,025 1,822 5,101 1,852 1,760 29 120 495

CHNGE. +2,300 +2,259 +1,273 +1,216 +862 +804 +707 –707 –571 +475

Source: Barclays Global Investors| Data as of Data as of September 30, 2009.

ETF Radar Magazine • N o v e m b e r - D e c e m b e r

2009

SINGAPORE: UNITED OVERSEAS BANK TO LAUNCH FIRST CHINA A-SHARE ETF

The fund management arm of United Overseas Bank will list a China A-shares exchange traded fund on the Singapore Exchange on November 12, allowing retail investors to invest in China's top 50 companies. This will be the first China Ashares ETF to be listed in Singapore. UOB Kay Hian, the brokerage arm of UOB, recently started offering the ETF to retail investors with an initial target to raise USD 60 million. UOB said the launch is a milestone for the group because traditionally access to A-shares market in China is limited to Chinese nationals and Qualified Foreign Institutional Investors approved by the Chinese regulator. The fund will be offered in Singapore dollar denomination and to be priced one day before the offering period begins. HONG KONG: S&P AWARDED AS “MOST INNOVATIVE INDEX PROVIDER ASIA”

Recognized for its growing class of innovative index products, Standard & Poor's announced on October 29 that it has been named most innovative index provider of the year in the Structured Products Asia Awards 2009. This year, S&P Indices has launched over 40 indices that have provided regional and global investors in Asia with greater investment choices, additional diversification options and increased transparency.

15


Ranking

Highlights of the WORLDWIDE WEB Websites which are more or less focussed on Exchange Traded Funds are mushrooming. The ETF Radar Magazine exclusively reviewed more than 140 websites and blogs globally and selected the most useful offers.

BY SEBASTIAN STAHN AND MARTIN RAAB | ETF RADAR MAGAZINE | NAPLES (FL)/MUNICH

A

long with the significant growth of the exchange traded funds industry, semi-professional bloggers, media companies and small businesses have created an incredible number of websites providing news, trading advice and research analysis for ETFs and index-tracking products. However - like in many other fields of interest - not each website has the same usability or offer the same valuable services to the users. High flyer and virtual wrecks We discovered really brilliant websites with up-to-date news and easy-to-use online tools but also some websites with pretty old content. For example one website showed “ETF News” dated from May this year. Also the rest of the site looked like a virtual, abandoned wreck. Nevertheless in most cases of the web research we found well designed, informative and useful web pages. An interesting outcome of our research is that the majority of the relevant sites have been launched in the past two years. Also some big media companies like Bloomberg, CNN or Yahoo created own sections which are exclusively focused on Exchange Traded Funds. Understanding the information provided One of the most important point for the website visitor is to really understand what all the information mean and how such an investment will behave in different market situations. Maybe the best starting point is the fund’s factsheet, which should always be available from the ETF provider’s website. Secondly an investor should create a virtual portfolio by which he or she can track and compare the fund’s performance accordingly. At least one time a week an ETF investor should check the latest market news and prices of his or her individual portfolio – in order to avoid negative surprises.  ETF Radar Magazine • N o v e m b e r - D e c e m b e r

2009

QUICK FACTS

13,200,000 search results appear for “etf ” on google.com

3,288 videos appear on youtube.com (selected clips)

3,048 people appear in relation with ETFs on linkedin.com

2,994

www

ETF related web domains are registred globally

298 people appear in relation with ETFs on xing.com

32

facebook

ETF covering groups are organized on facebook.com

12 active groups covering ETFs exist on linkedin.com Sources: ETF Radar Global Research and above mentioned companies| Data as of 28 October 2009.

16


Ranking

HOW THE RANKINGS ARE WORKED OUT Global

ETF

Global

WEBSCAPE 2009

ETF WEBSCAPE

THE SPECTRUM We reviewed 144 different websites which appeared on google.com and yahoo.com when entering the hitnames “etf ” or “exchange traded funds”. THE RANKING PARAMETERS Usability (weighting 25%) Content (weighting 50%) Design (weighting 25%)

CATEGORIES

ETF News

ETF Issuers Category WINNER

ETF Trading & Analysis Category WINNER

Category WINNER

etfdailynews.com

ishares.com

etfzone.com

Definitely the best website we discovered within the category “ETF News” is etfdailynews.com, a new hampshire based site, which is on air since March 2009. All news are published in real-time by an small but enthusiastic team, which cover various topcis within the exchange traded funds industry. The website’s design has a clear and puristic structure. Currently more than 25,000 visitors access etfdailynews.com per month.

