Tag Archives: exchange-traded funds

ETF News

New Rules: B-Ds Can Skirt Finra Research Rules When It Comes to ETFs

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MarketsMuse ETF update profiles just-passed-by-Congress legislation that offers a sigh of relief for broker-dealers who aspire to frame ETF recommendations within the context of research (which might qualify them for ‘buyside research votes’), but have held back from issuing a buy, sell or hold recommendation for ETFs out of fear of Finra and/or SEC staffers sanctioning them.

All can guess that those lobbyists engaged by ETF issuers and sell-siders  who focus heavily on ETFs will be getting a hefty bonus in consideration for greasing the wheels and halls of Congress and helping brokerdealers creatively usurp Finra rules and regs when it comes to what is and what is not considered “research.” One group of folks not celebrating: top brass and salesman at Morningstar (read further)

Here’s the extract of the news from InvestmentNews.com

ETF Legislation approved this week by the House Financial Services Committee would allow broker-dealers to publish ETF research reports without the reports being considered offers to buy shares in the ETF.

The measure was co-authored by Rep. French Hill, R-Ark., and Rep. John Carney, D-Del.

A freshman legislator who came to Capitol Hill after working as a broker , Mr. Hill said most broker-dealers do not publish ETF research for fear of violating securities laws.

“This is a commonsense proposal,” Mr. Hill said at a May 20 committee hearing before the panel passed the bill. “With close to six million U.S. households holding and using ETFs, investors need access to this research.”

DOUBLE-DIGIT GROWTH

The ETF market has experienced double-digit annual growth over the past few years and, as of the end of April, included 1,496 funds with $2.1 trillion in assets, according to figures from Morningstar Inc.

As ETFs occupy a greater share of both retail and institutional investor portfolios, there’s a growing demand for insight about the vehicles, said Ben Johnson, director of global ETF research at Morningstar.

“There is a clear need for more research, more analysis across a very wide swath of the U.S. investor base,” Mr. Johnson said.

He said Mr. Hill’s bill is a good idea because investors would benefit from ETF research in the same way that they now can find research on individual securities and mutual funds.

If brokers issue their own ETF research, it could encroach on Morningstar’s turf. Morningstar can disseminate research through a so-called publisher’s exemption that applies to research organizations that aren’t regulated as securities firms.

“Any time there’s competition in the research space, that’s good for investors,” Mr. Johnson said. “It forces everyone to up their game.”

To continue reading this story from InvestmentNews.com, please click here

ETF News, People Profiles

ETF.com Appoints Matt Hougan as CEO-MarketsMuse

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MarketsMuse ETF department extends our congrats to exchange-traded fund guru Matt Hougan in connection with announcement this week that Matt has been elevated to the role of CEO of industry platform ETF.com.

ETF.com, the world’s leading authority on ETFs, named Matt Hougan, a longtime veteran in the world of exchange-traded funds, as its new chief executive officer. Hougan, 38, was previously president of North America for the firm. His appointment as CEO is effective immediately.

“Matt is both one of the world’s foremost experts on ETFs and an exceptional leader for our business,” Barnaby Grist, ETF.com’s chairman, who led the CEO search, said in a press release. “As the use of ETFs expands, Matt’s vision for how to educate, engage with and empower investors and financial advisors will drive better outcomes for investors and continued rapid growth at ETF.com.”

Hougan has worked at ETF.com for more than eight years, and was the fourth employee to join the company. Under his guidance, the company’s U.S. business achieved record results in the past year, including record attendance and revenue at its marquee conference, Inside ETFs, and dramatic growth in its core online and print media properties, ETF.com and ETF Report.

Jim Wiandt, ETF.com’s founder and former CEO, said he has full confidence in Hougan’s ability to lead the company’s next stage of growth. Wiandt founded the company in 2001.

“We chose Matt not just because of his extensive knowledge of exchange-traded products, but because he has demonstrated the organizational and leadership skills required to lead a growing and dynamic organization,” said Wiandt, who is now vice chairman and president of ETF.com’s Europe operation. Wiandt continues a key leadership role on the management team and board of directors.

‘ETF Master’

Hougan, a well-known figure in the world of ETFs who often appears on CNBC, envisions a growing and increasingly important role for ETF.com as more and more investors adopt ETF in their portfolios.

