etf radar magazine issue july 2011 (european edition)
DESCRIPTION
ETF Radar Magazine Issue July 2011 (European Edition)TRANSCRIPT
Why attend?
5. The European Cup provides an up-to-date snapshot of the latest key industry trends to help investors make more informed decisions
4. 16 sessions discussing the most current and practical strategies and solutions for today’s investment professionals
3. The 2011 conference program has been developed with the support of select AFME committees and an industry-led event advisory board
2. Ample networking time has been built into the program
1. Hear from delegates representing leaders from the investment management, ETF & indexing industry
Managing DirectorCAPITAL ECONOMICS LTD
Deborah FuhrManaging Director, Global Head of ETF
Research and Implementation StrategyBLACKROCK
KEYNOTE ADDRESS : FEATURED SPEAKER :
For information on attending or speaking, please contact Jackie Rubbo at +1 212.901.1884 or [email protected]
For information on sponsorship, please contact Meredith Atkinson at +1 212.901.0585 or [email protected]
For more information or to register, please visit: http://www.imn.org
Tel: 212-224-3428 | Email: [email protected]/imn_investment
twitter.com/imn_investment#IMNEvents
I N ASSOCIATION WITH :
Information Management Network is pleased to announce our partnership with the Association for Financial Markets in Europe (AFME) for
the upcoming European Cup of ETFs and Investment Management. Being held in London on 19-20 September, Europe’s leading institutional
investors, fi nancial advisors, consultants, academics, investment managers and industry experts in the European ETF, indexing, investment and risk
management arenas will gather to discuss the impact of new regulations on the changing investment landscape and how providers and investors have
responded to the uncertain macroeconomic environment.
19-20 SEPTEMBER 2011
O F ETFs AND
M ANAGEMENT
EUROPEAN CUP
INVESTMENT
ONE GREAT GEORGE STREET • LONDON , UK
etfRadarGlobal Investor Intelligence
SM
Roger Bootle
www.etf-radar.com
Issue No. 11ISSN 2150-9166
European Edition
July 2011
Feature
What's Really Behind Your Product?Global Collateral Report
Rankings
ETF Landscape At A Glance
The Global
Magazine
People
Source ETFTed Hood
Index InvestorStoxx Europe 600Tactical Portfolio UpdateETF of the Month
Sector Map
THE HOTSPOTSAT A GLANCE
ETF Radar Magazine | Issue July 2011
ADVERTISING
etfRadarSM
Why attend?
5. The European Cup provides an up-to-date snapshot of the latest key industry trends to help investors make more informed decisions
4. 16 sessions discussing the most current and practical strategies and solutions for today’s investment professionals
3. The 2011 conference program has been developed with the support of select AFME committees and an industry-led event advisory board
2. Ample networking time has been built into the program
1. Hear from delegates representing leaders from the investment management, ETF & indexing industry
Managing DirectorCAPITAL ECONOMICS LTD
Deborah FuhrManaging Director, Global Head of ETF
Research and Implementation StrategyBLACKROCK
KEYNOTE ADDRESS : FEATURED SPEAKER :
For information on attending or speaking, please contact Jackie Rubbo at +1 212.901.1884 or [email protected]
For information on sponsorship, please contact Meredith Atkinson at +1 212.901.0585 or [email protected]
For more information or to register, please visit: http://www.imn.org
Tel: 212-224-3428 | Email: [email protected]/imn_investment
twitter.com/imn_investment#IMNEvents
I N ASSOCIATION WITH :
Information Management Network is pleased to announce our partnership with the Association for Financial Markets in Europe (AFME) for
the upcoming European Cup of ETFs and Investment Management. Being held in London on 19-20 September, Europe’s leading institutional
investors, fi nancial advisors, consultants, academics, investment managers and industry experts in the European ETF, indexing, investment and risk
management arenas will gather to discuss the impact of new regulations on the changing investment landscape and how providers and investors have
responded to the uncertain macroeconomic environment.
19-20 SEPTEMBER 2011
O F ETFs AND
M ANAGEMENT
EUROPEAN CUP
INVESTMENT
ONE GREAT GEORGE STREET • LONDON , UK
etfRadarGlobal Investor Intelligence
SM
Roger Bootle
www.etf-radar.com
Issue No. 11ISSN 2150-9166
European Edition
July 2011
Feature
What's Really Behind Your Product?Global Collateral Report
Rankings
ETF Landscape At A Glance
The Global
Magazine
People
Source ETFTed Hood
Index InvestorStoxx Europe 600Tactical Portfolio UpdateETF of the Month
Sector Map
THE HOTSPOTSAT A GLANCE
ETF Radar Magazine | Issue July 2011
ADVERTISING
etfRadarSM
Global Summary
Industry Highlights
4
Global Round-Up
stnevE detceleS
mocr.adar-fte.www no noitces tneve eht tisiv esaelp sliated tneve lluf roF
BOSTON3rd Annual FundForum USA07–09 November 2011Westin Boston Waterfront
► AFRICA: VAN ECK PLANS NIGERIA ETFVan Eck’s ETF lineup already includes a number of products offering targeted exposure to frontier markets, like the Vietnam ETF or the recently proposed Mongolia ETF. The latest newcomer is the Market Vectors Nigeria ETF, which would focus on companies listed in or operating in one of Africa’s oil-rich economies. The proposed ETF would seek to replicate the Market Vectors Nigeria Index, a modified capitalization weighted, float adjusted index that includes companies that are domiciled and primarily listed on an exchange in Nigeria or that generate at least 50% of their revenues in Nigeria.
►
►
EUROPE: VANGUARD EXPANDS ETF LISTINGS Vanguard, one of the world’s biggest mutual-fund company, confirmed plans that they will roll out its range of ETFs in the U.K. market in Q4/2011. Market participants expect a set of global equity ETFs and some strategy ETFs. Also one cross-listing on a Pan-European exchange could happen soon after the launch at the London Stock Exchange.
EUROPE: STOXX600 WITH CURRENCY HEDGED VERSIONIndex provider STOXX has introduced the all-new STOXX Europe 600 Hedged EUR Index, a currency hedged strategy benchmark aimed at investors seeking exposure to the well-known STOXX Europe 600 Index, while at the same time looking to reduce the risk of currency fluctuations.
►
►
US: 80% VOTE AGAINST COMMODITY ETFSA staggering number of Registered Investment Advisors will not recommend new commodity ETFs to their clients, according to a new study released by Rivermark Research. 80.6 % of advisors surveyed say new commodity ETFs are unnecessary, with most advisors listing “oversaturation” of the marketplace as the number one reason, followed by “product complexity” and “risk.”25.2 % of advisors surveyed also believe new ETF products – outside of commodity funds – will not serve a purpose in their clients’ portfolios.
EUROPE: HSBC ROLLS OUT FIRST RUSSIA PHYSICAL ETFHSBC has unveiled a New Russian capped exchange-traded fund (ETF). The new HSBC MSCI Russia capped ETF is the first European fund that will physically track the Russian market.
►
►
OVERALL MARKET ETF/ETPAccording to BlackRock‘s latest data report, the end of May 2011, the global ETF industry had 2,747 ETFs (+23%) with 6,079 listings (+38%) and assets of USD 1,446.6 Bn (+39%), from 142 providers (+8%) on 49 exchanges (+16%) around the world. This compares to 2,218 ETFs with 4,411 listings and assets of USD 1,044.1 Bn from 131 providers on 42 exchanges in May one year ago.
Additionally, there were 1,158 other ETPs with 1,794 listings and assets of USD 190.2 Bn from 58 providers on 23 exchanges. This compares to 792 ETPs with 1,122 listings and assets of USD 129.4 Bn from 45 providers on 18 exchanges, at the end of May 2010.
HEDGE FUNDS LOVE ETFSCredit Suisse Quantitative Equity Research recently put out a research paper that identified the ETFs with the highest hedge fund ownership and those that are most heavily shorted. According to Credit Suisse, alternativ asset managers love the SPDR S&P OIL & Gas ETF (30%) and SPDR S&P Retail ETF (19%). Interestingly, these ETFs also have the greatest percentage of shorts. Rounding out the top holders list among hedge funds and the percentage of the shares held by hedge funds: GDX Market Vectors Gold Miners (14%); IShares DJ US Real Estate (13%); SPDR KBW Regional Banking ETF (12%); and SPDR S&P Homebuilders ETF (12%).
NORTH [email protected] Naples (FL) +1 239 384 6090
EUROPE, MIDDLE EAST and [email protected] London +44 203 519 1179
ETF RADAR IS A PRIVATE AND INDEPENDENT INFORMATION PROVIDER.
NO STATEMENT IN THIS ISSUE IS TO BE CONSTRUED AS A RECOMMENDATION TO BUY OR SELL SECURITIES OR TO PROVIDE INVESTMENT ADVICE. PLEASE SEE OUR DISCLAIMER PAGE FOR FURTHER INFORMATION.
© 2009-2011 ETF Radar Global Investor Services. All rights reserved.
For all subscription enquiries, thoughts or general questions please contact us directly by email:
Global Summary
ContentsIssue July 2011
3
Industry Highlights
Global Round-Up
Top20 Global Index Provider
Hot Product Debuts
Upcoming Events
Number CruncherAssets under Management
Change in ADV
Change in AuM
Best-
Worst-Performer
Performer
Stoxx 600 Sector Map
Tactical
ETF of the Month
Portfolio Update
IndexInvestor 6
Rankings 14
Ted Hood,
Source ETF
People 12
Fast Lane
Get In Touch
Feature 8
Global Collateral Report
IndexCompanies and People
ETF Radar Magazine | Issue July 2011
Dear Reader,
Despite the latest criticism raised by the FSB and IMF, ETFs are still very popular with investors. Blackrock research expects the global ETF industry to reach USD 2 trillion AUM by the end of 2012. Expecting such a big growth, it's time to take a closer look on different aspects of ETFs such as the transparency and security for investors.
In our cover story we are focussing on the often unattended collateralization. In our opinion the industry has to be more transparent as well as educate better about the involved risks. Regrettably for investors, some so called collaterals are not worth their name and should be rather classified as junk. There are big differences between the market participants. ETF Radar exclusively publishes the details in its Global Collateral Report 2011. The associated story you will find starting on page 8.
But don't become flustered now. ETFs are definitely more secure than mutual funds. In our exclusive interview, Ted Hood CEO of Source amongst others talks about this topic.
Enjoy reading and let us know your thoughts.
Silvan SchellingHead of Relationship Management
ETF Radar Magazine | Issue July 2011
Amundi ETF (pg. 10) Lyxor (pg. 11)
Barclays (pg. 10, 11) Morgan Stanley (pg. 12)
BlackRock (pg. 2) Natixis (pg. 10)
BoA/Merrill Lynch (pg. 9) Nomura (pg. 5)
Citigroup (pg. 9) Ossiam (pg. 11)
Commerzbank (pg. 11) Rabobank (pg. 9)
Deutsche Bank (pg. 4) Rivermark Research (pg. 4)
ETF Securities (pg. 4, 10) Arne Scheehl (pg. 11)
First Asset Capital (pg. 4) Stoxx (pg. 4)
Ben Fulton (pg. 11, 12) UBS (pg. 4)
IndexIQ (pg. 5) Van Eck (pg. 4)
iShares (pg. 7) Vanguard (pg. 4, 6)
Ivesco PowerShares (pg. 5, 12)
NEW YORK CTIYETF 360October 12, 2011The Metropolitan Club
Global Summary
Industry Highlights
4
Global Round-Up
stnevE detceleS
mocr.adar-fte.www no noitces tneve eht tisiv esaelp sliated tneve lluf roF
BOSTON3rd Annual FundForum USA07–09 November 2011Westin Boston Waterfront
► AFRICA: VAN ECK PLANS NIGERIA ETFVan Eck’s ETF lineup already includes a number of products offering targeted exposure to frontier markets, like the Vietnam ETF or the recently proposed Mongolia ETF. The latest newcomer is the Market Vectors Nigeria ETF, which would focus on companies listed in or operating in one of Africa’s oil-rich economies. The proposed ETF would seek to replicate the Market Vectors Nigeria Index, a modified capitalization weighted, float adjusted index that includes companies that are domiciled and primarily listed on an exchange in Nigeria or that generate at least 50% of their revenues in Nigeria.
►
►
EUROPE: VANGUARD EXPANDS ETF LISTINGS Vanguard, one of the world’s biggest mutual-fund company, confirmed plans that they will roll out its range of ETFs in the U.K. market in Q4/2011. Market participants expect a set of global equity ETFs and some strategy ETFs. Also one cross-listing on a Pan-European exchange could happen soon after the launch at the London Stock Exchange.
EUROPE: STOXX600 WITH CURRENCY HEDGED VERSIONIndex provider STOXX has introduced the all-new STOXX Europe 600 Hedged EUR Index, a currency hedged strategy benchmark aimed at investors seeking exposure to the well-known STOXX Europe 600 Index, while at the same time looking to reduce the risk of currency fluctuations.
►
►
US: 80% VOTE AGAINST COMMODITY ETFSA staggering number of Registered Investment Advisors will not recommend new commodity ETFs to their clients, according to a new study released by Rivermark Research. 80.6 % of advisors surveyed say new commodity ETFs are unnecessary, with most advisors listing “oversaturation” of the marketplace as the number one reason, followed by “product complexity” and “risk.”25.2 % of advisors surveyed also believe new ETF products – outside of commodity funds – will not serve a purpose in their clients’ portfolios.
EUROPE: HSBC ROLLS OUT FIRST RUSSIA PHYSICAL ETFHSBC has unveiled a New Russian capped exchange-traded fund (ETF). The new HSBC MSCI Russia capped ETF is the first European fund that will physically track the Russian market.
►
►
OVERALL MARKET ETF/ETPAccording to BlackRock‘s latest data report, the end of May 2011, the global ETF industry had 2,747 ETFs (+23%) with 6,079 listings (+38%) and assets of USD 1,446.6 Bn (+39%), from 142 providers (+8%) on 49 exchanges (+16%) around the world. This compares to 2,218 ETFs with 4,411 listings and assets of USD 1,044.1 Bn from 131 providers on 42 exchanges in May one year ago.
Additionally, there were 1,158 other ETPs with 1,794 listings and assets of USD 190.2 Bn from 58 providers on 23 exchanges. This compares to 792 ETPs with 1,122 listings and assets of USD 129.4 Bn from 45 providers on 18 exchanges, at the end of May 2010.
HEDGE FUNDS LOVE ETFSCredit Suisse Quantitative Equity Research recently put out a research paper that identified the ETFs with the highest hedge fund ownership and those that are most heavily shorted. According to Credit Suisse, alternativ asset managers love the SPDR S&P OIL & Gas ETF (30%) and SPDR S&P Retail ETF (19%). Interestingly, these ETFs also have the greatest percentage of shorts. Rounding out the top holders list among hedge funds and the percentage of the shares held by hedge funds: GDX Market Vectors Gold Miners (14%); IShares DJ US Real Estate (13%); SPDR KBW Regional Banking ETF (12%); and SPDR S&P Homebuilders ETF (12%).
NORTH [email protected] Naples (FL) +1 239 384 6090
EUROPE, MIDDLE EAST and [email protected] London +44 203 519 1179
ETF RADAR IS A PRIVATE AND INDEPENDENT INFORMATION PROVIDER.
NO STATEMENT IN THIS ISSUE IS TO BE CONSTRUED AS A RECOMMENDATION TO BUY OR SELL SECURITIES OR TO PROVIDE INVESTMENT ADVICE. PLEASE SEE OUR DISCLAIMER PAGE FOR FURTHER INFORMATION.
© 2009-2011 ETF Radar Global Investor Services. All rights reserved.