It was a tight race between x-trackers and its rival iShares - but finally the re-designed web offer of Barclays’ ETF unit did it. Investors will find a very well designed site offering a wide range of general and product related information, framed by a clear structure.

The best website for near-time comprehensive comparisons and sophisticated ETF analysis. Even if the contents are focused on NYSE listed ETFs only, the stories are very informative and well-structured.

dbxtrackers.com

Clearly focused on trading strategies the website is one of the leading offers we found. Like all trading related sites, etftradingsingals offers an additonal premium section where interested investors can subscribe to its newsletter (ca. USD 50 monthly).

seekingalpha.com The “ETF Dashboard” on seekingalpha offers a great overivew about the latest news, market developments and provides a plenty choice of high quality contributors.

etfdb.com Also a good looking news website which is clearly structured and presents interesting news stories.

finance.yahoo.com More or less comprehensive news about ETFs are provided by Yahoo in association with various ETF news provides. A nice tool you should try is the “ETF browser”.

The website offers a sensationally information depth and has an attractive screendesign. Perhaps within the multi-media section some interactive (flash) videos should be added in order to help educating investors.

etflab.de One of the best websites (structure, content and actuality) we found within the category “issuer”. ETFlab is a small Exchange Traded Funds issuer backed by DekaBank, Germany’s Savings Bank Finance Group's central asset manager.

www.etftradingsignals.com

tradingmarkets.com Thousands of ETF trading informations most of them very up-to-date - are offered by the Conners Group, a New Jersey based investment company, which owns and operates a couple of investment related websites.

lyxoretf.com

etfdigest.com

Lyxor, part of Societe Generale, offers a very stylish website with one of the best multimedia features.

The website from Dave Fry offers a lot of information including daily comments and some podcasts. There is also some premium content available.

etfsecurities.com

www.emii.com

Notewhorty are especially the conference calls offered for interested investors.

www.etfexplorer.com

easyetf.com

extra-funds.de

source.com

exchangetradedfunds.com

proshares.com

money.cnn.com

spdrs.com

nasdaq.com

powershares.com

etf.com No question, this is the URL one could easily keep in mind when searching something related with ETFs. Notable is the “historic” issuer database within the “Quick Screener” application: Lehman Brothers still appears. Maybe it should just be a memorabilia for all of us.

etftradingstrategies.com morningstar.com www.deronwagner.com fool.com/etf

ETF Radar Magazine • N o v e m b e r - D e c e m b e r

2009

17


Career&Events

CAREER

Outlook CURRENT JOB OFFERS

ACTIVE EMPLOYERS

Total amount and global allocation of job offers within the ETF Industry

Top 10 Hiring Companies – incl. Recruiting Agencies – Worldwide

REGION

OFFERS TRE ND

North America United States Canada Latin-/South America Brazil Europe United Kingdom Germany Switz erland France Middle East UAE (Dubai) Asia-Pacific Singapore Hong Kong Australia Total

46 2

 

2

23 4 7 4

   

7

2 2 6 105

   

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Citifocus (UK) ETF Securities (US) Kaizen Partnership (US) ProFunds Advisors (US) Barclays Global Investors (US) PlanNet (UK) Selby Jennings (UK) Charles Schwab (US) Morgan Stanley (US) J.P. Morgan (US)

Source: ETF Radar Global Research| Data as of November 6, 2009.

Canada 2%

Brazil 2%

United Kingdom 22% Germany 4% Switzerland 6% France 4% UAE (Dubai) 6%

United States 44% Job Offers sorted by New York California Massachusetts New Jersey North Carolina Virginia Georgia Maryland Connecti cut Florida Nationwide

State: NY CA MA NJ NC VA GA MA CT FL

ETF Radar Magazine • N o v e m b e r - D e c e m b e r

16 10 4 4 3 3 2 2 1 1 46

2009

35 22 9 9 7 7 4 4 2 2 100

% % % % % % % % % % %

Hong Australia Kong 2% 6%

Singapore 2%

Source: ETF Radar Global Research| Data as of 6 November 2009.