“As that use accelerates, we are more committed than ever to providing clear, independent and ETF-specific education, research and analysis,” Hougan said. “We have exciting plans in place that will help us become even more integral to our users’ investment decision-making and simultaneously reach a larger and larger audience than ever before.”

For the entire story from ETF.com, please click here

ETF News

Investors Brace For Bumpy Ride As Airline ETFs Hit A Rough Patch

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After a hot take off for the ETF, JETS, MarketsMuse blog update profiles the plunge airline stocks and ETFs have seen in the recent weeks ahead the summer season, which will then hopefully bring another boost to the stocks and ETFs. This blog update is courtesy of Zacks Research article, “Air Stocks and ETF Plunge: Warming Up for Summer?”, with an excerpt below. 

The airline stocks that were hot and soaring over the past few years suddenly lost their altitude in Wednesday trading session as the shares of major carriers nosedived as much as 10% on concerns that growth might outpace travel demand. This could result in lower fares and thinner profit margins.

This is because cheap fuel is encouraging carriers to increase the number of seats at the current fares, breaking the competitive discipline that helped the industry to earn record profits in the past.

Bright Summer Outlook

Despite the brutal plunge, airline stocks and the ETF are anticipating sunnier days in summer. This is especially true given the optimistic view from the Washington-based trade group Airlines for America.

The group expects airlines to see the busiest summer ever this year buoyed by an improving economy, accelerating job market and rising consumer confidence. The demand for U.S. air travel would hit a fresh high as 222 million travelers (or 2.4 million a day) are expected to fly from June 1 through August 31, up 4.5% year over year and much higher than a record of 217.6 million travelers seen in 2007.

To continue reading about the airline stocks and ETFs that are bracing the bumpy ride, click here

 

ETF News

As Predicted, The Sun Has Set On The Solar ETF’s Rise

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After months of warnings from market watchers, the Chinese solar stock, Hanergy Thin Film Power Group, started to set on a pretty powerful year so far. MarketsMuse blog update profiles the effects this Chinese stock has had on the Guggenheim ETF, which MarketsMuse has profiled before. This MarketsMuse update is courtesy of MarketWatch’s Victor Reklaitis and his article, “China solar stock implosion a reminder to look under ETF’s hood“

Many market watchers have warned this year about a highflying Chinese solar stock—Hanergy Thin Film Power Group—and its leading role in popular ways to bet on solar stocks like one Guggenheim ETF.

On Wednesday, Hanergy’s 0566, -46.95% aerial routine ended with a crash, as one Wall Street Journal headline put it. And the Hong Kong-listed stock’s dive after a meteoric rise was helping to take down the Guggenheim Solar ETF TAN, -7.79%

So what’s the takeaway?

“Investors should take care to look under the hood of the ETFs in order to understand what exposure they are possibly buying into,” said Markit analyst Relte Schutte in an email to MarketWatch on Tuesday about the solar ETF and Hanergy.

Schutte had noted in a May 6 commentary that about half of the Guggenheim ETF’s year-to-date jump of 40% was due to Hanergy’s surge of 157%. The ETF was about 12% exposed to Hanergy as of Tuesday, before its big plunge, making it the largest stock in that fund. Hanergy also has been the biggest holding in two rival ETFs, the Market Vectors Solar Energy ETF KWT, -6.88% and iShares Global Clean Energy ETF ICLN, -2.57%

To continue reading about the implications the crash the Hanergy Stock has had on the solar ETFs, click here.

ETF News

One Gold ETF Looks To Be Worthy Of A First Place Finish

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After a few rough years for gold as investors shifted other asset equities, things are starting to look up, especially for one ETF in particular. MarketsMuse blog update profiles Gartman Gold/Yen ETF (GYEN)  as one of the best ETFs to invest in for gold options. This update is courtesy of Zacks’ Equity Research article, “Is This the Safest Gold ETF for 2015?“, with an excerpt below explaining why GYEN could be the best gold ETF. 

Gold had one of its worst nightmares in the last two years as investors shifted to more risky asset classes like equities. This is especially true in the backdrop of the strengthening dollar and continued bullishness in the stock market, two conditions that spoilt the safe haven appeal of the yellow metal. The bleeding stretch led the metal to languish below the $1,200 an ounce level – almost near its lowest level since April 2010.