For all subscription enquiries, thoughts or general questions please contact us directly by email:
Global Summary
ContentsIssue July 2011
3
Industry Highlights
Global Round-Up
Top20 Global Index Provider
Hot Product Debuts
Upcoming Events
Number CruncherAssets under Management
Change in ADV
Change in AuM
Best-
Worst-Performer
Performer
Stoxx 600 Sector Map
Tactical
ETF of the Month
Portfolio Update
IndexInvestor 6
Rankings 14
Ted Hood,
Source ETF
People 12
Fast Lane
Get In Touch
Feature 8
Global Collateral Report
IndexCompanies and People
ETF Radar Magazine | Issue July 2011
Dear Reader,
Despite the latest criticism raised by the FSB and IMF, ETFs are still very popular with investors. Blackrock research expects the global ETF industry to reach USD 2 trillion AUM by the end of 2012. Expecting such a big growth, it's time to take a closer look on different aspects of ETFs such as the transparency and security for investors.
In our cover story we are focussing on the often unattended collateralization. In our opinion the industry has to be more transparent as well as educate better about the involved risks. Regrettably for investors, some so called collaterals are not worth their name and should be rather classified as junk. There are big differences between the market participants. ETF Radar exclusively publishes the details in its Global Collateral Report 2011. The associated story you will find starting on page 8.
But don't become flustered now. ETFs are definitely more secure than mutual funds. In our exclusive interview, Ted Hood CEO of Source amongst others talks about this topic.
Enjoy reading and let us know your thoughts.
Silvan SchellingHead of Relationship Management
ETF Radar Magazine | Issue July 2011
Amundi ETF (pg. 10) Lyxor (pg. 11)
Barclays (pg. 10, 11) Morgan Stanley (pg. 12)
BlackRock (pg. 2) Natixis (pg. 10)
BoA/Merrill Lynch (pg. 9) Nomura (pg. 5)
Citigroup (pg. 9) Ossiam (pg. 11)
Commerzbank (pg. 11) Rabobank (pg. 9)
Deutsche Bank (pg. 4) Rivermark Research (pg. 4)
ETF Securities (pg. 4, 10) Arne Scheehl (pg. 11)
First Asset Capital (pg. 4) Stoxx (pg. 4)
Ben Fulton (pg. 11, 12) UBS (pg. 4)
IndexIQ (pg. 5) Van Eck (pg. 4)
iShares (pg. 7) Vanguard (pg. 4, 6)
Ivesco PowerShares (pg. 5, 12)
NEW YORK CTIYETF 360October 12, 2011The Metropolitan Club
Index Investor
In June the STOXX 600 Index dropped -1.98% due to with the the uncertainness about the handling with the Greeks would be the best choice. Best and falling leading indicators. The last days of the performing sector with a performance of +8.33% in June month smoothed the negative performance a little bit 2011 was the STOXX 600 Automobiles and Parts Index. as an agreement about the Greek sovereign debt Here speculations about the Chinese regulators to soften emerged. Having a look at the sector performances, the import restrictions on Automobiles in China – one of the Retail Sector was the worst performing with a loss the most important markets - positively influenced the of -5.85% in June 2011. Retailers were under pressure sector. If you believe in an ongoing trend, the due to a grim consumer spending outlook. If investors believe in a recovery of this sector, the contrarian pick would be your best pick.
iShares STOXX Europe 600 Retail (DE000A0H08P6)
Comstage ETF STOXX 600 Automobiles and Parts
(LU0378435043) n
Like A Red Carpet: Losses In Many European Sectorsby Sebastian Stahn
The Action Plan
Stoxx 600 Sector Map
6
CONTRARIAN PICK BEST-TREND PICK
HIGH LOW LOW
iShares STOXX Europe 600 Retail
ISIN/Ticker: DE000A0H08P6TER / AUM: 0.47% / 13.8 mn.1 Year Return: +3.39%Last Price/High/Low 52-Weeks: EUR 25.59 | 24.05 | 28.05Replication: Full replication
Comstage ETF STOXX 600 Automobiles and PartsISIN/TIcker: LU0378435043TER / AUM: 0.25% / 23.3 mn. 1 Year Return: +54.01%Last Price/High/Low 52-Weeks: EUR 55.40 | 34.60 | 55.40Replication: Synthetic (swap)
RISK-REWARD-ANALYSISbased on an investment horizon of one month
RISK-REWARD-ANALYSISbased on an investment horizon of one month
CBSXAR GYHIGH
stnevE detceleS
Global Summary
5
Top10 Global Index Provider(Ranked by AuM)
Hot Product Debuts
► FIRST CLOUD ETF LAUNCHEDFirst Trust announced that the first ETF focused on the cloud computing industry is expected to launch on NASDAQ in early July 2011. The fund will be based on the ISE Cloud Computing Index. This index is a modified equal-dollar weighted index designed to provide a benchmark for investors interested in tracking companies involved in the cloud computing industry. The Index is owned and was developed by the ISE.
FRANKFURTCommodities Deutschland20-22 September 2011Le Meriden Parkhotel
Ticker/ISIN: SKYY TER: 0.60% p.a.CCY: USD
LONDONEuropean Cup of ETFs19–20 September 2011Great George Street Conference Hall
Sources: Event organizers, Reuters, BusinessWire, BlackRock, ETF Radar Global Research
Number Cruncher
Total listings of Exchange Traded Funds in Germany as of July 6, 2011.
► SMALL-CAP REIT ETF LAUNCHED IndexIQ released a new ETF dedicated to providing access to the small-cap US real estate sector. The fund will include exposure to a variety of small-cap Real Estate Investment Trusts (REITs). “Performance among all REITs took a big hit during the financial crisis, but since 2009, REITs have seen a rebound, with small-cap offerings faroutpacing the performance of their large-cap counterparts,” said Adam Patti, CEO of IndexIQ.
Ticker/ISIN: ROOFTER: 0.69% p.a.CCY: USD
↑
↑
↑
→→
→
→
► NEW GAS STRATEGY ETNUBS recently launched the ETRACS Natural Gas Futures Contango ETN on NYSE Arca. The unsecured note is designed to capitalize on natural gas markets in a state of contango, as evidenced by an upward sloping futures curve, while minimizing the exposure to absolute changes in futures prices. The ETN is linked to the ISE Natural Gas Futures Spread Index. An ETF wrapper would be an interesting option to sell this alpha strategy in Europe.
Ticker/ISIN: GASZTER: 0.85% p.a.CCY: USD
Percent rate of Americans who wiew homeownership as important part of the „American Dream“.
► NOMURA’S NEW VOLA STRATEGYSource ETF and well-regarded investment bank Nomura partnered up to offer Europe’s first volatility strategy ETF. The fund tracks the rule-based Nomura Voltage Strategy Mid-Term 30-day USD TR index. The allocation can be between 0% and 100%, depending on the volatility of the index. The ETF is being marketed to European investors and is listed on the London Stock Exchange. It is available in US dollars.
Ticker/ISIN: IE00B3LK4075TER: 0.30% p.a.CCY: USD
MSCI 25.5%
S&P 22.6%
Barclays Capital 8.5%
STOXX 7.1%
Russell 5.9%
FTSE 4.2%
Dow Jones 3.9%
Markit 3.4%
NASDAQ OMX 2.5%
NYSE Euronext 1.2%
Other 15.1%↑
HONG KONGETF Index Investment Summit 201131 Aug. - 1 Sept. 2011JW Marriot Hotel
1'199 98%
Monthly Performance. As of June 30, 2011.
Basic Resources –0.41%
Real Estate–1.60%
Telecomm-unications
–1.25%
Insurance
–0.88%
Travel & Leisure–1.59%
Chemicals–0.17% Media
–0.14%
Automobiles & Parts+8.33%
Financial Services–4.86%
Food & Beverage
–2.93%
Health Care –2.92%
Construction & Materials–2.61%
Bank–3.96%
Retail–5.85%
Technology –3.51%
Industrial Goods & Services
–1.81%
Oil & Gas–1.74%
Personal & Household Goods
–1.63%Utilities –1.61%
BESTPERFORMINGSECTORS
WORSTPERFORMING
SECTORS
ETF Radar Magazine | Issue July 2011ETF Radar Magazine | Issue July 2011
MSCI 25.6%
S&P 22.6%
Barclays Capital 8.5%
STOXX 7.1%
Russell 5.9%
FTSE 4.2%
Dow Jones 3.9%
Markit 3.4%
NASDAQ OMX 2.5%
NYSE Euronext 1.2%
Other 15.1%
SXRPNAV
LONDONETF & Indexing Investments Europe17–19 October 2011Guoman Tower Hotel
First Trust
JAKARTAIndonesia Investment Summit 201120 - 22 July 2011Grand Hyatt Hotel
Index Investor
In June the STOXX 600 Index dropped -1.98% due to with the the uncertainness about the handling with the Greeks would be the best choice. Best and falling leading indicators. The last days of the performing sector with a performance of +8.33% in June month smoothed the negative performance a little bit 2011 was the STOXX 600 Automobiles and Parts Index. as an agreement about the Greek sovereign debt Here speculations about the Chinese regulators to soften emerged. Having a look at the sector performances, the import restrictions on Automobiles in China – one of the Retail Sector was the worst performing with a loss the most important markets - positively influenced the of -5.85% in June 2011. Retailers were under pressure sector. If you believe in an ongoing trend, the due to a grim consumer spending outlook. If investors believe in a recovery of this sector, the contrarian pick would be your best pick.
iShares STOXX Europe 600 Retail (DE000A0H08P6)
Comstage ETF STOXX 600 Automobiles and Parts
(LU0378435043) n
Like A Red Carpet: Losses In Many European Sectorsby Sebastian Stahn
The Action Plan
Stoxx 600 Sector Map
6
CONTRARIAN PICK BEST-TREND PICK
HIGH LOW LOW
iShares STOXX Europe 600 Retail
ISIN/Ticker: DE000A0H08P6TER / AUM: 0.47% / 13.8 mn.1 Year Return: +3.39%Last Price/High/Low 52-Weeks: EUR 25.59 | 24.05 | 28.05Replication: Full replication
Comstage ETF STOXX 600 Automobiles and PartsISIN/TIcker: LU0378435043TER / AUM: 0.25% / 23.3 mn. 1 Year Return: +54.01%Last Price/High/Low 52-Weeks: EUR 55.40 | 34.60 | 55.40Replication: Synthetic (swap)
RISK-REWARD-ANALYSISbased on an investment horizon of one month
RISK-REWARD-ANALYSISbased on an investment horizon of one month
CBSXAR GYHIGH
stnevE detceleS
Global Summary
5
Top10 Global Index Provider(Ranked by AuM)
Hot Product Debuts
► FIRST CLOUD ETF LAUNCHEDFirst Trust announced that the first ETF focused on the cloud computing industry is expected to launch on NASDAQ in early July 2011. The fund will be based on the ISE Cloud Computing Index. This index is a modified equal-dollar weighted index designed to provide a benchmark for investors interested in tracking companies involved in the cloud computing industry. The Index is owned and was developed by the ISE.
FRANKFURTCommodities Deutschland20-22 September 2011Le Meriden Parkhotel
Ticker/ISIN: SKYY TER: 0.60% p.a.CCY: USD
LONDONEuropean Cup of ETFs19–20 September 2011Great George Street Conference Hall
Sources: Event organizers, Reuters, BusinessWire, BlackRock, ETF Radar Global Research
Number Cruncher
Total listings of Exchange Traded Funds in Germany as of July 6, 2011.
► SMALL-CAP REIT ETF LAUNCHED IndexIQ released a new ETF dedicated to providing access to the small-cap US real estate sector. The fund will include exposure to a variety of small-cap Real Estate Investment Trusts (REITs). “Performance among all REITs took a big hit during the financial crisis, but since 2009, REITs have seen a rebound, with small-cap offerings faroutpacing the performance of their large-cap counterparts,” said Adam Patti, CEO of IndexIQ.
Ticker/ISIN: ROOFTER: 0.69% p.a.CCY: USD
↑
↑
↑
→→
→
→
► NEW GAS STRATEGY ETNUBS recently launched the ETRACS Natural Gas Futures Contango ETN on NYSE Arca. The unsecured note is designed to capitalize on natural gas markets in a state of contango, as evidenced by an upward sloping futures curve, while minimizing the exposure to absolute changes in futures prices. The ETN is linked to the ISE Natural Gas Futures Spread Index. An ETF wrapper would be an interesting option to sell this alpha strategy in Europe.
Ticker/ISIN: GASZTER: 0.85% p.a.CCY: USD
Percent rate of Americans who wiew homeownership as important part of the „American Dream“.
► NOMURA’S NEW VOLA STRATEGYSource ETF and well-regarded investment bank Nomura partnered up to offer Europe’s first volatility strategy ETF. The fund tracks the rule-based Nomura Voltage Strategy Mid-Term 30-day USD TR index. The allocation can be between 0% and 100%, depending on the volatility of the index. The ETF is being marketed to European investors and is listed on the London Stock Exchange. It is available in US dollars.
Ticker/ISIN: IE00B3LK4075TER: 0.30% p.a.CCY: USD
MSCI 25.5%
S&P 22.6%
Barclays Capital 8.5%
STOXX 7.1%
Russell 5.9%
FTSE 4.2%
Dow Jones 3.9%
Markit 3.4%
NASDAQ OMX 2.5%
NYSE Euronext 1.2%
Other 15.1%↑
HONG KONGETF Index Investment Summit 201131 Aug. - 1 Sept. 2011JW Marriot Hotel
1'199 98%
Monthly Performance. As of June 30, 2011.
Basic Resources –0.41%
Real Estate–1.60%
Telecomm-unications
–1.25%
Insurance
–0.88%
Travel & Leisure–1.59%
Chemicals–0.17% Media
–0.14%
Automobiles & Parts+8.33%
Financial Services–4.86%
Food & Beverage
–2.93%
Health Care –2.92%
Construction & Materials–2.61%
Bank–3.96%
Retail–5.85%
Technology –3.51%
Industrial Goods & Services
–1.81%
Oil & Gas–1.74%
Personal & Household Goods
–1.63%Utilities –1.61%
BESTPERFORMINGSECTORS
WORSTPERFORMING
SECTORS
ETF Radar Magazine | Issue July 2011ETF Radar Magazine | Issue July 2011
MSCI 25.6%
S&P 22.6%
Barclays Capital 8.5%
STOXX 7.1%
Russell 5.9%
FTSE 4.2%
Dow Jones 3.9%
Markit 3.4%
NASDAQ OMX 2.5%
NYSE Euronext 1.2%
Other 15.1%
SXRPNAV
LONDONETF & Indexing Investments Europe17–19 October 2011Guoman Tower Hotel
First Trust
JAKARTAIndonesia Investment Summit 201120 - 22 July 2011Grand Hyatt Hotel
8
Feature
QUICK FACTS the clients money into the five stocks by buying them There are big differences between the issuers’ on the exchange or over-the-counter from a market
collateral management. participant. Hence the ETF's value behaves like the A collateral with a volatility of 47% is questionable.
performance of the five stocks. If an ETF wants to track Investors should realize that also ETFs could be
the performance of 20 or 200 stocks it may quickly associated with some hidden risks. become difficult and costly. Hence – especially in Europe – the majority of ETF issuers prefer swap-As years go by more and more ETF providers are based (or synthetic) replication methods for their “born” trying to get on the gravy train. For example products. the latest newcomer in the European business is
Ossiam ETF, a subsidiary of Natixis, which is What will happen if one goes bust?affiliated to BPCE, France's second largest banking A synthetic ETF doesn't hold the exact underlying group. As the number of ETF issuers increase, each index constituents. Instead, it holds a (randomly filled) of them tries to minimize costs and maximize the basket of securities. These securities may be completely performance of their products. As ETF provider different to the index it is tracking – which is an you have the choice between physical replication important fact some investors often do not catch and synthetic replication. Let's consider an issuer correctly. The ETF asset manager typically will enter will launch a new ETF. The fund should track an into a total return swap (TRS) contract in which he index covering the World's five largest publicly gives away the performance of the collateral basket in listed stock companies. The ETF issuer could put
►
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by Sebastian Stahn and David Cohne
HIGHQUICK FACTS European Consumer discretionary
Consumer Discretionary stocks are stocks are benefiting from increasing attractive. demand from emerging markets
Germany’s DAX is outperforming countries. In addition, German stocks other European blue chip indices. are in an uptrend and are outperforming
stocks from other European countries.The ETF Radar Tactical portfolio is a model portfolio that invests in five Based on the rankings SPDR MSCI Exchange Traded Funds based on a Europe Consumer Discretionary ETF customized, tactical ETF rankings (FR0000001752) is the ETF of the system. The portfolio trades at the month. It tracks the price of consumer end of each month. The holdings for discretionary stocks in the MSCI Europe July 2011 include Index. It has an expense ratio of 0.30%
annually and EUR 14 million under , management. One of the largest fund
, holdings are German premium , carmaker Daimler AG (9.97%), luxury-
brand holding LVMH S.A. (6.29%) and and the Vivendi Universal S.A. (5.52%).
