Archives: February , 2012
ETF News

ETF Fund Flow: Trumping Mutual Funds

Leave a comment

According to technology and trading firm ConvergEx Group, during the first 6 weeks of 2012, more than $8 billion has flowed in to U.S. Equity ETFs, while nearly $8 billion has “flown out” of U.S. equity mutual funds.

“Some of the commentary surrounding these products has made them sound like the hoof beats which precede the Four Horsemen of the Apocalypse,”  said Nicholas Colas, ConvergEx’s Chief Market Strategiest, alluding to various critiques of ETFs that have emerged over the past 18 months, notably Kauffmann Foundation reports that blamed ETFs for a dead U.S. initial public offering market, and argued huge short interest in some funds could pose systemic risk.

“If you want to understand how investment capital flows play into the year-to-date rally for risk assets, the world of exchange-traded funds is essentially your ‘One Stop Shop,’” Colas said in the note, stressing that whatever negative comments are being made about ETFs, they are a great way to gauge overall sentiment in financial markets.

“But for 2012, you can just as accurately call them the most visible source of capital to help U.S. stocks and other risk assets higher,” Colas wrote.

Most Popular Funds

As far as the individual funds that have really “Killed it” in year-to-date asset gathering this year-to-date, Colas said the ETFs that have pulled in over $1 billion include:

  • iShares iBoxx $ High Yield Corporate Bond Fund (NYSEArca: HYG)
  • iShares MSCI Emerging Markets Index Fund (NYSEArca:EEM)
  • iShares Russell 2000 Fund (NYSEArca:IWM)
  • iShares $ Investment Grade Corporate Bond Fund (NYSEArca: LQD)
  • Vanguard MSCI Emerging Markets ETF (NYSEArca:VWO)
  • Powershares QQQ (NasdaqGM QQQ)
  • SPDR Barclays High Yield Bond ETF (NYSEArca: JNK)
  • SPDR Gold Trust (NYSEArca: GLD)

Apart from the strong push into U.S. equities, Colas said emerging markets and precious metals are coming back into favor, with inflows of $9.1 billion and $2 billion, respectively.

”We’ve noticed a trend now for at least a year where investors use country-specific funds in lieu of regional products,” Colas said, singling out a number of those funds that have gathered more than $100 million dollars in new investments since the start of the year.

Among those are:

  • iShares FTSE China 25 Index Fund (NYSEArca: FXI)
  • iShares MSCI China Index Fund (NYSEArca: MCHI)
  • iShares MSCI Germany Index Fund (NYSEArca: EWG)
  • Market Vectors Russia ETF (NYSEArca: RSX)
  • iShares MSCI Chile Index Fund (NYSEArcaECH).

“I have no doubt that mutual fund flows will eventually turn positive, and we’ll have to keep an eye on this trend when it develops,” Colas said.

“But for now, exchange traded funds look to be the horse pulling the market’s proverbial cart.”

ETF News

Bullion Bulls Back Buying SPDR Gold (GLD)?

Leave a comment

Despite cutting his GLD holdings at the end of 2011, Billionaire John Paulson is, according to a letter to investors obtained by Bloomberg LP, bullish on bullion, and adding to his 17 million+ share position in the yellow metal ETF.

Similar stellar hedge fund managers, who have been trading the trend and more recently cashed in on paper profits,  have purportedly since used the recent lackluster period of early January through mid February, in which gold traded down 20% from all time highs to re-load.

One in-the-know hedge fund trader (who asked not to be identified) observed, “you can look at 13-F’s and make all the interpretations that you want, but those filings only report yesterday’s news, whether its Soros adding, or SAC cutting back, or Tudor liquidating all of its GLD during the last quarter; the fact is, everyone still has an axe in owning gold to a much greater extent than they would have 3-4 years ago.

ETF News, Tech Talk

“Navesis-ETF” Launches Today: 1st Euro-based Alternative Trading System for ETFs

Leave a comment

A joint partnership between Normua Holdings and inter-dealer broker Tradition PLC formalized the launch of the ETF industry’s first electronic exchange platform.  Based in London and designed for the European theatre, where ETF transparency is often problematic, “Navesis-ETF” is  intended to provide “qualified customers” the ability to trade ETFs in real-time, and enable investors to create and redeem ETF units based on the fund’s net asset value (NAV). The initial launch of the platform will facilitate trade in upwards of 100 different Euro-centric ETF issues.

According to Rupert Hodges, managing director of  TFS Derivatives, the brokering division of Compagnie Financiere Tradition that has partnered with Nomura, ” Up until now, institutional investors in ETFs on the primary market could only buy and sell units via market makers and other ‘authorised participants, accepting an indicative price determined by the supply and demand for the ETF offered. By offering the ability to trade based on NAV, Navesis-ETF is a game changer.”

Lee Burrows, Head of Delta One, EMEA for Nomura added, “Listing on a MTF will allow us to provide more liquidity and maximise efficiency in pricing.” Navesis-ETF has been in development for almost a year and according to the joint venture press release, the platform has been beta-tested for the past two months by clients that include Credit Suisse, HSBC and UBS.  Burrows stated there will be a minimum order size for units of 25,000-100,000 ETF shares and will operate in two phases. From 0900-1200 GMT it will operate a continuous call phase, accepting bids and offers. Then, from 1200-1215 GMT, there will be a “dark option” phase similar to dark pool trading. It will also provide an auction process once a day.