The start to 2015 was no different from the last two years as rising rate worries intensified at the beginning of the year. But the metal started to buck the trend since April. Weakness in the greenback in the wake of soft U.S. GDP in Q1 was the major driving force behind this uptrend.

What Are the Best Gold ETF Bets if Dollar Rises?

In most cases, gold investments are made via the U.S. dollar (which is presently at a roller coaster ride). So, it would be wise to look at the gold ETFs which are not linked to the greenback. Two such lucrative options are Gartman Gold/Yen ETF (GYEN) and Gartman Gold/Euro ETF (GEUR). While GYEN provides positive returns by using the yen for investing its assets in the gold market, GEUR does so with the euro.

Is GYEN the Best Option? 

After a nice show in 2013, the Japanese economy has been struggling since the second half of 2014. Japan’s growth in Q1 of 2015 has also been restrained by soft consumption. This ensures that the life of Japanese stimulus will be long as the economy is yet to stand on its own feet.

To continue reading about gold ETF option, GYEN, click here

ETF News

Nuveen Investments Has Returned To ETFs…Quietly

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MarketsMuse blog update profiles asset manager Nuveen Investments quietly returning to the world of ETFs.  This MarketsMuse blog update is courtesy of ETFTrends Tom Lydon’s article, “Nuveen Tiptoes Back Into ETFs“, with an excerpt below. 

After departing the exchange traded funds business in 2002, Nuveen Investments has returned in quiet fashion. The Chicago-based firm said Monday shareholders of the Nuveen Long/Short Commodity Total Return Fund (NYSEArca: CTF), have approved the plan to convert the fund into open-ended exchange-traded fund (ETF). The conversion plan is also contingent on customary regulatory approvals, according to a statement. “The Annual Meeting of Shareholders for the Nuveen Diversified Commodity Fund (NYSE: CFD) has been adjourned to June 15, 2015, to allow additional solicitation of votes on the proposed plan to convert the fund into an ETF,” according to Nuveen. Nuveen said in December it was planning to convert CTF and CFD into ETFs. CFD invests in an array of commodity futures and forward contracts. As of the end of November, the mutual fund allocated a combined 26.5% of its weight to oil and gold,according to issuer data.

The fund’s annual expenses total 1.75%. To continue reading about Nuveen’s quiet return, click here.

ETF News, Fixed Income

New Normal: Big Institutions Looking To ETFs Over Bonds

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MarketsMuse ETF and Fixed Income departments merge to profile trend on part of fixed-income focused hedge funds and institutional fund managers to use ETFs to express their bets on corporate bonds. This MarketsMuse blog update is courtesy of Bloomberg’s Lisa Abramowicz and her article, “A $200 Million Hedge-Fund Trade in Your Bond ETF Is Normal Now”. An excerpt from this article is below. 

Don’t be surprised if you see a huge chunk of cash simply evaporate one day from your exchange-traded bond fund. There’s a good chance it’s just a hedge fund cashing in on a bet.

An example of this can be found in BlackRock Inc.’s $5.1 billion long-term U.S. Treasuries ETF, which saw the greatest volume of withdrawals this year among similar funds. Among investors yanking cash was Passport Capital, the $4 billion hedge-fund firm run by John Burbank.

The firm sold its entire $217 million stake in the ETF in the period ended March 31, about three months after purchasing the shares, according to data compiled by Bloomberg.

On one hand, this is a remarkable amount of money, equal to about 4 percent of the fund at its current size. It’s also notable because ETFs have traditionally been marketed to individuals as a quick, easy way to invest in debt.

But that’s changing. These funds are increasingly being used by and advertised to big institutions, which are looking for the same efficiency as smaller investors at a time when it’s getting more difficult to execute big trades.

To continue reading about this new normal for both small and big investors, click here, for the article from Bloomberg’s Lisa Abramowicz and her article, “A $200 Million Hedge-Fund Trade in Your Bond ETF Is Normal Now”.