.
►
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SPDR MSCI Europe Consumer Discretionary ETF (FR0000001752) iShares DAX (DE0005933931) ComStage ATX ETF (LU0392496690) Lyxor ETF MSCI Europe Real Estate (FR0010833558) Amundi ETF CAC40 (FR0007080973)
n
Index Investor
Tactical Portfolio Update
by David Cohne
Consumer Discretionary andGermany are the Places to Be
ETF Radar Tactical Portfolio
Source: Cohne Investment Group, exclusively for ETF Radar / July 1, 2011 Ranking
7
ETF of the Month
SPDR MSCI Europe Consumer Discretionary ETF
52-Week Range EUR 51.54-EUR59.58 Market Cap EUR 14.0 millionDividends -TER 0.30% p.a.Last Volume n/a ETF Issuer SPDRs EuropeReplication Full Replication
(FR0000001752)
TICKER ETF NAME TER AUM WEIGHT
ETF Radar Magazine | Issue July 2011ETF Radar Magazine | Issue July 2011
FR0000001752 SPDR MSCI Europe Consumer Disc. ETF 0.30% $13.8 million 20%
DE0005933931 iShares DAX (DE) ETF 0.15% $6.0 billion 20%
LU0392496690 ComStage ETF ATX 0.25% $31.5 million 20%
FR0010833558 Lyxor ETF MSCI Europe Real Estate ETF 0.40% $31.0 million 20%
FR0007080973 Amundi CAC 40 ETF 0.25% $796.3 million 20%
Many investors may be strongly surprised if they get familiar with the potential risks associated with the constituents of their collateral baskets. Probably the ETF industry would be well advised to set new quality rules for collaterals – beyond UCITS.
Global Collateral Report
8
Feature
QUICK FACTS the clients money into the five stocks by buying them There are big differences between the issuers’ on the exchange or over-the-counter from a market
collateral management. participant. Hence the ETF's value behaves like the A collateral with a volatility of 47% is questionable.
performance of the five stocks. If an ETF wants to track Investors should realize that also ETFs could be
the performance of 20 or 200 stocks it may quickly associated with some hidden risks. become difficult and costly. Hence – especially in Europe – the majority of ETF issuers prefer swap-As years go by more and more ETF providers are based (or synthetic) replication methods for their “born” trying to get on the gravy train. For example products. the latest newcomer in the European business is
Ossiam ETF, a subsidiary of Natixis, which is What will happen if one goes bust?affiliated to BPCE, France's second largest banking A synthetic ETF doesn't hold the exact underlying group. As the number of ETF issuers increase, each index constituents. Instead, it holds a (randomly filled) of them tries to minimize costs and maximize the basket of securities. These securities may be completely performance of their products. As ETF provider different to the index it is tracking – which is an you have the choice between physical replication important fact some investors often do not catch and synthetic replication. Let's consider an issuer correctly. The ETF asset manager typically will enter will launch a new ETF. The fund should track an into a total return swap (TRS) contract in which he index covering the World's five largest publicly gives away the performance of the collateral basket in listed stock companies. The ETF issuer could put
►
►►
by Sebastian Stahn and David Cohne
HIGHQUICK FACTS European Consumer discretionary
Consumer Discretionary stocks are stocks are benefiting from increasing attractive. demand from emerging markets
Germany’s DAX is outperforming countries. In addition, German stocks other European blue chip indices. are in an uptrend and are outperforming
stocks from other European countries.The ETF Radar Tactical portfolio is a model portfolio that invests in five Based on the rankings SPDR MSCI Exchange Traded Funds based on a Europe Consumer Discretionary ETF customized, tactical ETF rankings (FR0000001752) is the ETF of the system. The portfolio trades at the month. It tracks the price of consumer end of each month. The holdings for discretionary stocks in the MSCI Europe July 2011 include Index. It has an expense ratio of 0.30%
annually and EUR 14 million under , management. One of the largest fund
, holdings are German premium , carmaker Daimler AG (9.97%), luxury-
brand holding LVMH S.A. (6.29%) and and the Vivendi Universal S.A. (5.52%).
.
►
►
SPDR MSCI Europe Consumer Discretionary ETF (FR0000001752) iShares DAX (DE0005933931) ComStage ATX ETF (LU0392496690) Lyxor ETF MSCI Europe Real Estate (FR0010833558) Amundi ETF CAC40 (FR0007080973)
n
Index Investor
Tactical Portfolio Update
by David Cohne
Consumer Discretionary andGermany are the Places to Be
ETF Radar Tactical Portfolio
Source: Cohne Investment Group, exclusively for ETF Radar / July 1, 2011 Ranking
7
ETF of the Month
SPDR MSCI Europe Consumer Discretionary ETF
52-Week Range EUR 51.54-EUR59.58 Market Cap EUR 14.0 millionDividends -TER 0.30% p.a.Last Volume n/a ETF Issuer SPDRs EuropeReplication Full Replication
(FR0000001752)
TICKER ETF NAME TER AUM WEIGHT
ETF Radar Magazine | Issue July 2011ETF Radar Magazine | Issue July 2011
FR0000001752 SPDR MSCI Europe Consumer Disc. ETF 0.30% $13.8 million 20%
DE0005933931 iShares DAX (DE) ETF 0.15% $6.0 billion 20%
LU0392496690 ComStage ETF ATX 0.25% $31.5 million 20%
FR0010833558 Lyxor ETF MSCI Europe Real Estate ETF 0.40% $31.0 million 20%
FR0007080973 Amundi CAC 40 ETF 0.25% $796.3 million 20%
Many investors may be strongly surprised if they get familiar with the potential risks associated with the constituents of their collateral baskets. Probably the ETF industry would be well advised to set new quality rules for collaterals – beyond UCITS.
Global Collateral Report
Feature
10
HIGH
9
Feature
HIGH
return for the performance of the fund's reference more ETF providers made their collateral baskets index. Eventually, investors have the risk that the visible on their websites. The recent call of the swap counterpart fails to fulfill its obligations. As Financial Stability Board to give more details about illustrated above, the performance of the five stocks assets held in collateral baskets to improve would no longer be provided by the initial swap transparency for investors strengthened this claim. As partner. So what will happen, if the swap above already mentioned, all synthetic (swap based) counterpart goes bust? Under UCITS, Europe's ETFs show differences between the underlying ETF regulatory framework for the fund industry, the and the collateral basket portfolio. One issuer for collateral is used as security in such a case. The example collateralises all of its ETFs with a portfolio collateral basket is made up from stocks and bonds consisting of stocks out of the German blue-chip index from OECD countries. A collateral shall cover 90% DAX. If investors buy an European bond ETF it is in of the net asset value (NAV) of the ETF, so the fact collateralised with a portfolio of German stocks. counterparty risk is 10% of the ETF's NAV. It is Other issuers use a broadly diversified portfolio of prevalent that ETF issuers use their parent bank as stocks based on a quantitative optimisation method. swap counterparty. Due to the lower correlation of Japanese stocks with
other developed countries the outcome of the Full replication contains similar risks optimisation will contain a big part of Japanese Counterparty risk appears in both replication companies.methods – full and synthetic. Using full / physical replication counterparty exposure arises when Examples of collaterals by issuers: securities are lent out by the ETF. This is quite common in the fund industry no matter even if it is A look behind the curtain – ETF Securitiesan ETF wrapper or a classic mutual fund. Securities As a reaction on the call of the Financial Stability Board lending generates an extra portion of income. to give more details about assets held in collateral Usually the lending fee contributes up to 40 basis baskets to improve transparency for investors, points to a blue chip ETF like the iShares (ETFS) publishes since May 2011 a list of all EuroStoxx50. Each security lending transaction is collateral held as security for investors on its website. secured by a so-called collateral. Usually, these The issuer holds currently USD 28.2 billion AuM. First securities are sent to a separate entity – mainly a of all the process of collateralisation at ETFS has to be bank with a custody business – which take care of described. We just highlight the collateralisation of the position and separate the relevant securities by ETFs, which are UCITS compliant and don't focus on posting it into a special account. In both replication the ETPs. Regarding to ETFS' website they currently methods, collaterals are generally 102% of the value have four swap providers. Swaps with the partners of domestic shares and 105% of the value of foreign Citigroup and Bank of America Merrill Lynch are shares. The North American peers still favour on unfunded. Agreements with Barclays and Rabobank full replication. Full replicated ETFs in the U.S. are are fully-funded. regulated under the Investment Company Act of 1940. This act forbids certain transactions and limits the use of derivatives. Also the SEC has stopped approving synthetic ETFs in March of 2010 to study their affects.
Who looks at the available Excel-files on ETFS' website, Quality of collateral – a turning point which list the stocks used as collateral, will find some But do investors really know, what's behind their interesting stocks. The majority consists of small and ETF? Is it even collateralised? What kind of mid caps. Furthermore there are a lot of illiquid securities are in the collateral basket? A few years Japanese stocks used as collateral. Also interesting is ago it was very difficult to find out, how the the statement regarding the valuation of the collateral collateral basket looked like and by how much – if on ETF Securities' website, which says that the at all – it was properly (over-)collateralised. As “collateral is highly diversified and/or of high quality”. today's investors desire full transparency, more and Sure, Markowitz says that diversification is important,
ETF Securities
but if the world stock markets tumble, the collaterals should have been better banned from a correlation between the equity markets money-market ETF since the expression “PIIGS” has approximates one. Keep the last paragraph in mind become a common negative shortcut for the troubled while you read the following example: The Eurozone states. Second, in some ETFs appears a major collateral with the highest weighting for the “ collateral position called “UK Equity Holdings”.
” is the Spanish media company Obviously, this is a Lyxor AM associated fund vehicle. . Hence it could be fairly risky for an investor to accept a
Sure, it belongs to the EuroStoxx Consumer security as collateral issued and managed by the ETF Services Index, but is it a good stock as collateral? firm itself.Its price is EUR 1.38 with a market capitalisation of round about EUR 700 Mio. and a 52 week high of EUR 2.52 and a low of EUR 1.27. Thus the (nearly penny-) stock had a volatility of 47% over the last year (as of 24th June 2011). Some other collaterals used are small and more or less illiquid stocks from all over the world.
The cost-cutting approach of (AuM USD A positive aspect is that all of the ETFs are up to ten 9.9 bn) seems to be what investors like. “We decided to percent over-collateralised. In the example of the implement a competitive pricing strategy. Cost is a key “ETFX DAX 2x Long” the fund is 9.14% over- criteria when collateralised. But imagine the above mentioned case of a default of the swap partner in falling equity markets and no other counterparty can be found to enter into the swap. The first possibility to switch to physical replication is hardly possible because of the highly differing collateral basket components. Furthermore physical replication is not possible in short or leveraged ETFs. Thus the last possibility is to terminate the fund and liquidate the collateral basket. But what kind of securities are in my portfolio? Right, mostly small and mid caps with a high beta and lower liquidity. It won't be fun to liquidate this volatile portfolio in falling equity markets. So it is questionable if cushions of approximately 9% will be enough to sleep carefree.
French Connection – Lyxor, Amundi & OssiamThe French ETF issuer (Current AuM USD 55 bn.), uses its parent Societe Generale as swap partner. Other than ETF Securities, its ETFs are not that much over-collateralised. The very positive aspect comparing to Lyxor's competitor is that the securities in the collateral baskets are mostly large caps with a high market capitalisation. Furthermore Lyxor is very transparent regarding the collateralisation. Sometimes the transparency may lead to surprises. Investors should keep an eye on two things: First, the Lyxor ETF Euro Cash. Here one could clearly see the dominance of Spanish and Italian Government bonds. Perhaps, those
ETFX DAX 2x LongPromotora de Informacions S.A. (ES0171743117)
Amundi ETF
Ossiam
Lyxor
db x-trackers
Deutsche Bank
selecting an ETF; our TER is on average 25% lower than that of our competitors.” said Valérie Baudson, Managing Director of Amundi ETF in an interview with ETF Radar. The issuer is a joint-venture between Societe Generale and Credit Agricole. Regarding transparency and quality of collaterals the newcomer makes a good shape. Detailed information about the underlying baskets is daily updated available via Amundi's website – and no obscure securities (or strong overweight of French equities) appeared in three randomly selected samples. Amundi's custodian is CACEIS Bank.
, a brand new ETF issuer and affiliate of French banking-group Natixis, provides detailed and easy to find facts about the effective ETF holdings. Accordingly, one could quickly find detailed information about the specific securities. Obviously, Natixis wired some positions of their French equities portfolio to Ossiam because there is a clear dominance of major French stocks used as collateral. The French start-up uses State Street Bank Luxembourg S.A. as custodian.
Commendable Germans – Deutsche Bank and...Another issuer to highlight is , who offers currently 187 products and manages USD 52.6 billion. It uses its parents as swap partner. A very commendable aspect of db x-trackers ETFs is the transparency regarding its collaterals. For
ETF Radar Magazine | Issue July 2011ETF Radar Magazine | Issue July 2011
It won't be fun to liquidate this volatile portfolio in falling markets.
It could be fairly risky for an investor to accept a security as collateral issued and managed by the ETF firm itself.
Feature
10
HIGH
9
Feature
HIGH
return for the performance of the fund's reference more ETF providers made their collateral baskets index. Eventually, investors have the risk that the visible on their websites. The recent call of the swap counterpart fails to fulfill its obligations. As Financial Stability Board to give more details about illustrated above, the performance of the five stocks assets held in collateral baskets to improve would no longer be provided by the initial swap transparency for investors strengthened this claim. As partner. So what will happen, if the swap above already mentioned, all synthetic (swap based) counterpart goes bust? Under UCITS, Europe's ETFs show differences between the underlying ETF regulatory framework for the fund industry, the and the collateral basket portfolio. One issuer for collateral is used as security in such a case. The example collateralises all of its ETFs with a portfolio collateral basket is made up from stocks and bonds consisting of stocks out of the German blue-chip index from OECD countries. A collateral shall cover 90% DAX. If investors buy an European bond ETF it is in of the net asset value (NAV) of the ETF, so the fact collateralised with a portfolio of German stocks. counterparty risk is 10% of the ETF's NAV. It is Other issuers use a broadly diversified portfolio of prevalent that ETF issuers use their parent bank as stocks based on a quantitative optimisation method. swap counterparty. Due to the lower correlation of Japanese stocks with
other developed countries the outcome of the Full replication contains similar risks optimisation will contain a big part of Japanese Counterparty risk appears in both replication companies.methods – full and synthetic. Using full / physical replication counterparty exposure arises when Examples of collaterals by issuers: securities are lent out by the ETF. This is quite common in the fund industry no matter even if it is A look behind the curtain – ETF Securitiesan ETF wrapper or a classic mutual fund. Securities As a reaction on the call of the Financial Stability Board lending generates an extra portion of income. to give more details about assets held in collateral Usually the lending fee contributes up to 40 basis baskets to improve transparency for investors, points to a blue chip ETF like the iShares (ETFS) publishes since May 2011 a list of all EuroStoxx50. Each security lending transaction is collateral held as security for investors on its website. secured by a so-called collateral. Usually, these The issuer holds currently USD 28.2 billion AuM. First securities are sent to a separate entity – mainly a of all the process of collateralisation at ETFS has to be bank with a custody business – which take care of described. We just highlight the collateralisation of the position and separate the relevant securities by ETFs, which are UCITS compliant and don't focus on posting it into a special account. In both replication the ETPs. Regarding to ETFS' website they currently methods, collaterals are generally 102% of the value have four swap providers. Swaps with the partners of domestic shares and 105% of the value of foreign Citigroup and Bank of America Merrill Lynch are shares. The North American peers still favour on unfunded. Agreements with Barclays and Rabobank full replication. Full replicated ETFs in the U.S. are are fully-funded. regulated under the Investment Company Act of 1940. This act forbids certain transactions and limits the use of derivatives. Also the SEC has stopped approving synthetic ETFs in March of 2010 to study their affects.