 

 

ETF News, People Profiles

Bogle Boggles and Balks re: ETFs

Leave a comment

In the category of  “He who speaks with forked tongue…” Index Icon and Vanguard Group founder John Bogle once again threw a curve ball while speaking at today’s Bloomberg Portfolio Manager Mash-Up.

John Bogle, Vanguard Group founder

Stating “ETFs are the greatest trading innovation of the 21st century,” what the Midas of Mutual Funds added with a big (*) was : “But the question is,  ‘Are they the greatest investment innovation?’ and the answer is ‘no.”

According to coverage of the event, fully credited to InvestmentNews, Bogle pulled no punches by calling out BlackRock for “just making a muddy pool muddier” in reference to BlackRock’s aggressive product launches. Bogle, who is also known as the “Midas of  Mutual Funds”, reminded the Bloomberg conference attendees “There’s something like 2000 ETFs now. That’s almost as many stocks as there are.”

One attendee then asked Mr. Bogle, “How many mutual funds are there?” In lieu of replying, he headed to the loo, where the self-proclaimed Buffet-like Market Bull took a bio break.

 

 

ETF News

iShares Adds More Junk (Bond) ETFs

Leave a comment

[slideshow]

For those raising their hands high and asking for more high yield bond ETFs, iShares is serving up two more corporate bond ETFs that “will cover a spectrum of credit quality ranging from low-investment-grade to junk bonds.” Both of the new funds will own corporates issued in US dollars, euros, British pounds and Canadian dollars.

iShares announcement is on the heels of Van Eck registering a bucket full of corporate bond ETFs earlier this week.

Kudos to Cinthia Murphy at IndexUniverse for keeping her fingers on the pulse of the new registration market!

ETF News

“Agency-Only Execution Firm” To Seed Hedge Fund Clients

Leave a comment

Cantor Fitzgerald, the “broker’s broker” that literally rose from the ashes of 9/11 to rebuild its business trafficking in multiple product types, including ETFs and options, and positions itself as an “agency-only” aka “conflict-free” broker, today announced the second phase of its plan to expand into the [often-conflicted] territory of hedge-fund seeding.

As reported by FINAlternatives,

Cantor hopes to raise $1.25 billion for their hedge fund seeding business, and the first tranche could provide between $25 million and $50 million to upwards of 25 emerging managers.

Cantor, which by virtue of its gargantuan global footprint, often finds itself not only standing in between captive buyers and sellers, but has occasionally been embroiled in issues that strike at the epicenter of the famous  Chinese Wall.  However much the strategy of a broker providing trading capital to its customers might seem to present potential conflicts with regard to the firm’s  “agency-only execution” model, one source who is not authorized by his firm to publicly comment, suggested “..industry watchers are confident that Cantor will always do the right thing..” Link to the full story by clicking on the FINAlternatives log.

ETF News

First Trust Launches More Intl. ETFs

Leave a comment

First Trust, the issuer of the first cloud computing ETF (SKYY) announced today they’ll be coming to market with a basket full of fun in their AlphaDEX Fund series.

Up to the plate for trading on Wednesday is a first string list of products: First Trust Canada AlphaDEX (NYSEArca : FCAN),  First Trust Germany AlphaDEX (NYSEArca : FGM), First Trust Switzerland (NYSEArca: FSZ), FirstTrust Hong Kong AlphaDEX (NYSEArca: FHK), First Trust Taiwan AlphaDEX (NYSEArca: FTW), and last, but not least, First Trust UK AlphaDEX Fund (NYSEArca: FKU)

Global Macro Strategy

No Free Luch Re: “Commission-Free” ETFs

Leave a comment

As observed by Forbes contributor Janet Brown, it seems the race to zero is becoming rampant in the brokerage community when promoting “commission-free trading for ETFs.” A closer look at the story tells us that discount broker talk is even cheaper than the commissions, and RIAs (and others) should read the fine print imbedded in various brokerage firm marketing materials.  Hold firm to Rule #1: : “There really ain’t no free lunch..”

According to Andy McOrmond, co-head of ETF trading for agency-execution firm WallachBeth Capital, “the article serves as yet another reminder that  beauty is not in the eyes of the ETF beholder when it comes to looking at trading screens, which simply don’t display the real best price available for even the most seemingly illiquid ETF product.”

Strike Price

VIX Options Volume Spike: Front-Runners Focus on Liquidation?

Leave a comment

A snarly spike in iPath’s VXX is causing some to scratch heads..is it a sign of things to come (change in recent weather of sunny and warm)? Or, was the volume surge a symptom of traders sensing that one customer was liquidated by their clearing agent?
Read the full story courtesy of ETF Daily News Continue reading →

Global Macro Strategy, People Profiles

WallachBeth ETF Trader Takes A Dive: To Raise $100k for ALS

Leave a comment
Chris Hempstead; Head of ETF Trading / WallachBeth Capital

Hands above your head and clap ’em together for Chris Hempstead, head of ETF trading at WallachBeth Capital..Hempstead recently took a dive (in frigid water), to help raise $100k for ALS…See the full coverage courtesy of TRADERS Magazine