ETF News, People Profiles

ETF-in-a-Box: You Too Can Launch An ETF for Peanuts

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The barrier to entry for issuers of ETFs keeps getting lower. What used to cost anywhere between $1mil-$5mil and many months of filing paper work to create and finally launch a new ETF, now, for just only $100k (before marketing/advertising costs), you too can launch an exchange-traded fund in under three months and maybe even become the next iShares or Wisdom Tree. At least that is the premise profiled by Lara Crigger’s post at ETF.com in her coverage of J. Garrett Stevens and his white-label ETF maker, Exchange Traded Concepts LLC, aka “ETC”.

Below is extracted from Crigger’s coverage…

Garret Stevens, President of ETC
Garret Stevens, President of ETC

Six years ago, J. Garrett Stevens, CEO of FaithShares, had just launched his first ETFs. He and his partners sat back, counted their victories, and eagerly waited for investors to bang down the door to buy up the funds.

They never did.

The rest of the story is all too familiar. Stevens and his partners had spent far more than they anticipated on getting their funds to market, with little left over to make sure investors actually knew the funds existed. As a result, the five FaithShares ETFs, despite solid performance, failed to accrue enough assets to survive. FaithShares shuttered its doors in 2011.

But a funny thing happened on the way to dissolution.

“People started calling, wanting to know if they could buy our exemptive relief,” said Stevens. “Or they wanted to know if we could consult and help them launch their own funds, since we’d already been down that road.”

That gave Stevens an idea: a white-label service that would shoulder the burden for would-be ETF providers looking to launch their very own funds. Thus was Exchange-Traded Concept (ETC) born.

To continue reading about Garett Stevens and his new company, the Exchange Traded Concept (ETC), click here

 

ETF News

ETFs-Know When To Hold ‘Em and When to Fold ‘Em-MarketsMuse

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MarketsMuse ETF update profiles the risks associated with tact-strategists over-trading exchange-traded products and the costs associated with using ETFs as trading products vs. investment products. Below extract is courtesy of Jason Zweig WSJ Weekend edition.

When hiring people who call themselves strategists, be aware that some act more like tacticians instead.

That is one lesson from several recent setbacks among ETF strategists, asset managers who specialize in picking exchange-traded funds—those popular investment baskets that mimic market benchmarks like the S&P 500-stock index or the Barclays U.S. Aggregate bond index.

Until recently, ETF strategists have been sizzling hot. By March 2014, they had garnered $103 billion in assets, up from $44 billion at the end of 2011. But assets slid to $91 billion at year-end 2014 and likely dropped further in the first quarter as disappointed investors pulled money out, says Ling-Wei Hew, an analyst at Morningstar, the investment-research firm.

Some strategists, such as Vanguard Advisers, a unit of the giant Vanguard Group, and Ibbotson Associates MORN -0.43%, a subsidiary of Morningstar, bundle ETFs into highly diversified portfolios that they patiently hold.

Yet other strategists rapidly trade from one ETF to another, from ETFs to cash or from cash to ETFs. That is more tactical than strategic. When they think a market is about to go down, these tacti-strategists will move to cash; if they are bullish, they will get out of cash and back into ETFs. While such trading could limit your losses during bad markets, it often comes at a high price in the form of annual management fees and other costs that can exceed 2%.

Such strategists may manage bundles of ETFs in separate accounts, advise mutual funds or even just sell their recommendations of when to trade which funds to financial advisers.

“Financial advisers have a real appetite for this kind of product right now, since it enables them to spend less time managing portfolios and more time managing the relationship with their clients,” says Jennifer Muzerall, a senior ETF analyst at Cerulli Associates, a financial-research firm based in Boston.

But can anyone reliably beat the market with funds that are designed only to match the market?

This past week, Hartford, Conn.-based Virtus Investment Partners VRTS -0.32%, which manages $55 billion in mutual funds and other assets, removed ETF strategist F-Squared Investments as an adviser to five Virtus funds.

The largest of them, now known as the Virtus Equity Trend Fund, underperformed the S&P 500 by at least two percentage points annually the past four years in a row; last year, it lagged behind the market by 11.9 points.

To continue reading the entire column by Jason Zweig, please click here

ETF News, Fixed Income

Corporate Bond ETFs for Single Issuers??