Who looks at the available Excel-files on ETFS' website, Quality of collateral – a turning point which list the stocks used as collateral, will find some But do investors really know, what's behind their interesting stocks. The majority consists of small and ETF? Is it even collateralised? What kind of mid caps. Furthermore there are a lot of illiquid securities are in the collateral basket? A few years Japanese stocks used as collateral. Also interesting is ago it was very difficult to find out, how the the statement regarding the valuation of the collateral collateral basket looked like and by how much – if on ETF Securities' website, which says that the at all – it was properly (over-)collateralised. As “collateral is highly diversified and/or of high quality”. today's investors desire full transparency, more and Sure, Markowitz says that diversification is important,
ETF Securities
but if the world stock markets tumble, the collaterals should have been better banned from a correlation between the equity markets money-market ETF since the expression “PIIGS” has approximates one. Keep the last paragraph in mind become a common negative shortcut for the troubled while you read the following example: The Eurozone states. Second, in some ETFs appears a major collateral with the highest weighting for the “ collateral position called “UK Equity Holdings”.
” is the Spanish media company Obviously, this is a Lyxor AM associated fund vehicle. . Hence it could be fairly risky for an investor to accept a
Sure, it belongs to the EuroStoxx Consumer security as collateral issued and managed by the ETF Services Index, but is it a good stock as collateral? firm itself.Its price is EUR 1.38 with a market capitalisation of round about EUR 700 Mio. and a 52 week high of EUR 2.52 and a low of EUR 1.27. Thus the (nearly penny-) stock had a volatility of 47% over the last year (as of 24th June 2011). Some other collaterals used are small and more or less illiquid stocks from all over the world.
The cost-cutting approach of (AuM USD A positive aspect is that all of the ETFs are up to ten 9.9 bn) seems to be what investors like. “We decided to percent over-collateralised. In the example of the implement a competitive pricing strategy. Cost is a key “ETFX DAX 2x Long” the fund is 9.14% over- criteria when collateralised. But imagine the above mentioned case of a default of the swap partner in falling equity markets and no other counterparty can be found to enter into the swap. The first possibility to switch to physical replication is hardly possible because of the highly differing collateral basket components. Furthermore physical replication is not possible in short or leveraged ETFs. Thus the last possibility is to terminate the fund and liquidate the collateral basket. But what kind of securities are in my portfolio? Right, mostly small and mid caps with a high beta and lower liquidity. It won't be fun to liquidate this volatile portfolio in falling equity markets. So it is questionable if cushions of approximately 9% will be enough to sleep carefree.
French Connection – Lyxor, Amundi & OssiamThe French ETF issuer (Current AuM USD 55 bn.), uses its parent Societe Generale as swap partner. Other than ETF Securities, its ETFs are not that much over-collateralised. The very positive aspect comparing to Lyxor's competitor is that the securities in the collateral baskets are mostly large caps with a high market capitalisation. Furthermore Lyxor is very transparent regarding the collateralisation. Sometimes the transparency may lead to surprises. Investors should keep an eye on two things: First, the Lyxor ETF Euro Cash. Here one could clearly see the dominance of Spanish and Italian Government bonds. Perhaps, those
ETFX DAX 2x LongPromotora de Informacions S.A. (ES0171743117)
Amundi ETF
Ossiam
Lyxor
db x-trackers
Deutsche Bank
selecting an ETF; our TER is on average 25% lower than that of our competitors.” said Valérie Baudson, Managing Director of Amundi ETF in an interview with ETF Radar. The issuer is a joint-venture between Societe Generale and Credit Agricole. Regarding transparency and quality of collaterals the newcomer makes a good shape. Detailed information about the underlying baskets is daily updated available via Amundi's website – and no obscure securities (or strong overweight of French equities) appeared in three randomly selected samples. Amundi's custodian is CACEIS Bank.
, a brand new ETF issuer and affiliate of French banking-group Natixis, provides detailed and easy to find facts about the effective ETF holdings. Accordingly, one could quickly find detailed information about the specific securities. Obviously, Natixis wired some positions of their French equities portfolio to Ossiam because there is a clear dominance of major French stocks used as collateral. The French start-up uses State Street Bank Luxembourg S.A. as custodian.
Commendable Germans – Deutsche Bank and...Another issuer to highlight is , who offers currently 187 products and manages USD 52.6 billion. It uses its parents as swap partner. A very commendable aspect of db x-trackers ETFs is the transparency regarding its collaterals. For
ETF Radar Magazine | Issue July 2011ETF Radar Magazine | Issue July 2011
It won't be fun to liquidate this volatile portfolio in falling markets.
It could be fairly risky for an investor to accept a security as collateral issued and managed by the ETF firm itself.
Feature
12
HIGH
11
Feature
HIGH
ETF Radar Magazine | Issue July 2011ETF Radar Magazine | Issue July 2011
each ETF you can see detailed information of the are at risk vs. the swap counterparty. This means if the collateral basket like the allocation of the asset swap counterpart (here: Commerzbank) would come class, country, sector, currency, rating, etc. Of into serious trouble, the swap collateral should be course you can also download the list of the whole 107.5% or more in order to prevent a potenial loss. securities used as collateral on a daily basis. The „Investors don‘t have to worry. We adjust all collaterals ETFs are UCITS compliant and the collateral exists on a daily basis.“ adds Arne Scheehl.of high quality securities. The used stocks are in most instances blue chips. Unfortunately the ETFs „Tricky Brits“ – Barclays and its ETNsare just – if at all – little over-collateralised. A prominent player in the global ETN business is Sometimes they are even under-collateralised. Let's with its subsidiary. Its main assume the case that the counterparty in the swap rivals in the ETN business are Morgan Stanley and agreement (Deutsche Bank) defaults on the UBS. Unlike ETFs, ETNs are senior, unsecured, example of the . This unsubordinated debt securities. In case of iPath ETNs, ETF is backed by a collateral value of 99.46% as of these securities are issued by Barclays Bank Plc. One of June 21, 2011. Thus the fund is under-collateralised. their best-known products is the series When looking into its country and currency – linked to selected S&P500 VIX Futures. Investors weightings, the US clearly dominates with nearly buying these ETNs are more or less entering into a kind 29% of the holdings, followed by Japan (22%) and of simple bet: Barclays will promise to pay the specific Germany (20%). About 38% of the collateral are performance (i.e. index return of the S&P500 VIX denominated in Euro, 28% in USD and another Futures) and will promise to pay back the individual 22% in JPY. 13% account in CHF. market value when investors are selling the ETN. An
important detail: The investor's money is not posted So in the (more or less) unlikely case of a default of into a pledge account or a separated collateralized the counterparty Deutsche Bank AG, investors may securities account. Barclays main concern is delivering receive the value of the stocks that are used as the benchmark performance. They do this either collateral rather than the value of the index. through swaps or investing directly in futures. It Although they invested in the German Stock depends on which asset classes they are investing in. Exchange Index the collateral portfolio would Unlike the leveraged ETFs, these ETNs are not covered consist of only 38% Euro investments. This by the Investment Act of 1940. Instead they are covered situation appears not just at db x-trackers. Many by the Investment Act of 1933 so they are free to use ETF providers use this method of portfolio derivatives. According to Barclays, they only do their optimisation in their collateral basket. swaps „with investment banks and other financial
institutions with very high ratings“. In addition, their ...Commerzbank obligations come from their bank itself, which has a A similar picture at , one of the emerging double AA rating, not from a sub-entity.ETF brands in Europe. 's subsidiary has 94 products available which account totally to an AuM of USD 9.5 billion. According to Arne Scheehl, Sales Institutional Clients, the Frankfurt-based ETF issuer uses the swap desk of Commerzbank for all their products. The swap is overcollateralised at a minimum of 105%. The collateral baskets contain strictly German government bonds which are in custody of „American Idol“ – Invesco PowerSharesClearstream Banking Frankfurt. “Both the carrier There are also some risks luring across the Atlantic basket and the collateral are published on our ocean. The synthetic issues that are of some concern in website.” he explained. One of the largest NAV the U.S. are leveraged ETFs and Exchange Traded difference has the comstage ShortDAX ETF Notes (ETNs). There are a few issuers in the U.S. that do (LU0603940916). Its basket NAV is 92.53% in offer synthetic ETFs. , , & favour of the fund – or in other words, roughly 7.5% offer leveraged and/or inverse ETFs.
Barclays Bank iPath
DAX ETF (LU0274211480)
iPath VIX ETN
comstageCommerzbank
ProShares Direxion RydexPowerShares
PowerShares also offers commodity ETFs of which many use 3-month U.S. treasuries as collateral. “Regarding the use of swap based or collateralized ETFs, our preference has always been to fully replicate a portfolio where possible,” said Ben Fulton, Invesco PowerShares managing director of global ETFs in an recent interview with ETF Radar. „In the U.S. market, PowerShares ETFs are either fully replicated or use a representative sampling methodology.“ he added. The PowerShares DB currency & commodity suite of 11 ETFs managed by Deutsche Bank, hold futures contracts as opposed to swaps. They also markets the PowerShares DB line of 28 ETNs which are unsecured debt obligations of Deutsche Bank AG, London Branch. In Europe, PowerShares ETFs are all UCITS compliant and we use specific replication investment methodology for 15 of the 19 funds, and one fund uses representative sampling.
Investors should ask the right questionsOne issue that regulators are concerned with is that securities lending has the ability to cause more counterparty risk and more collateral risk for the investor. The counterparty risk appears if the borrower cannot give it back. The collateral risk comes into play if the collateral that the borrower used is worth less than the security. In the U.S., investors are partially protected by the Investment Company Act of 1940 which only allows one third of the fund to be lent. One firm of note is iShares which posted securities lending income on their recent annual report.
All in all, investors – in North America, Europe and elsewhere in the world – should realize that also ETFs could be associated with some hidden risks. But nevertheless an ETF is nowadays one of the most transparent, liquid and cost-efficient vehicle one could have in its portfolio. So we recommend every investor to have a closer look at the collateralisation of swap-based ETFs due to big differences between the competing providers. Probably the simple conclusion one should bear in mind is: Even with ETFs and ETPs – Don't let yourself be fooled. n
An important detail: The investor's money is not posted into a pledge account or a separated collateralized securities account.
The main question is: Why do we analyse the collateral and the processes behind collateralisation? Everything will be alright…and nobody cares about the details. But what happens if markets tumble for example caused by another financial crisis and banks default or go bankrupt and one of these banks served as swap partner in an ETF you owned?
There are three options to ETF providers if their swap partner defaults:
A) The first is to look for another swap partner who enters into your swap agreement as counterparty. It is questionable if banks will do so in times of a crisis.
B) The second option is to switch the replication method and go ahead with physical replication. This could be very challenging and costly, because as mentioned the collateral baskets differ highly from the underlying index components. C) If both methods don't work the ETF provider has to terminate the ETF and liquidate the collateral portfolio. Due to the default of the counterparty the loss of the swap agreements will be up to 10%. Further losses can arise from the liquidation of the collateral basket. Thus there are two aspects essential - the quality of the used collateral and the level of over-collateralisation.
It appears in many collateral agreements that there is either lower-quality or less liquid collateral. Also many ETFs are not over-collateralised. The rule you should keep in mind is:The less liquid and the lower the quality of the collateral basket, the higher the over- collateralisation should be. Hopefully some issuers keep this rule of thumb also in mind.
A Practical Overview About Swap Defaults
ETF RadarGlobal Collateral Report
Download the full data-set directly:www.etf-radar.com/collateralreport.pdf
Even with ETFs and ETPs – Don't let yourself be fooled.
DirectDownload
Feature
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ETF Radar Magazine | Issue July 2011ETF Radar Magazine | Issue July 2011
each ETF you can see detailed information of the are at risk vs. the swap counterparty. This means if the collateral basket like the allocation of the asset swap counterpart (here: Commerzbank) would come class, country, sector, currency, rating, etc. Of into serious trouble, the swap collateral should be course you can also download the list of the whole 107.5% or more in order to prevent a potenial loss. securities used as collateral on a daily basis. The „Investors don‘t have to worry. We adjust all collaterals ETFs are UCITS compliant and the collateral exists on a daily basis.“ adds Arne Scheehl.of high quality securities. The used stocks are in most instances blue chips. Unfortunately the ETFs „Tricky Brits“ – Barclays and its ETNsare just – if at all – little over-collateralised. A prominent player in the global ETN business is Sometimes they are even under-collateralised. Let's with its subsidiary. Its main assume the case that the counterparty in the swap rivals in the ETN business are Morgan Stanley and agreement (Deutsche Bank) defaults on the UBS. Unlike ETFs, ETNs are senior, unsecured, example of the . This unsubordinated debt securities. In case of iPath ETNs, ETF is backed by a collateral value of 99.46% as of these securities are issued by Barclays Bank Plc. One of June 21, 2011. Thus the fund is under-collateralised. their best-known products is the series When looking into its country and currency – linked to selected S&P500 VIX Futures. Investors weightings, the US clearly dominates with nearly buying these ETNs are more or less entering into a kind 29% of the holdings, followed by Japan (22%) and of simple bet: Barclays will promise to pay the specific Germany (20%). About 38% of the collateral are performance (i.e. index return of the S&P500 VIX denominated in Euro, 28% in USD and another Futures) and will promise to pay back the individual 22% in JPY. 13% account in CHF. market value when investors are selling the ETN. An
important detail: The investor's money is not posted So in the (more or less) unlikely case of a default of into a pledge account or a separated collateralized the counterparty Deutsche Bank AG, investors may securities account. Barclays main concern is delivering receive the value of the stocks that are used as the benchmark performance. They do this either collateral rather than the value of the index. through swaps or investing directly in futures. It Although they invested in the German Stock depends on which asset classes they are investing in. Exchange Index the collateral portfolio would Unlike the leveraged ETFs, these ETNs are not covered consist of only 38% Euro investments. This by the Investment Act of 1940. Instead they are covered situation appears not just at db x-trackers. Many by the Investment Act of 1933 so they are free to use ETF providers use this method of portfolio derivatives. According to Barclays, they only do their optimisation in their collateral basket. swaps „with investment banks and other financial
institutions with very high ratings“. In addition, their ...Commerzbank obligations come from their bank itself, which has a A similar picture at , one of the emerging double AA rating, not from a sub-entity.ETF brands in Europe. 's subsidiary has 94 products available which account totally to an AuM of USD 9.5 billion. According to Arne Scheehl, Sales Institutional Clients, the Frankfurt-based ETF issuer uses the swap desk of Commerzbank for all their products. The swap is overcollateralised at a minimum of 105%. The collateral baskets contain strictly German government bonds which are in custody of „American Idol“ – Invesco PowerSharesClearstream Banking Frankfurt. “Both the carrier There are also some risks luring across the Atlantic basket and the collateral are published on our ocean. The synthetic issues that are of some concern in website.” he explained. One of the largest NAV the U.S. are leveraged ETFs and Exchange Traded difference has the comstage ShortDAX ETF Notes (ETNs). There are a few issuers in the U.S. that do (LU0603940916). Its basket NAV is 92.53% in offer synthetic ETFs. , , & favour of the fund – or in other words, roughly 7.5% offer leveraged and/or inverse ETFs.