18


Career&Events

EVENT

Calendar SELECTED EVENTS

JANUARY

NOVEMBER

DECEMBER

Advanced Wealth Management

Barron's

CEE Insurance & Pension Funds 29 January 2010

Conference

Top 100 Women Advisors Summit

November 9 – 10

2 – 4 December 2009

Location

Location

Location

Warsaw (Poland), TBD

Chicago (USA), Renaissance Hotel

Palm Beach (USA), The Breakers Hotel

Organizer information www.easteurolink.co.uk

Organizer information

Organizer information

imca.org

barronsmag.com

Registration Fee

Registration Fee

Registration Fee

TBD

Starting at USD 745

USD 1,800

Commodities and Equities

Super Bowl of Indexing

Outlook 2010 Forum

6 – 9 December 2009

Starting 12th November 2009

Location

Locations

Phoenix (USA), Biltmore Resort

London, Amsterdam, Vienna, Munich, Frankfurt,

Organizer information

Milan, Lugano, Geneva and Zurich

imn.org

Organizer information

Registration Fee

etfsecurities.com

TBD

Registration Fee Complimentary

Private Banking World

portfolio ETF-Forum

7 – 9 December 2009

Middle East 2009 November 30 – Dec 1

Location

Location

Manama (Bahrain), Hotel Sheraton Bahrain

Frankfurt (GER), Radisson SAS Hotel

Organizer information

Organizer information

terrapinn.com

etfforum.de

Registration Fee

Registration Fee

Starting at USD 4,190

Starting at EUR 315

Quant Invest 30 November - 2 December 2009 Location Paris (France), Hotel Le Meridien Montparnasse Organizer information terrapinn.com Registration Fee Starting at EUR 1,360

Is your upcoming event not listed? Just let us know. magazine@etf-radar.com

ETF Radar Magazine • N o v e m b e r - D e c e m b e r

2009

19


Global Players (Selection) ET F Pr ov ide r (tra ding a s)

C onta ct de tails (websi te/Hea do ffi ce)

B lac kr ock / B GI

www.isha res.co m

i Share s

L ondo n EC 3N 4HH (UK)

S SgA Inc.

www.ssg afunds.co m

Str eetTr ack s

B os ton, MA, 02111 (USA)

Va ngua rd

www.vang uard.co m

Va ngua rd ET Fs

Wa yne, PA 19087 (USA)

S ocié té Géné ra le S A

www.lyxo re tf.c om

L yxo r ETF s

92987 Pa ri s-L a Défe nse (F R)

De utsche B ank A G

www.dbxtra cke rs.com

db x-tr ack ers

60311 F rank furt (G ER )

Inves co

www.invesc opo we rshar es.c om

P ower Share s ETF s

Whea ton, IL 60187 (USA)

P ro Sha re s

www.pro share s.c om

P roS ha re s

B ethesda , MD 2081 4 (USA)

N omur a AM

www.nom ura -a m.co.jp

No m ur a ETFs

To kyo 103 -8260 (Japa n)

Va n Ec k Se c. C or p.

www.vane ck. com

m ar ketvec tor

Ne w York , NY 10017 (US A)

N ik ko A M

www.nikk oa m.co m

nik ko ETF s

To kyo , 107-62 42, (Ja pa n)

C re dit Suisse A M

www.xm tch-e tf.c om

xm tch ETFs

8070 Züric h (CH)

B NP P a ribas

www.ea syetf.co m

Ea syETF s

75009 Pa ri s (F R)

ET FL ab Invm t.

www.etfla b.de

e tfla b

80807 München (G ER )

Wisdo mTr ee Invmt.

www.wisdo mtr ee. com

Wi sdom Tree ETF s

Ne w York , NY 10017 (US A)