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MarketsMuse ETF and Fixed Income departments merge and gives credit to Morgan Stanley as they raise their own ETF flag with an innovative idea to package a single corporate bond issuer’s debt into one neat package so that ETF investors can express their bets on the issuer’s outstanding credit… Here’s the excerpt courtesy of Reuters:

 A bank proposal to pool corporate bonds of a single borrower into an ETF-style “trust” to help solve the credit markets’ chronic illiquidity problem is being circulated among issuers and investors, and finding some support.

Though still conceptual, the idea initiated by Morgan Stanley reckons investors could find more liquidity in a single instrument that represents several bonds issued by one borrower in a certain maturity, than in the individual bonds themselves.

According to the proposal, the trust would get positions in all of an issuer’s outstanding securities in the secondary market.

It would then group them according to whether they have short, intermediate or long-dated maturities, and issue separate trust certificates against each of those maturity buckets.

An underlying unit of bonds to represent each maturity trust certificate would be created and redeemed in a similar way as existing bond index exchange-traded funds.

To continue reading about Morgan Stanley’s new idea for an ETF, click here.

ETF News

Eaton Vance Ups ETMF Ante; Payment For Order Flow: Bounties For BrokerDealers

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MarketsMuse ETF update profiles a novel “payment-for-order-flow” approach on the part of ETF issuers who vie to whoo broker-dealers to promote their products to investors. Eaton Vance Corp. said Thursday it may help brokerages foot the bill to make its new type of actively managed exchange-traded products, called NextShares, available to their clients. Below extract is courtesy of Reuters’ Jessica Toonkel reporting

In an unprecedented move, Eaton Vance Corp will offer to help some brokerages pay their technology costs to make the fund company’s new breed of exchange-traded managed funds (ETMFs) available to investors, Tom Faust, Eaton’s chief executive officer, told Reuters this week. ETMFs are a hybrid between actively managed mutual funds and exchange-traded funds.

The Boston-based company also plans to pay brokerage firms a share of the revenues from the sale of the funds, which Faust hopes will be available by year-end.

BrokerDealer.com maintains the world’s largest database of broker-dealers and encompasses brokerdealer firms based in nearly 3 dozen countries

Tom Faust, Eaton Vance
Tom Faust, Eaton Vance

Big-name firms like Fidelity Investments and TD Ameritrade told Reuters they will not sell the funds until they see demand.

Helping to cover technology costs of distributors is new, but so are the Eaton Vance products, which require brokerages to take a new kind of order from investors, experts said.

“This is the first time I have ever heard of a firm offering to pay some brokerage costs for a new product,” said Ben Johnson, an ETF analyst at Morningstar.

He said the cost of gearing up to sell the product has been a sticking point for brokers. However, a number of executives at brokerage firms and industry consultants told Reuters that questions about whether there will be investor demand, and how they will get compensated to sell the new products, are even bigger issues that could keep them from selling the funds even with the Eaton Vance offer on the table.

Faust said figuring out the economic incentives and getting the systems up and running is top of mind for Eaton Vance.

“The biggest challenge we see at this stage of the game is getting broker dealers,” Faust said. “If we are looking to launch before the end of the year, we need the broker dealers to start making systems changes and otherwise preparing themselves to offer this to clients.”

Eight outside fund managers, including Mario J. Gabelli’s GAMCO Investors Inc., have licensed the right to sell NextShares. But large broker-dealers have not yet indicated that they’re taking the steps to offer them to financial advisers.

Investors will need to be informed by broker-dealers of the unique qualities of the funds when they trade, and they will place exchange orders in a way that differs from stocks or ETFs.

For the full article from Reuters, please click here

ETF News

RBC Global Asset Launches 5 New ETFs To Access International Equity Markets

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MarketsMuse blog update profiles RBC Global Asset Management launching five new liquid alternative equity ETFs. These five new ETFs allow for investors to be exposed to Canadian, American, and other international equity markets. These ETFs are now available for purchase on the Toronto Stock Exchange (TSX). These new ETFs are: 

  • RBC Quant Canadian Equity Leaders ETF (RCE)
  • RBC Quant U.S. Equity Leaders ETF (RUE) 
  • RBC Quant EAFE Equity Leaders ETF (RIE)
  • RBC Quant U.S. Equity Leaders (CAD Hedged) ETF (RHS)
  • RBC Quant EAFE Equity Leaders (CAD Hedged) ETF (RHF)

This update is courtesy of FINAlternatives’ article, “RBC Launches Liquid Alternative Quant Equity ETFs”, with an excerpt below. 

finalternatives11111RBC Global Asset Management has launched five new liquid alternative equity ETFs that employ quantitative, rules based methodologies for investment selections instead of relying on an index, according to a press release.