Barclays Bank iPath
DAX ETF (LU0274211480)
iPath VIX ETN
comstageCommerzbank
ProShares Direxion RydexPowerShares
PowerShares also offers commodity ETFs of which many use 3-month U.S. treasuries as collateral. “Regarding the use of swap based or collateralized ETFs, our preference has always been to fully replicate a portfolio where possible,” said Ben Fulton, Invesco PowerShares managing director of global ETFs in an recent interview with ETF Radar. „In the U.S. market, PowerShares ETFs are either fully replicated or use a representative sampling methodology.“ he added. The PowerShares DB currency & commodity suite of 11 ETFs managed by Deutsche Bank, hold futures contracts as opposed to swaps. They also markets the PowerShares DB line of 28 ETNs which are unsecured debt obligations of Deutsche Bank AG, London Branch. In Europe, PowerShares ETFs are all UCITS compliant and we use specific replication investment methodology for 15 of the 19 funds, and one fund uses representative sampling.
Investors should ask the right questionsOne issue that regulators are concerned with is that securities lending has the ability to cause more counterparty risk and more collateral risk for the investor. The counterparty risk appears if the borrower cannot give it back. The collateral risk comes into play if the collateral that the borrower used is worth less than the security. In the U.S., investors are partially protected by the Investment Company Act of 1940 which only allows one third of the fund to be lent. One firm of note is iShares which posted securities lending income on their recent annual report.
All in all, investors – in North America, Europe and elsewhere in the world – should realize that also ETFs could be associated with some hidden risks. But nevertheless an ETF is nowadays one of the most transparent, liquid and cost-efficient vehicle one could have in its portfolio. So we recommend every investor to have a closer look at the collateralisation of swap-based ETFs due to big differences between the competing providers. Probably the simple conclusion one should bear in mind is: Even with ETFs and ETPs – Don't let yourself be fooled. n
An important detail: The investor's money is not posted into a pledge account or a separated collateralized securities account.
The main question is: Why do we analyse the collateral and the processes behind collateralisation? Everything will be alright…and nobody cares about the details. But what happens if markets tumble for example caused by another financial crisis and banks default or go bankrupt and one of these banks served as swap partner in an ETF you owned?
There are three options to ETF providers if their swap partner defaults:
A) The first is to look for another swap partner who enters into your swap agreement as counterparty. It is questionable if banks will do so in times of a crisis.
B) The second option is to switch the replication method and go ahead with physical replication. This could be very challenging and costly, because as mentioned the collateral baskets differ highly from the underlying index components. C) If both methods don't work the ETF provider has to terminate the ETF and liquidate the collateral portfolio. Due to the default of the counterparty the loss of the swap agreements will be up to 10%. Further losses can arise from the liquidation of the collateral basket. Thus there are two aspects essential - the quality of the used collateral and the level of over-collateralisation.
It appears in many collateral agreements that there is either lower-quality or less liquid collateral. Also many ETFs are not over-collateralised. The rule you should keep in mind is:The less liquid and the lower the quality of the collateral basket, the higher the over- collateralisation should be. Hopefully some issuers keep this rule of thumb also in mind.
A Practical Overview About Swap Defaults
ETF RadarGlobal Collateral Report
Download the full data-set directly:www.etf-radar.com/collateralreport.pdf
Even with ETFs and ETPs – Don't let yourself be fooled.
DirectDownload
12
People
ETF Radar Magazine | Issue July 2011
competitors. Our ETF structure FSB, one of the key problems is transparency and disclosure to combines full investment in listed that a significant number of facilitate this process. However, equities with the use of swap exchange-traded investment complexity can also come from the transactions to ensure precise products are not ETF's. How can underlying investment objective of tracking. Swaps can be transacted the industry improve the the product – in this respect, ETPs with multiple counterparties (6 understanding among investors? are no different from conventional major investment banks), thus I do think the industry could be mutual funds. Although most diversifying the risk. Moreover, the more pro-active in educating ETPs aim to track well-known swaps are reset frequently as the investors that not all exchange benchmark indices, there are also funds expand or contract, so that the traded products are regulated more complex products on offer: absolute amount of risk is small – funds. At an institutional level this e.g., products linked to emerging typically less than 0.10% of the is well understood, but as we see markets, volatility and hedge fund fund's assets. This approach has more retail participation it will replication strategies. These are resonated well with the European become increasingly important to likely to appeal only to more ETF investor community. make the distinction clear. sophisticated investors. It's down
to investors to decide what kind of How is your approach at Source underlying assets they wish to take in educating investors? exposure to and to ensure that they At Source, we approach this from understand the risks.two angles: first, we are extremely clear in our marketing materials What are your thoughts about about product structure (going so an European ETF Association – far as to employ different colour and perhaps a Global ETF
So ETFs are still an attractive schemes for non-fund products!). Association?wrapper? Second, although our commodity There is currently an ETF working Yes, but a separate and important products are certificates rather group within the European Fund question is the distinction between than funds, we provide a focus on a n d A s s e t M a n a g e m e n t ETFs and other exchange traded liquidity, transparency and Association that includes most of products. These products are not minimising counterparty risk that the major ETF sponsors. As ETFs subject to the same robust is no different to our other are regulated investment funds, regulatory framework as funds and products. Our ETCs are fully this is an obvious and effective way therefore warrant a higher degree of backed by the underly ing for us to address industry concerns. scrutiny. This is not to say the commodity or – where this is not There may be some merit to a products are bad – indeed, in many feasible – with US Treasury bills, separate European organization to respects Source's exchange traded which are by far the world's most look at non-fund related issues commodity products are even more liquid security. In our opinion, it (e.g. trade reporting). A global robust than many ETFs – but in the would make sense for the European organization, however, would absence of strict governmental regulators to step in here and allow seem to have limited value given oversight investors need to do more commodity products to be the differences in regulatory homework. We also agree that the delivered in a regulated format (as regimes and investor preferences.industry could do a better job of is the case in the US). In the educating investors that not all absence of such a framework, we exchange traded products are funds. have constructed our products in a In sum, we welcome the scrutiny: we manner that is otherwise as think ETFs are generally well consistent as possible with the constructed and well managed and UCITS rules.will stand up to rigorous evaluation. Indeed, we have some of the most Have some ETF's and ETP's sophisticated financial institutions meanwhile become too complex Some investors have raised the in the world as our investors, and for an ordinary investor? question of whether ETF short they have not been shy about poking I don't think that ETP structures selling can have a negative under the hood. have become too complex for impact on the performance of a
investors to make sensible fund – particularly for investors In the latest reply of EFAMA decisions and most product who have nothing to do with the towards the concerns raised by the sponsors provide high levels of shorting?
Our investors have not been shy about poking under the hood.
A global organization would seem to have limited value.
13
People
ETF Radar Magazine | Issue July 2011
Expert Talk with
VITA
►►►
► ►
RDX Source ETF (Russia)
Born: 1963, Pelhm (NY)Lives in: Kent (England)
Ted is CEO and responsible for ensuring that Source – through its employees, partners and service providers – protects the assets of our clients, delivers asset performance and provides the honesty, transparency and service that investors deserve. Before joining Source, Ted Hood was a Managing Director and co-head of Morgan Stanley's multi-asset structuring team which creates and distributes derivative investment products to EMEA investors. Prior to this, he worked within Morgan Stanley's equity product group with responsibility for the development, marketing and execution of structured product and alternative fund platforms. Previously Ted was a lawyer at the London and New York offices of Cleary, Gottlieb, Steen & Hamilton specialising in cross-border financial transactions, before joining Morgan Stanley's tax department as a Vice President in 1999. He holds a Juris Doctor from the Cornell Law School, where he graduated magna cum laude and served as editor of the Cornell Law Review.
My first ETF, I bought QQQMy favourite investments:
Career:
Ted Hood
Recently some concerns doesn't matter whether an ETF regarding the associated derives its underlying exposure risks with ETF's/ETP's have through direct investment or via been raised, how about your a derivative: ultimately, both thoughts on this topic? derive their liquidity from the I think it is extremely important shares that constitute the that this discussion be put in underlying index. ETF investors context. The vast majority of typically benefit from intraday ETFs constitute efficient and trading and a high level of effective tools for obtaining transparency. Investors in market exposure. Like any conventional mutual funds – a investment vehicle, ETFs are not far larger component of the risk free, but the risks – which market – perhaps have greater are relatively small – are fully cause for concern since they can regulated and monitored in the typically trade only once a day same manner as any other public a n d m a y s u f f e r g a t i n g investment fund. That said, restr ict ions and lack of Source welcomes rigorous due transparency.diligence by regulators and investors alike, and we think it is helpful to discuss these issues in an open and transparent manner.
To start, both the FSB and BIS have raised concerns about product liquidity, and what would happen if investors rushed to sell their ETFs in a What about counterparty risk?market crash. As a general rule, Counterparty risk has also an ETF is as liquid as the attracted attention. Since its underlying market to which it launch in 2009, Source has been provides access. A product heavily focused on this issue, offering exposure to mid cap developing an innovative and stocks in an emerging market is highly robust approach to going to be far less liquid than a counterparty risk management EURO STOXX 50 product. It that is not matched by our
by Silvan Schelling
CEO, Source ETF
Investors in conventional mutual funds perhaps have greater cause for concern.
“Investors need to do more homework.”
12
People
ETF Radar Magazine | Issue July 2011
competitors. Our ETF structure FSB, one of the key problems is transparency and disclosure to combines full investment in listed that a significant number of facilitate this process. However, equities with the use of swap exchange-traded investment complexity can also come from the transactions to ensure precise products are not ETF's. How can underlying investment objective of tracking. Swaps can be transacted the industry improve the the product – in this respect, ETPs with multiple counterparties (6 understanding among investors? are no different from conventional major investment banks), thus I do think the industry could be mutual funds. Although most diversifying the risk. Moreover, the more pro-active in educating ETPs aim to track well-known swaps are reset frequently as the investors that not all exchange benchmark indices, there are also funds expand or contract, so that the traded products are regulated more complex products on offer: absolute amount of risk is small – funds. At an institutional level this e.g., products linked to emerging typically less than 0.10% of the is well understood, but as we see markets, volatility and hedge fund fund's assets. This approach has more retail participation it will replication strategies. These are resonated well with the European become increasingly important to likely to appeal only to more ETF investor community. make the distinction clear. sophisticated investors. It's down
to investors to decide what kind of How is your approach at Source underlying assets they wish to take in educating investors? exposure to and to ensure that they At Source, we approach this from understand the risks.two angles: first, we are extremely clear in our marketing materials What are your thoughts about about product structure (going so an European ETF Association – far as to employ different colour and perhaps a Global ETF
So ETFs are still an attractive schemes for non-fund products!). Association?wrapper? Second, although our commodity There is currently an ETF working Yes, but a separate and important products are certificates rather group within the European Fund question is the distinction between than funds, we provide a focus on a n d A s s e t M a n a g e m e n t ETFs and other exchange traded liquidity, transparency and Association that includes most of products. These products are not minimising counterparty risk that the major ETF sponsors. As ETFs subject to the same robust is no different to our other are regulated investment funds, regulatory framework as funds and products. Our ETCs are fully this is an obvious and effective way therefore warrant a higher degree of backed by the underly ing for us to address industry concerns. scrutiny. This is not to say the commodity or – where this is not There may be some merit to a products are bad – indeed, in many feasible – with US Treasury bills, separate European organization to respects Source's exchange traded which are by far the world's most look at non-fund related issues commodity products are even more liquid security. In our opinion, it (e.g. trade reporting). A global robust than many ETFs – but in the would make sense for the European organization, however, would absence of strict governmental regulators to step in here and allow seem to have limited value given oversight investors need to do more commodity products to be the differences in regulatory homework. We also agree that the delivered in a regulated format (as regimes and investor preferences.industry could do a better job of is the case in the US). In the educating investors that not all absence of such a framework, we exchange traded products are funds. have constructed our products in a In sum, we welcome the scrutiny: we manner that is otherwise as think ETFs are generally well consistent as possible with the constructed and well managed and UCITS rules.will stand up to rigorous evaluation. Indeed, we have some of the most Have some ETF's and ETP's sophisticated financial institutions meanwhile become too complex Some investors have raised the in the world as our investors, and for an ordinary investor? question of whether ETF short they have not been shy about poking I don't think that ETP structures selling can have a negative under the hood. have become too complex for impact on the performance of a
investors to make sensible fund – particularly for investors In the latest reply of EFAMA decisions and most product who have nothing to do with the towards the concerns raised by the sponsors provide high levels of shorting?
Our investors have not been shy about poking under the hood.
A global organization would seem to have limited value.
13
People
ETF Radar Magazine | Issue July 2011
Expert Talk with
VITA
►►►
► ►
RDX Source ETF (Russia)
Born: 1963, Pelhm (NY)Lives in: Kent (England)
Ted is CEO and responsible for ensuring that Source – through its employees, partners and service providers – protects the assets of our clients, delivers asset performance and provides the honesty, transparency and service that investors deserve. Before joining Source, Ted Hood was a Managing Director and co-head of Morgan Stanley's multi-asset structuring team which creates and distributes derivative investment products to EMEA investors. Prior to this, he worked within Morgan Stanley's equity product group with responsibility for the development, marketing and execution of structured product and alternative fund platforms. Previously Ted was a lawyer at the London and New York offices of Cleary, Gottlieb, Steen & Hamilton specialising in cross-border financial transactions, before joining Morgan Stanley's tax department as a Vice President in 1999. He holds a Juris Doctor from the Cornell Law School, where he graduated magna cum laude and served as editor of the Cornell Law Review.
My first ETF, I bought QQQMy favourite investments:
Career:
Ted Hood
Recently some concerns doesn't matter whether an ETF regarding the associated derives its underlying exposure risks with ETF's/ETP's have through direct investment or via been raised, how about your a derivative: ultimately, both thoughts on this topic? derive their liquidity from the I think it is extremely important shares that constitute the that this discussion be put in underlying index. ETF investors context. The vast majority of typically benefit from intraday ETFs constitute efficient and trading and a high level of effective tools for obtaining transparency. Investors in market exposure. Like any conventional mutual funds – a investment vehicle, ETFs are not far larger component of the risk free, but the risks – which market – perhaps have greater are relatively small – are fully cause for concern since they can regulated and monitored in the typically trade only once a day same manner as any other public a n d m a y s u f f e r g a t i n g investment fund. That said, restr ict ions and lack of Source welcomes rigorous due transparency.diligence by regulators and investors alike, and we think it is helpful to discuss these issues in an open and transparent manner.
To start, both the FSB and BIS have raised concerns about product liquidity, and what would happen if investors rushed to sell their ETFs in a What about counterparty risk?market crash. As a general rule, Counterparty risk has also an ETF is as liquid as the attracted attention. Since its underlying market to which it launch in 2009, Source has been provides access. A product heavily focused on this issue, offering exposure to mid cap developing an innovative and stocks in an emerging market is highly robust approach to going to be far less liquid than a counterparty risk management EURO STOXX 50 product. It that is not matched by our
by Silvan Schelling
CEO, Source ETF
Investors in conventional mutual funds perhaps have greater cause for concern.
“Investors need to do more homework.”
Harriman House is one of the UK's leading independent publishersof finance, trading and investment books.
There’s Never Been A Better Time To Learn More About The ETF Industry.