C om me rzbank A G

www.co ms tag e.de

c om stag e ETFs

60311 F rank furt (G ER )

Ra ting s (S&P /MDYS/ FTC H)

Mar ke t R e gulato rs (Sel ecti on)

Listed ETF s (gl oba l)

-/A1/-

SEC, F SA (UK), AMF

403

-/A1/-

SEC

106

F la gs hip pr oducts (Tick er)

Exc hange Listing s

IWM, DAXEX, US, UK , GER , IT, C H, FR , AT, HK, SG , AU SP DR

As se ts-unde rMa nag em ent (Tre nd) US$ 452 B n

Re plica tio n m ethod

Ma r ke tshar e (US/ EU/MEAP)

full re pl ica tio n

53%/39% /10%

full re pl ica tio n

21% /0.7%/14%

US, F R, NL , SG , HK , AU

US$ 138 B n

sam pling (SP DR )

-/ -/-

SEC

40

-

US

US$77 Bn

full re pl ica tio n / sam pling

11%/0% /0%

AA-/ Aa2/-

AMF , FSA (UK)

102

L VC, C AC, MSE

GE R, UK, IT, ES, CH, FR , AT, SG

US$43 Bn

synthe tic repl ica tio n

0%/22% /0%

A+/Aa 1/AA-

Ba FIN, AMF , F SA (UK )

118

XDAX, XEOD

G ER, UK, IT, CH, F R, AT, SG

US$34 Bn

synthe tic repl ica tio n

0% /17%/ 15%

B B B+ /A3/B B B+

SEC

124

QQQQ

US

US$32 Bn

full re pl ica tio n

3.4% /0.5% /0%

-/ -/-

SEC

-/Ba a 2/BB B

  

F SA (JP )

78

29

PSQ, QL M, DDM

US

-

JP

US$23.7 B n

 US$15.5 B n

full re pl ica tio n / sam pling / synthetic

2.5%/ 0%/0%

full re pl ica tio n

0%/0% /28%

full re pl ica tio n / sam pling

1% /0%/ 0%

full re pl ica tio n

0%/0% /10%

full re pl ica tio n / sam pling

0% /4.5%/0%

full re pl ica tio n

0% /3.3%/0%

full re pl ica tio n

0% /2%/ 0%

 -/ -/-

SEC

21

G DX, RSX

US

US$9.7 Bn

-/ -/-

SEC

10

-

JP

US$5.7 Bn

A+/Aa 1/AA-

FINMA

24

XMS MI

CH

US$7.6 Bn

AA/ Aa1/AA

AMF

64

CPETDX5

G ER, F R, IT, CH

US$5.9 Bn

A/-/ Aa2

B AF IN

30

ETFL 01, ETFL 02

G ER

US$5.2 Bn

WTIND, WTDFA

US

C B DAX

G ER

   

-/ -/-

A/Aa3 /A+

SEC

B AF IN

51

51

 US$5.38 B n

 US$4.22 B n

full re pl ica tio n / sam pling

0.6%/ 0%/0%

synthe tic repl ica tio n

0% /2.2%/0%

Table sorted by Assets-under-Management. Please notice: SSgA rating equals STT Corp. rating. iShares ratings equals Blackrock's rating. Nomura AM equals Nomura Hlds' rating. ETFLab Invmt. equals Dekabank's rating. Source: ETF Radar Research, Sep. 30, 2009.

ETF Radar Magazine • N o v e m b e r - D e c e m b e r

2009

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Disclaimer

Important notice to our readers: 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 its 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 its 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' decisionmaking 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 its 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 and Disclaimers 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. Buying commodity based investments allow for a source of diversification for those sophisticated persons who wish to add commodities to their portfolios and who are prepared to assume the risks inherent in these markets. Any investment represents a transaction in a non-income producing commodity and is highly speculative. Therefore, commodities should not represent a significant portion of an individual’s portfolio. Futures trading is for individuals willing to accept a higher level of risk for the opportunity of greater returns. Past performance is not a guarantee of 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 EXPENSES CAREFULLY BEFORE INVESTING. 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.

ETF Radar Magazine • N o v e m b e r - D e c e m b e r

2009

21


ETF Radar Magazine (Nov/Dec2009)