The new funds offer investors and advisors diversified core equity exposure in Canadian, U.S. and international equity markets, together with the option to hedge foreign currency risk, and trade on the Toronto Stock Exchange.

The RBC Quant Canadian Equity Leaders ETF (RCE) focused on companies domiciled in Canada and follows the RBC GAM’s rules-based Quant Equity Leaders investment process. It carries a management fee of 0.39%.

The RBC Quant U.S. Equity Leaders ETF (RUE) is similar to RCE but focuses instead on U.S.-domiciled companies that pass muster in the Quant Equity Leaders investment process. It also has a management fee of 0.39%. The ticker symbol “RUE” represents Canadian-dollar-denominated units, while the ticker symbol “RUE.u” represents U.S.-dollar denominated units.

To continue reading about these five new ETFs from RBC Global Asset Management, click here.

ETF News

ETFs Are Taking Over The World…

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MarketsMuse blog update profiles ETFs taking over the world, well the hedge fund world at least. ETFs assets are about to total $3 trillion which means are they are poised to out raise hedge funds. This update is courtesy of Bloomberg’s article, “ETF Assets Set to Overtake Hedge Funds This Year“, by Trista Kelley, Inyoung Hwang, and Lorcan Roche Kelly, with an excerpt below.

They’re cheap, easy to use, and they’re winning over more investors than ever.

Now exchange-traded funds — investment tools that seek to replicate the performance of a portfolio of securities — are growing at such a clip that their assets are poised to overtake those of hedge funds.

It’s no secret hedge funds have had a rough couple of years. Without the returns to make up for high taxes and fees, more investors are turning to the ever-growing range of ETF products on offer. ETFs have lower fees than mutual funds, lower taxes than index funds and are easier to buy or sell quickly than either. And underpinning gains is loose central-bank policy that has been fueling a general movement toward passive investing.

To continue reading about ETFs overtaking hedge funds, click here.

ETF News

Mining ETF Rises From The Ashes

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MarketsMuse blog update profiles the SPDR Metals & Mining ETF that has recently performed very well over the past few months. When oil prices reached a new low in January it sent a ripple across other sectors including the metal and mining sectors. XME was trading at its lowest price since March 2009. Although the sector ETFs are still on their road to recovery, the ETF, XME, is showing drastic improvement compared to many others. This MarketsMuse blog update is courtesy of an ETFTrends’ article by Todd Shriber titled, “This ETF is Springing to Life“, with an excerpt below. 

ETFTrends-logo

Mining stocks and the corresponding exchange traded funds have moved in fits and starts over the past few years. Unfortunately, there have been more fits than pleasantries, but the moribund industry could finally be putting in a legitimate bottom.

Though it is still down 27.5% over the past year, the SPDR Metals & Mining ETF (NYSEArca: XME) is up nearly 8% over the past month. That is a solid run for an ETF that started the year trading at its lowest levels since the first quarter of 2009. [Woes for a Mining ETF]

XME is meriting of consideration as some analysts believe the worst is behind the commodities space. Those were the sentiments of R.W. Baird when the research firm upgraded Dow component Caterpillar (NYSE: CAT) and Joy Global (NYSE: JOY) to outperform on Monday, according to CNBC.

To continue reading about the rise of this mining ETF, click here.

ETF News

Could Russia ETFs Be Making A Comeback?

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

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

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

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

To keep reading about Russia ETFs comeback, click here.

 

ETF News

Social Media Popularity Doesn’t Show In Social Media ETF

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

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

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

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

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

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

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

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

 

 

ETF News, Tech Talk

BNY Mellon Introduces New ETF Tool

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

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

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

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

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

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

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

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

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Goldman Sachs Readies ETF Launch

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

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

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

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

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