Hh Harriman HouseOn Sale Now:
www.harriman-house.com/etfradarGet 30% off the regular price!
Rankings
Top 25 ETF providers around the world ranked by Assets under ManagementAs at end May 2011
WORLDWIDE
In association with
Source: BlackRock Global ETF Research and Implementation Strategy Team
14
ETF Radar Magazine | Issue July 2011
Provider # ETFs
AUM
(US$ Bn) % total
ADV
(US$ Bn)
#
planned # ETFs % ETFs
AUM
(US$ Bn) % AUM
% market
share
iShares 470 $628.5 43.5% $17.9 15 -3 -0.6% $49.9 8.6% -0.7%
State Street Global Advisors 134 $203.4 14.1% $27.8 39 21 18.6% $12.7 6.7% -0.5%
Vanguard 69 $177.6 12.3% $1.7 1 4 6.2% $29.1 19.6% 1.0%
Lyxor Asset Management 163 $54.5 3.8% $0.9 1 7 4.5% $1.2 2.3% -0.3%
db x-trackers 187 $52.6 3.6% $0.5 16 8 4.5% $3.5 7.2% -0.1%
PowerShares 134 $47.9 3.3% $2.8 49 4 3.1% $5.1 11.8% 0.0%
Van Eck Associates Corp 34 $23.1 1.6% $1.2 37 5 17.2% $3.1 15.6% 0.1%
ProShares 107 $22.6 1.6% $2.9 93 7 7.0% $1.1 4.9% -0.1%
Credit Suisse Asset Management 58 $18.2 1.3% $0.1 0 4 7.4% $2.5 16.2% 0.1%
Nomura Asset Management 34 $15.2 1.1% $0.1 0 2 6.3% -$1.2 -7.3% -0.2%
Zurich Cantonal Bank 7 $13.2 0.9% $0.1 0 0 0.0% $1.4 12.2% 0.0%
WisdomTree Investments 46 $12.3 0.9% $0.2 71 2 4.5% $2.4 24.1% 0.1%
Bank of New York 1 $11.3 0.8% $0.4 0 0 0.0% -$1.0 -7.9% -0.2%
UBS Global Asset Management 45 $10.3 0.7% $0.0 0 16 55.2% $3.7 56.9% 0.2%
Amundi ETF 99 $9.9 0.7% $0.1 0 7 7.6% $2.7 38.3% 0.1%
Commerzbank 94 $9.5 0.7% $0.0 0 4 4.4% $0.9 10.8% 0.0%
HSBC/Hang Seng 31 $8.5 0.6% $0.1 4 14 82.4% $1.1 15.0% 0.0%
First Trust Advisors 59 $8.2 0.6% $0.1 3 16 37.2% $2.8 51.0% 0.2%
Source Markets 62 $7.1 0.5% $0.5 15 6 10.7% $2.1 42.9% 0.1%
Nikko Asset Management 20 $6.7 0.5% $0.0 0 3 17.6% $0.1 2.3% 0.0%
Direxion Shares 46 $6.5 0.5% $2.5 180 7 17.9% -$0.1 -0.9% -0.1%
Claymore Investments 30 $6.5 0.4% $0.0 5 1 3.4% $1.0 17.5% 0.0%
EasyETF 48 $6.2 0.4% $0.0 1 -1 -2.0% $0.6 11.3% 0.0%
Rydex SGI 25 $5.7 0.4% $0.1 97 1 4.2% $0.8 15.3% 0.0%
Daiwa Asset Management 23 $5.7 0.4% $0.0 1 0 0.0% -$1.2 -17.7% -0.1%
YTD changeMay 2011
13
People
Across the Atlantic:
Source has put considerable effort likely to have tighter trading How about your ETCs?into analysing the mechanics of the spreads and therefore the cost of Source's commodity T-ETCs are ETF short selling process, with putting on and taking off my own fully invested in US Treasury bills. respect to both its own products and position may well be lower. All of Commodity swaps are reset those of competitors. Our view is your T-ETC products use US weekly and marked-to-market at that not only does short selling not treasury bills and cash as collateral. the end of each trading day and jeopardize the performance of an counterparties are required to ETF, but it can enhance overall provide margin where the swaps performance by attracting liquidity are in-the-money. To date, we to the product and thereby reducing have only received cash margin, trading spreads. There is one though technically US treasury significant caveat: clearly short bills and other G7 government selling can have an impact on the bonds are permitted as well.price of the underlying shares. Our only comment here is that investors Which new product ideas you can short major benchmarks in a have for the next time ahead?number of different ways (e.g., With interest rates still low and futures and swaps) so if investors many investors seeking more than want to short, they will find a way to How and where can investors see benchmark returns, Source is also do so and the market will receive that the exact collaterals and its partnering with selected active downward pressure regardless of weightings? Are there any plans managers, including PIMCO and whether ETFs are involved. to publish the current holdings Man GLG, to deliver exclusive
of your ETCs and ETFs on your opportunities for enhanced The fact that short positions may website ? returns. A good example is our exceed the size of the assets held by We already publish full constituents PIMCO Enhanced Short Maturity an ETF is not relevant to a fund's for our physically invested products, ETFs. These aim to deliver an performance. The fund will hold and which include all of our equity funds, enhanced yield compared to manage assets commensurate with our range of PIMCO Source fixed money market funds, while its outstanding shares at all times. income funds and our physically- maintaining high levels of The investor taking the short secured precious metal products. security and liquidity, and allow position may need to find ETF units Because the portfolio composition of investors to benefit from PIMCO's to close out its position, usually by our T-ETCs is formulaic and world class expertise in fixed investing in the fund and creating relatively static (i.e., US Treasury income. more units. This process for bills with a predefined maturity unwinding short positions has been profile), there has been very limited functioning for more than 15 years investor interest and so we currently without notable incident. provide this information on request.
So, should investors stay away Does Source hold or accept such from ETF with an extremely short “PIIGS” bonds as collateral for interest ratio like the SPDR its products? Regional Banking ETF or the Source's swap-enhanced equity iShares Russel 2000 ETF? ETFs are typically fully invested in I think an intelligent investor would listed equities. These are owned by want to understand why others had the fund rather than held as formed the view that these collateral. No bonds of any sort are benchmarks were likely to decline in held in these funds. Some of our v a l u e ! B u t i f t h e i nve s t o r fixed income ETFs are actively nevertheless wants exposure to managed and may hold Greek or regional banks or US small caps, I Portuguese government bonds in would not be concerned that a large accordance with their stated short interest ratio might have a i nves tm ent ob j ec t ives and negative impact on the performance guidelines. Full constituents for the of these funds. To the contrary, I funds are published on the Source would assume these products were website daily.
Thank you! n
Some of our fixed income ETFs may hold Greek or Portuguese government bonds –in accordance withtheir guidelines.
People
Interview withJim King, Rydex ETFin the Magazine’sNorth American Edition.www.etf-radar.com
ETF Radar Magazine | Issue July 2011
Harriman House is one of the UK's leading independent publishersof finance, trading and investment books.
There’s Never Been A Better Time To Learn More About The ETF Industry.
Hh Harriman HouseOn Sale Now:
www.harriman-house.com/etfradarGet 30% off the regular price!
Rankings
Top 25 ETF providers around the world ranked by Assets under ManagementAs at end May 2011
WORLDWIDE
In association with
Source: BlackRock Global ETF Research and Implementation Strategy Team
14
ETF Radar Magazine | Issue July 2011
Provider # ETFs
AUM
(US$ Bn) % total
ADV
(US$ Bn)
#
planned # ETFs % ETFs
AUM
(US$ Bn) % AUM
% market
share
iShares 470 $628.5 43.5% $17.9 15 -3 -0.6% $49.9 8.6% -0.7%
State Street Global Advisors 134 $203.4 14.1% $27.8 39 21 18.6% $12.7 6.7% -0.5%
Vanguard 69 $177.6 12.3% $1.7 1 4 6.2% $29.1 19.6% 1.0%
Lyxor Asset Management 163 $54.5 3.8% $0.9 1 7 4.5% $1.2 2.3% -0.3%
db x-trackers 187 $52.6 3.6% $0.5 16 8 4.5% $3.5 7.2% -0.1%
PowerShares 134 $47.9 3.3% $2.8 49 4 3.1% $5.1 11.8% 0.0%
Van Eck Associates Corp 34 $23.1 1.6% $1.2 37 5 17.2% $3.1 15.6% 0.1%
ProShares 107 $22.6 1.6% $2.9 93 7 7.0% $1.1 4.9% -0.1%
Credit Suisse Asset Management 58 $18.2 1.3% $0.1 0 4 7.4% $2.5 16.2% 0.1%
Nomura Asset Management 34 $15.2 1.1% $0.1 0 2 6.3% -$1.2 -7.3% -0.2%
Zurich Cantonal Bank 7 $13.2 0.9% $0.1 0 0 0.0% $1.4 12.2% 0.0%
WisdomTree Investments 46 $12.3 0.9% $0.2 71 2 4.5% $2.4 24.1% 0.1%
Bank of New York 1 $11.3 0.8% $0.4 0 0 0.0% -$1.0 -7.9% -0.2%
UBS Global Asset Management 45 $10.3 0.7% $0.0 0 16 55.2% $3.7 56.9% 0.2%
Amundi ETF 99 $9.9 0.7% $0.1 0 7 7.6% $2.7 38.3% 0.1%
Commerzbank 94 $9.5 0.7% $0.0 0 4 4.4% $0.9 10.8% 0.0%
HSBC/Hang Seng 31 $8.5 0.6% $0.1 4 14 82.4% $1.1 15.0% 0.0%
First Trust Advisors 59 $8.2 0.6% $0.1 3 16 37.2% $2.8 51.0% 0.2%
Source Markets 62 $7.1 0.5% $0.5 15 6 10.7% $2.1 42.9% 0.1%
Nikko Asset Management 20 $6.7 0.5% $0.0 0 3 17.6% $0.1 2.3% 0.0%
Direxion Shares 46 $6.5 0.5% $2.5 180 7 17.9% -$0.1 -0.9% -0.1%
Claymore Investments 30 $6.5 0.4% $0.0 5 1 3.4% $1.0 17.5% 0.0%
EasyETF 48 $6.2 0.4% $0.0 1 -1 -2.0% $0.6 11.3% 0.0%
Rydex SGI 25 $5.7 0.4% $0.1 97 1 4.2% $0.8 15.3% 0.0%
Daiwa Asset Management 23 $5.7 0.4% $0.0 1 0 0.0% -$1.2 -17.7% -0.1%
YTD changeMay 2011
13
People
Across the Atlantic:
Source has put considerable effort likely to have tighter trading How about your ETCs?into analysing the mechanics of the spreads and therefore the cost of Source's commodity T-ETCs are ETF short selling process, with putting on and taking off my own fully invested in US Treasury bills. respect to both its own products and position may well be lower. All of Commodity swaps are reset those of competitors. Our view is your T-ETC products use US weekly and marked-to-market at that not only does short selling not treasury bills and cash as collateral. the end of each trading day and jeopardize the performance of an counterparties are required to ETF, but it can enhance overall provide margin where the swaps performance by attracting liquidity are in-the-money. To date, we to the product and thereby reducing have only received cash margin, trading spreads. There is one though technically US treasury significant caveat: clearly short bills and other G7 government selling can have an impact on the bonds are permitted as well.price of the underlying shares. Our only comment here is that investors Which new product ideas you can short major benchmarks in a have for the next time ahead?number of different ways (e.g., With interest rates still low and futures and swaps) so if investors many investors seeking more than want to short, they will find a way to How and where can investors see benchmark returns, Source is also do so and the market will receive that the exact collaterals and its partnering with selected active downward pressure regardless of weightings? Are there any plans managers, including PIMCO and whether ETFs are involved. to publish the current holdings Man GLG, to deliver exclusive
of your ETCs and ETFs on your opportunities for enhanced The fact that short positions may website ? returns. A good example is our exceed the size of the assets held by We already publish full constituents PIMCO Enhanced Short Maturity an ETF is not relevant to a fund's for our physically invested products, ETFs. These aim to deliver an performance. The fund will hold and which include all of our equity funds, enhanced yield compared to manage assets commensurate with our range of PIMCO Source fixed money market funds, while its outstanding shares at all times. income funds and our physically- maintaining high levels of The investor taking the short secured precious metal products. security and liquidity, and allow position may need to find ETF units Because the portfolio composition of investors to benefit from PIMCO's to close out its position, usually by our T-ETCs is formulaic and world class expertise in fixed investing in the fund and creating relatively static (i.e., US Treasury income. more units. This process for bills with a predefined maturity unwinding short positions has been profile), there has been very limited functioning for more than 15 years investor interest and so we currently without notable incident. provide this information on request.
So, should investors stay away Does Source hold or accept such from ETF with an extremely short “PIIGS” bonds as collateral for interest ratio like the SPDR its products? Regional Banking ETF or the Source's swap-enhanced equity iShares Russel 2000 ETF? ETFs are typically fully invested in I think an intelligent investor would listed equities. These are owned by want to understand why others had the fund rather than held as formed the view that these collateral. No bonds of any sort are benchmarks were likely to decline in held in these funds. Some of our v a l u e ! B u t i f t h e i nve s t o r fixed income ETFs are actively nevertheless wants exposure to managed and may hold Greek or regional banks or US small caps, I Portuguese government bonds in would not be concerned that a large accordance with their stated short interest ratio might have a i nves tm ent ob j ec t ives and negative impact on the performance guidelines. Full constituents for the of these funds. To the contrary, I funds are published on the Source would assume these products were website daily.
Thank you! n
Some of our fixed income ETFs may hold Greek or Portuguese government bonds –in accordance withtheir guidelines.
People
Interview withJim King, Rydex ETFin the Magazine’sNorth American Edition.www.etf-radar.com
ETF Radar Magazine | Issue July 2011
16
Rankings
Top 10 ETFs by Change in Average Daily VolumeAs at end May 2011
WORLDWIDE
Top 10 ETFs by Change in Assets under ManagementAs at end May 2011
WORLDWIDE
Source: BlackRock Global ETF Research and Implementation Strategy Team
► NO GAME CHANGERWith in the ADV rankings no realremarkable change happend. lost a bit on daily volume, tookover rank two. keeps the red lantern in the table.
QQQEEM
XLF
► DAX AND AGRIBIZWith regards to change in AuM,two well-known DAX ETFs ( and ) saw strong gains. Thismonth‘s newcomer is MOO, an ETF from VanEck focussed on tracking Argibuisness stocks.
DAXEXXDAX
ETF Radar Magazine | Issue July 2011
ETF Bloomberg ticker
ADV
(US$ Mn)
ADV
('000 shares)
AUM
(US$ Mn)
SPDR S&P 500 SPY US $19,913.5 148,564 $89,227.2
iShares Russell 2000 Index Fund IWM US $4,976.4 59,529 $16,683.8
iShares MSCI Emerging Markets Index Fund EEM US $2,777.4 58,105 $40,204.7
PowerShares QQQ Trust QQQ US $2,666.9 45,740 $24,368.2
Energy Select Sector SPDR Fund XLE US $1,830.3 24,335 $9,775.5
iShares MSCI EAFE Index Fund EFA US $1,075.8 17,529 $40,810.7
iShares MSCI Brazil Index Fund EWZ US $1,004.8 13,588 $12,919.0
Vanguard MSCI Emerging Markets ETF VWO US $954.6 19,791 $48,702.2
SPDR Dow Jones Industrial Average ETF DIA US $873.3 6,946 $9,919.9
Financial Select Sector SPDR Fund XLF US $850.8 53,481 $7,356.0
ETF Bloomberg ticker
AUM
(US$ Mn)
May-11
AUM
(US$ Mn)
Dec-10
Change
(US$ Mn)
iShares MSCI Emerging Markets Index Fund EEM US $40,204.7 $47,551.5 -$7,346.8
iShares DAX (DE) DAXEX GY $10,719.7 $5,917.7 $4,802.0
Vanguard MSCI Emerging Markets ETF VWO US $48,702.2 $44,569.8 $4,132.5
iShares MSCI EAFE Index Fund EFA US $40,810.7 $36,923.1 $3,887.5
Market Vectors Agribusiness ETF MOO US $5,254.0 $2,631.5 $2,622.5
db x-trackers DAX ETF XDAX GY $6,269.3 $3,693.1 $2,576.3
iShares S&P MidCap 400 Index Fund IJH US $11,848.3 $9,332.0 $2,516.3
iShares S&P 500 Index Fund IVV US $28,279.8 $25,799.2 $2,480.6
iShares MSCI Japan Index Fund EWJ US $7,252.7 $4,883.3 $2,369.4
PowerShares QQQ Trust QQQ US $24,368.2 $22,069.9 $2,298.3
Rankings
10
Top 10/Top 5 ETFs by Assets under ManagementAs at end May 2011
UNITED STATES
EUROPE
MIDDLE-EAST/AFRICA
ASIA-PACIFIC
JAPAN
15Source: BlackRock Global ETF Research and Implementation Strategy Team
ETF Radar Magazine | Issue July 2011
ETF Bloomberg ticker
AUM
(US$ Mn)
ADV
('000 shares)
ADV
(US$ Mn)
SPDR S&P 500 SPY US $89,227.2 148,564 $19,913.5
Vanguard MSCI Emerging Markets ETF VWO US $48,702.2 19,791 $954.6
iShares MSCI EAFE Index Fund EFA US $40,810.7 17,529 $1,075.8
iShares MSCI Emerging Markets Index Fund EEM US $40,204.7 58,105 $2,777.4
iShares S&P 500 Index Fund IVV US $28,279.8 2,715 $365.0
PowerShares QQQ Trust QQQ US $24,368.2 45,740 $2,666.9
iShares Barclays TIPS Bond Fund TIP US $20,509.1 746 $82.6
Vanguard Total Stock Market ETF VTI US $20,338.2 1,297 $90.5
iShares Russell 2000 Index Fund IWM US $16,683.8 59,529 $4,976.4
iShares Russell 1000 Growth Index Fund IWF US $13,981.6 1,867 $115.2
ETF Bloomberg ticker
AUM
(US$ Mn)
ADV
('000 shares)
ADV
(US$ Mn)
iShares DAX (DE) DAXEX GY $10,719.7 3,503 $343.0
iShares S&P 500 IUSA LN $9,573.8 7,530 $100.5
ZKB Gold ETF (CHF) ZGLD SW $8,445.9 12 $31.1
iShares MSCI Emerging Markets IEEM LN $7,060.0 1,187 $55.5
Lyxor ETF Euro STOXX 50 MSE FP $6,723.6 3,301 $140.5
db x-trackers DAX ETF XDAX GY $6,269.3 686 $72.2
iShares FTSE 100 ISF LN $6,003.2 10,024 $98.3
db x-trackers MSCI Emerging Market TRN Index ETF XMEM GY $5,568.2 900 $41.5
iShares EURO STOXX 50 (DE) SX5EEX GY $5,560.1 1,246 $53.0
iShares Markit iBoxx Euro Corporate Bond IBCS GY $4,614.0 116 $19.9
ETF Bloomberg ticker
AUM
(US$ Mn)
ADV
('000 shares)
ADV
(US$ Mn)
SATRIX40 STX40 SJ $1,016.4 1,136 $4.9
STANLIB SWIX 40 Fund STANSX SJ $348.8 1 $0.0
Satrix Dividend Plus STXDIV SJ $156.7 730 $0.2
SATRIX Financials STXFIN SJ $124.6 85 $0.1
Bips Government Inflation Linked Bond Fund BIPINF SJ $123.9 51 $0.1
ETF Bloomberg ticker
AUM
(US$ Mn)
ADV
('000 shares)
ADV
(US$ Mn)
NIKKEI 225 ETF 1321 JP $6,883.5 368 $44.7
TOPIX ETF 1306 JP $6,874.9 2,636 $28.0
Listed Index Fund 225 1330 JP $3,130.7 271 $33.0
Listed Index Fund TOPIX 1308 JP $3,095.8 249 $2.6
Daiwa ETF NIKKEI 225 1320 JP $2,691.1 72 $8.8
ETF Bloomberg ticker
AUM
(US$ Mn)
ADV
('000 shares)
ADV
(US$ Mn)
iShares FTSE A50 China Index ETF* 2823 HK $7,849.4 65,926 $111.4
Tracker Fund of Hong Kong (TraHK) 2800 HK $7,532.7 19,653 $60.8
Hang Seng Index ETF 2833 HK $4,097.9 62 $1.9
China AMC SSE 50 510050 CH $3,141.8 263,678 $81.3
Hang Seng H-Share Index ETF 2828 HK $2,840.8 1,432 $24.6
E Fund SZSE 100 159901 CH $2,708.8 480,861 $56.0
ABF Pan Asia Bond Index Fund 2821 HK $2,450.1 2 $0.3
SPDR S&P/ASX 200 Fund STW AU $2,412.1 199 $9.5
Polaris Taiwan Top 50 Tracker 0050 TT $2,292.5 15,936 $34.5
Samsung Kodex200 ETF 069500 KS $2,267.7 1,445 $38.2
16
Rankings
Top 10 ETFs by Change in Average Daily VolumeAs at end May 2011
WORLDWIDE
Top 10 ETFs by Change in Assets under ManagementAs at end May 2011
WORLDWIDE
Source: BlackRock Global ETF Research and Implementation Strategy Team
► NO GAME CHANGERWith in the ADV rankings no realremarkable change happend. lost a bit on daily volume, tookover rank two. keeps the red lantern in the table.
QQQEEM
XLF
► DAX AND AGRIBIZWith regards to change in AuM,two well-known DAX ETFs ( and ) saw strong gains. Thismonth‘s newcomer is MOO, an ETF from VanEck focussed on tracking Argibuisness stocks.
DAXEXXDAX
ETF Radar Magazine | Issue July 2011
ETF Bloomberg ticker
ADV
(US$ Mn)
ADV
('000 shares)
AUM
(US$ Mn)
SPDR S&P 500 SPY US $19,913.5 148,564 $89,227.2
iShares Russell 2000 Index Fund IWM US $4,976.4 59,529 $16,683.8
iShares MSCI Emerging Markets Index Fund EEM US $2,777.4 58,105 $40,204.7
PowerShares QQQ Trust QQQ US $2,666.9 45,740 $24,368.2
Energy Select Sector SPDR Fund XLE US $1,830.3 24,335 $9,775.5
iShares MSCI EAFE Index Fund EFA US $1,075.8 17,529 $40,810.7
iShares MSCI Brazil Index Fund EWZ US $1,004.8 13,588 $12,919.0
Vanguard MSCI Emerging Markets ETF VWO US $954.6 19,791 $48,702.2
SPDR Dow Jones Industrial Average ETF DIA US $873.3 6,946 $9,919.9
Financial Select Sector SPDR Fund XLF US $850.8 53,481 $7,356.0
ETF Bloomberg ticker
AUM
(US$ Mn)
May-11
AUM
(US$ Mn)
Dec-10
Change
(US$ Mn)
iShares MSCI Emerging Markets Index Fund EEM US $40,204.7 $47,551.5 -$7,346.8
iShares DAX (DE) DAXEX GY $10,719.7 $5,917.7 $4,802.0
Vanguard MSCI Emerging Markets ETF VWO US $48,702.2 $44,569.8 $4,132.5
iShares MSCI EAFE Index Fund EFA US $40,810.7 $36,923.1 $3,887.5
Market Vectors Agribusiness ETF MOO US $5,254.0 $2,631.5 $2,622.5
db x-trackers DAX ETF XDAX GY $6,269.3 $3,693.1 $2,576.3
iShares S&P MidCap 400 Index Fund IJH US $11,848.3 $9,332.0 $2,516.3
iShares S&P 500 Index Fund IVV US $28,279.8 $25,799.2 $2,480.6
iShares MSCI Japan Index Fund EWJ US $7,252.7 $4,883.3 $2,369.4
PowerShares QQQ Trust QQQ US $24,368.2 $22,069.9 $2,298.3
Rankings
10
Top 10/Top 5 ETFs by Assets under ManagementAs at end May 2011
UNITED STATES
EUROPE
MIDDLE-EAST/AFRICA
ASIA-PACIFIC
JAPAN
15Source: BlackRock Global ETF Research and Implementation Strategy Team
ETF Radar Magazine | Issue July 2011
ETF Bloomberg ticker
AUM
(US$ Mn)
ADV
('000 shares)
ADV
(US$ Mn)
SPDR S&P 500 SPY US $89,227.2 148,564 $19,913.5
Vanguard MSCI Emerging Markets ETF VWO US $48,702.2 19,791 $954.6
iShares MSCI EAFE Index Fund EFA US $40,810.7 17,529 $1,075.8
iShares MSCI Emerging Markets Index Fund EEM US $40,204.7 58,105 $2,777.4
iShares S&P 500 Index Fund IVV US $28,279.8 2,715 $365.0
PowerShares QQQ Trust QQQ US $24,368.2 45,740 $2,666.9
iShares Barclays TIPS Bond Fund TIP US $20,509.1 746 $82.6
Vanguard Total Stock Market ETF VTI US $20,338.2 1,297 $90.5
iShares Russell 2000 Index Fund IWM US $16,683.8 59,529 $4,976.4
iShares Russell 1000 Growth Index Fund IWF US $13,981.6 1,867 $115.2
ETF Bloomberg ticker
AUM
(US$ Mn)
ADV
('000 shares)
ADV
(US$ Mn)
iShares DAX (DE) DAXEX GY $10,719.7 3,503 $343.0
iShares S&P 500 IUSA LN $9,573.8 7,530 $100.5
ZKB Gold ETF (CHF) ZGLD SW $8,445.9 12 $31.1
iShares MSCI Emerging Markets IEEM LN $7,060.0 1,187 $55.5
Lyxor ETF Euro STOXX 50 MSE FP $6,723.6 3,301 $140.5
db x-trackers DAX ETF XDAX GY $6,269.3 686 $72.2
iShares FTSE 100 ISF LN $6,003.2 10,024 $98.3
db x-trackers MSCI Emerging Market TRN Index ETF XMEM GY $5,568.2 900 $41.5
iShares EURO STOXX 50 (DE) SX5EEX GY $5,560.1 1,246 $53.0
iShares Markit iBoxx Euro Corporate Bond IBCS GY $4,614.0 116 $19.9
ETF Bloomberg ticker
AUM
(US$ Mn)
ADV
('000 shares)
ADV
(US$ Mn)
SATRIX40 STX40 SJ $1,016.4 1,136 $4.9
STANLIB SWIX 40 Fund STANSX SJ $348.8 1 $0.0
Satrix Dividend Plus STXDIV SJ $156.7 730 $0.2
SATRIX Financials STXFIN SJ $124.6 85 $0.1
Bips Government Inflation Linked Bond Fund BIPINF SJ $123.9 51 $0.1
ETF Bloomberg ticker
AUM
(US$ Mn)
ADV
('000 shares)
ADV
(US$ Mn)
NIKKEI 225 ETF 1321 JP $6,883.5 368 $44.7
TOPIX ETF 1306 JP $6,874.9 2,636 $28.0
Listed Index Fund 225 1330 JP $3,130.7 271 $33.0
Listed Index Fund TOPIX 1308 JP $3,095.8 249 $2.6
Daiwa ETF NIKKEI 225 1320 JP $2,691.1 72 $8.8
ETF Bloomberg ticker
AUM
(US$ Mn)
ADV
('000 shares)
ADV
(US$ Mn)
iShares FTSE A50 China Index ETF* 2823 HK $7,849.4 65,926 $111.4
Tracker Fund of Hong Kong (TraHK) 2800 HK $7,532.7 19,653 $60.8
Hang Seng Index ETF 2833 HK $4,097.9 62 $1.9
China AMC SSE 50 510050 CH $3,141.8 263,678 $81.3
Hang Seng H-Share Index ETF 2828 HK $2,840.8 1,432 $24.6
E Fund SZSE 100 159901 CH $2,708.8 480,861 $56.0
ABF Pan Asia Bond Index Fund 2821 HK $2,450.1 2 $0.3
SPDR S&P/ASX 200 Fund STW AU $2,412.1 199 $9.5
Polaris Taiwan Top 50 Tracker 0050 TT $2,292.5 15,936 $34.5
Samsung Kodex200 ETF 069500 KS $2,267.7 1,445 $38.2
Rankings
18
ETF Radar Magazine | Issue July 2011
Rankings
17
ETF Radar Magazine | Issue July 2011
Top 30 Worst Performing ETPsAs at end of June 2011
WORLDWIDE
Source: GlobalFundData/Morningstar as of July 5, 2011
Top 30 Best Performing ETPsAs at end of June 2011
WORLDWIDE
Source: GlobalFundData/Morningstar as of July 5, 2011
► AGROS: SWEET PERFOMERThe last 20 trading days, investorsin Sugar and Wheat enjoyed soaringprices. The relevant ETPs show impressive gains. Bearish motivatedinvestors got most rewarded inShort Silver and Short Crude ETPs –maybe this trend will end shortly.
ETF/ETP Listing Region 1 Mth 12 Mth Inception
Net assets
(USD)
ETFS Leveraged Sugar ETC Europe 38.46% 208.14% 1.34% 8,849,032
ETFS Leveraged Sugar (DE) ETC Europe 37.29% 160.34% 33.80% 6,103,443
ProShares UltraShort Si lver North America 20.58% -88.19% -80.93% -
PowerShares DB Crude Oil Dble Short ETN North America 20.57% -40.95% 22.10% -
ETFS Short Wheat ETC Europe 20.44% -24.81% 13.03% 8,186,638
ETFS Short Wheat (DE) ETC Europe 19.43% -36.47% 7.87% 5,646,570
Source S&P GSCI Sugar TR T-ETC Europe 18.32% 95.72% 38.05% 4,168,473
ETFS Sugar ETC Europe 18.31% 95.73% 9.82% 62,472,778
Horizons BetaPro NYMEX Crude Oil Bear North America 18.11% -46.89% -15.20% 127,750,283
Direxion Daily Semicondct Bear 3X Shares North America 17.94% -65.01% -56.98% -
Horizons BetaPro COMEX Si lver Bear North America 17.50% -80.17% -71.63% 31,511,187
ProShares UltraShort DJ-UBS Crude Oil North America 17.41% -45.00% -34.96% -
ETFS Sugar (DE) ETC Europe 17.31% 65.36% 6.98% 43,089,349
iPath Short Extended Russell 2000 TR ETN North America 15.96% - -45.03% -
iPath Pure Beta Sugar ETN North America 13.20% - 11.19% 6,883,206
NEXT FUNDS TOPIX-17 Electric Power & Gas Asia-Pacific 13.07% -39.54% -16.99% -
Daiwa ETF TOPIX-17 Electric Power & Gas Asia-Pacific 12.96% -39.57% -18.19% -
ETFS Leveraged Lead ETC Europe 12.33% 105.82% -32.47% 4,147,102
ETFS Short Grains DJ-UBSCI ETC Europe 12.29% -35.80% -2.04% 1,132,639
Hyundai Hi Shares Insurance ETF Equity Asia-Pacific 12.11% 16.98% 11.06% 1,961,555,136
Direxion Daily Energy Bear 3X Shares North America 11.78% -76.51% -71.59% -
ETFS Short Cotton ETC Europe 11.77% -59.05% -21.24% 20,812,617
EasyETF Dow Jones Luxury EUR Europe 11.64% 58.83% 16.40% 10,132,985
Lyxor ETF Daily Double Short SMI A Europe 11.56% -13.35% 3.34% -
SPGS Si lver ETN Europe 11.45% - 107.49% -
ETFS Leveraged Lead (DE) ETC Europe 11.38% 73.89% -11.07% 2,860,381
ETFS Short Grains DJ-UBSCI (DE) ETC Europe 11.34% -45.76% -1.68% 781.215
Direxion Daily Gold Miners Bear 2X Shrs North America 11.10% - 9.01% -
ETFS Short Cotton (DE) ETC Europe 10.83% -65.41% -25.65% 14,355,086
iPath Short Extended Russell 1000 TR ETN North America 10.60% - -40.27% -
ETF/ETP Listing Region 1 Mth 12 Mth Inception
Net assets
(USD)
ETFS Short Sugar (DE) ETC Europe -17.30% -65.73% -34.03% 9,247,651
ETFS Leveraged Agri DJ-UBSCI (DE) ETC Europe -16.98% 71.58% -6.32% 11,078,136
ETFS Cotton (DE) ETC Europe -16.70% 65.55% 5.52% 24,685,925
ETFS Short Sugar ETC Europe -16.60% -59.43% -25.06% 13,407,639
ETFS Leveraged Agri DJ-UBSCI ETC Europe -16.27% 103.08% -16.75% 16,061,555
ETFS Leveraged Crude Oil (DE) ETC Europe -16.18% -7.56% -57.89% 89,734,401
ETFS Cotton ETC Europe -15.99% 95.95% 8.29% 35,790,708
Source S&P GSCI Cotton TR T-ETC North America -15.99% 96.52% 55.94% 13,708,445
UBS E-TRACS CMCI Si lver TR ETN North America -15.67% 105.92% 27.80% -
ETFS Leveraged Crude Oil ETC Europe -15.46% 9.42% -52.17% 130,100,766
ETFS Leveraged Natural Gas (DE) ETC Europe -14.86% -63.44% -81.79% 249,645,820
Market Vectors Solar Energy ETF North America -14.77% 11.25% -33.95% -
iPath S&P GSCI Grains Index TR (DE) ETN North America -14.77% 36.24% 17.97% 335.117
Guggenheim Solar North America -14.73% 11.94% -32.61% -
Source S&P GSCI Grains TR T-ETC Europe -14.68% 36.15% 5.48% 5,260,902
iPath Pure Beta Cotton ETN North America -14.67% - -10.32% 5,836,250
ETFS Leveraged Tin (DE) ETC Europe -14.64% 70.79% 2.96% 828.151
ETFS Leveraged Natural Gas ETC Europe -14.13% -56.73% -77.88% 361,947,168
ETFS Leveraged Tin ETC Europe -13.91% 102.16% 5.14% 1,200,689
Direxion Daily Energy Bull 3X Shares North America -13.91% 168.91% 27.08% -
Kodex Securities ETF Asia-Pacific -13.84% 9.56% -6.97% 4,294,967,295
ETFS Leveraged Energy DJ-UBSCI (DE) ETC Europe -13.76% -18.31% -59.11% 907.694
EasyETF BNP Par Global Rnwble Energy USD Europe -13.66% -25.85% -18.15% 14,910,655
ETFS Leveraged Petrolm DJ-UBSCI (DE) ETC Europe -13.65% 8.07% -51.12% 658.597
ETFS Leveraged Corn (DE) ETC Europe -13.34% 131.39% -27.36% 3,594,656
ETFS Leveraged Soybean Oil (DE) ETC Europe -13.17% 58.63% -25.38% 667.162
iPath DJ-UBS Tin TR Sub-Idx ETN North America -13.12% 55.73% 9.57% -
ETFS Leveraged Energy DJ-UBSCI ETC Europe -13.02% -3.31% -52.78% 1,316,013
ETFS Leveraged Petrolm DJ-UBSCI ETC Europe -12.92% 27.91% -44.21% 954.862
ETFS Leveraged Platinum (DE) ETC Europe -12.89% -0.97% -19.35% 7,812,621
► THE B-SIDE: COTTON AND GAS The biggest loser in the last monthhave been (long) cotton, (short) sugar and (long) gas ETPs with losses up to 17%. Remarkable: Even if solar and alternative energy have become very trendy investment targets theGuggenheim Solar ETF declined nearly 15%.
Rankings
18
ETF Radar Magazine | Issue July 2011
Rankings
17
ETF Radar Magazine | Issue July 2011
Top 30 Worst Performing ETPsAs at end of June 2011
WORLDWIDE
Source: GlobalFundData/Morningstar as of July 5, 2011
Top 30 Best Performing ETPsAs at end of June 2011
WORLDWIDE
Source: GlobalFundData/Morningstar as of July 5, 2011
► AGROS: SWEET PERFOMERThe last 20 trading days, investorsin Sugar and Wheat enjoyed soaringprices. The relevant ETPs show impressive gains. Bearish motivatedinvestors got most rewarded inShort Silver and Short Crude ETPs –maybe this trend will end shortly.
ETF/ETP Listing Region 1 Mth 12 Mth Inception
Net assets
(USD)
ETFS Leveraged Sugar ETC Europe 38.46% 208.14% 1.34% 8,849,032
ETFS Leveraged Sugar (DE) ETC Europe 37.29% 160.34% 33.80% 6,103,443
ProShares UltraShort Si lver North America 20.58% -88.19% -80.93% -
PowerShares DB Crude Oil Dble Short ETN North America 20.57% -40.95% 22.10% -
ETFS Short Wheat ETC Europe 20.44% -24.81% 13.03% 8,186,638
ETFS Short Wheat (DE) ETC Europe 19.43% -36.47% 7.87% 5,646,570
Source S&P GSCI Sugar TR T-ETC Europe 18.32% 95.72% 38.05% 4,168,473
ETFS Sugar ETC Europe 18.31% 95.73% 9.82% 62,472,778
Horizons BetaPro NYMEX Crude Oil Bear North America 18.11% -46.89% -15.20% 127,750,283
Direxion Daily Semicondct Bear 3X Shares North America 17.94% -65.01% -56.98% -
Horizons BetaPro COMEX Si lver Bear North America 17.50% -80.17% -71.63% 31,511,187
ProShares UltraShort DJ-UBS Crude Oil North America 17.41% -45.00% -34.96% -
ETFS Sugar (DE) ETC Europe 17.31% 65.36% 6.98% 43,089,349
iPath Short Extended Russell 2000 TR ETN North America 15.96% - -45.03% -
iPath Pure Beta Sugar ETN North America 13.20% - 11.19% 6,883,206
NEXT FUNDS TOPIX-17 Electric Power & Gas Asia-Pacific 13.07% -39.54% -16.99% -
Daiwa ETF TOPIX-17 Electric Power & Gas Asia-Pacific 12.96% -39.57% -18.19% -
ETFS Leveraged Lead ETC Europe 12.33% 105.82% -32.47% 4,147,102
ETFS Short Grains DJ-UBSCI ETC Europe 12.29% -35.80% -2.04% 1,132,639
Hyundai Hi Shares Insurance ETF Equity Asia-Pacific 12.11% 16.98% 11.06% 1,961,555,136
Direxion Daily Energy Bear 3X Shares North America 11.78% -76.51% -71.59% -
ETFS Short Cotton ETC Europe 11.77% -59.05% -21.24% 20,812,617
EasyETF Dow Jones Luxury EUR Europe 11.64% 58.83% 16.40% 10,132,985
Lyxor ETF Daily Double Short SMI A Europe 11.56% -13.35% 3.34% -
SPGS Si lver ETN Europe 11.45% - 107.49% -
ETFS Leveraged Lead (DE) ETC Europe 11.38% 73.89% -11.07% 2,860,381
ETFS Short Grains DJ-UBSCI (DE) ETC Europe 11.34% -45.76% -1.68% 781.215
Direxion Daily Gold Miners Bear 2X Shrs North America 11.10% - 9.01% -
ETFS Short Cotton (DE) ETC Europe 10.83% -65.41% -25.65% 14,355,086
iPath Short Extended Russell 1000 TR ETN North America 10.60% - -40.27% -
ETF/ETP Listing Region 1 Mth 12 Mth Inception
Net assets
(USD)
ETFS Short Sugar (DE) ETC Europe -17.30% -65.73% -34.03% 9,247,651
ETFS Leveraged Agri DJ-UBSCI (DE) ETC Europe -16.98% 71.58% -6.32% 11,078,136
ETFS Cotton (DE) ETC Europe -16.70% 65.55% 5.52% 24,685,925
ETFS Short Sugar ETC Europe -16.60% -59.43% -25.06% 13,407,639
ETFS Leveraged Agri DJ-UBSCI ETC Europe -16.27% 103.08% -16.75% 16,061,555
ETFS Leveraged Crude Oil (DE) ETC Europe -16.18% -7.56% -57.89% 89,734,401
ETFS Cotton ETC Europe -15.99% 95.95% 8.29% 35,790,708
Source S&P GSCI Cotton TR T-ETC North America -15.99% 96.52% 55.94% 13,708,445
UBS E-TRACS CMCI Si lver TR ETN North America -15.67% 105.92% 27.80% -
ETFS Leveraged Crude Oil ETC Europe -15.46% 9.42% -52.17% 130,100,766
ETFS Leveraged Natural Gas (DE) ETC Europe -14.86% -63.44% -81.79% 249,645,820
Market Vectors Solar Energy ETF North America -14.77% 11.25% -33.95% -
iPath S&P GSCI Grains Index TR (DE) ETN North America -14.77% 36.24% 17.97% 335.117
Guggenheim Solar North America -14.73% 11.94% -32.61% -
Source S&P GSCI Grains TR T-ETC Europe -14.68% 36.15% 5.48% 5,260,902
iPath Pure Beta Cotton ETN North America -14.67% - -10.32% 5,836,250
ETFS Leveraged Tin (DE) ETC Europe -14.64% 70.79% 2.96% 828.151
ETFS Leveraged Natural Gas ETC Europe -14.13% -56.73% -77.88% 361,947,168
ETFS Leveraged Tin ETC Europe -13.91% 102.16% 5.14% 1,200,689
Direxion Daily Energy Bull 3X Shares North America -13.91% 168.91% 27.08% -
Kodex Securities ETF Asia-Pacific -13.84% 9.56% -6.97% 4,294,967,295
ETFS Leveraged Energy DJ-UBSCI (DE) ETC Europe -13.76% -18.31% -59.11% 907.694
EasyETF BNP Par Global Rnwble Energy USD Europe -13.66% -25.85% -18.15% 14,910,655
ETFS Leveraged Petrolm DJ-UBSCI (DE) ETC Europe -13.65% 8.07% -51.12% 658.597
ETFS Leveraged Corn (DE) ETC Europe -13.34% 131.39% -27.36% 3,594,656
ETFS Leveraged Soybean Oil (DE) ETC Europe -13.17% 58.63% -25.38% 667.162
iPath DJ-UBS Tin TR Sub-Idx ETN North America -13.12% 55.73% 9.57% -
ETFS Leveraged Energy DJ-UBSCI ETC Europe -13.02% -3.31% -52.78% 1,316,013
ETFS Leveraged Petrolm DJ-UBSCI ETC Europe -12.92% 27.91% -44.21% 954.862
ETFS Leveraged Platinum (DE) ETC Europe -12.89% -0.97% -19.35% 7,812,621
► THE B-SIDE: COTTON AND GAS The biggest loser in the last monthhave been (long) cotton, (short) sugar and (long) gas ETPs with losses up to 17%. Remarkable: Even if solar and alternative energy have become very trendy investment targets theGuggenheim Solar ETF declined nearly 15%.
etfRadarGlobal Investor Intelligence
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Inverse and leveraged products, synthetic replicated funds and optimised indices are just a few features one should understand.
The ETF business has become quite exotic.
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General InformationThe views and expectations presented in the analyses, data and product presentations in this publication should not be viewed as investment recommendations of and by the ETF Radar Magazine or any of affiliates or associates. Investors should seek independent professional advice. Contributors of this publication and/or its affiliates may invest in or act as a market maker for the securities or indices or other products referred to in this publication for own account or the account of a third party. Editorial contributors may also have a business relationship with issuers of such securities or providers of such indices or products and may represent members of such issuers' or providers' decision-making bodies.
While the information in this publication has been obtained from sources believed to be reliable, neither the ETF Radar Magazine nor any contributor makes any representation as to accuracy or completeness. The ETF Radar Magazine does not act as an registered investment advisor or fiduciary for anyone unless otherwise agreed. Any evaluations in this publication reflect only the author's opinion at the time of the analysis. The opinions, forecasts, assumptions, estimates, derived valuations and target price(s) contained in this material are as of the date indicated and are subject to change at any time without prior notice. This publication is general and for information only and does not constitute any form of recommendation, an offer to sell or a solicitation to buy any security or other financial instrument.
Prospective investors should understand the risks associated with the products mentioned in this publication and should reach an investment decision on the basis of the information in the relevant offering circulars. Neither the staff of the ETF Radar Magazine nor any other person shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary loss or damages, including without limitation lost profits arising in any way from the information contained in the material. All designated trademarks and brands are the property of their respective owners.
Additional InformationAll figures are subject to market fluctuation and change. Investments that are concentrated in a specific sector or industry may be subject to a higher degree of market risk than investments that are more diversified. An index is not managed and is unavailable for direct investment. Total returns assume reinvestment of all distributions, including dividends and capital gains. Reinvestment does not assure a profit or protect against a loss in declining markets. Total returns do not include commissions, fees, other transaction variables or the effects of taxation. Past performance does not guarantee or predict future results. The investment discussed may not be suitable for all investors. Investors must make their own decisions based on their specific investment objectives and financial circumstances. This communication is not an offer to sell or solicitation of offers to buy any securities mentioned herein. This report is not a complete analysis of every material fact in respect to any fund or fund type. The opinions expressed here reflect the judgment of the author as of the date of the report and are subject to change without notice. Statistical information has been obtained from sources believed to be reliable but its accuracy is not guaranteed. The ETF Radar Magazine does not render legal, accounting or tax advice. Please consult your tax or legal advisors before taking any action that may have tax consequences.
The performance provided is past performance, which does not guarantee future results and current performance may be lower or higher than the performance data quoted. The investment return and principal value will fluctuate when sold and may be worth more or less than the original cost.
EXCHANGE TRADED FUNDS ARE SOLD BY PROSPECTUS. PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISK, CHARGES AND 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.
Disclaimer
Important notice to our readers
19
ETF Radar Magazine | Issue July 2011
etfRadarGlobal Investor Intelligence
SM
Inverse and leveraged products, synthetic replicated funds and optimised indices are just a few features one should understand.
The ETF business has become quite exotic.
Don’t get lost.
EXPLORE. UNDERSTAND. PROFIT.
www.etf-radar.com
PUT US
ON YOUR RADAR.
ADVERTISING
www.etf-radar.com
General InformationThe views and expectations presented in the analyses, data and product presentations in this publication should not be viewed as investment recommendations of and by the ETF Radar Magazine or any of affiliates or associates. Investors should seek independent professional advice. Contributors of this publication and/or its affiliates may invest in or act as a market maker for the securities or indices or other products referred to in this publication for own account or the account of a third party. Editorial contributors may also have a business relationship with issuers of such securities or providers of such indices or products and may represent members of such issuers' or providers' decision-making bodies.
While the information in this publication has been obtained from sources believed to be reliable, neither the ETF Radar Magazine nor any contributor makes any representation as to accuracy or completeness. The ETF Radar Magazine does not act as an registered investment advisor or fiduciary for anyone unless otherwise agreed. Any evaluations in this publication reflect only the author's opinion at the time of the analysis. The opinions, forecasts, assumptions, estimates, derived valuations and target price(s) contained in this material are as of the date indicated and are subject to change at any time without prior notice. This publication is general and for information only and does not constitute any form of recommendation, an offer to sell or a solicitation to buy any security or other financial instrument.
Prospective investors should understand the risks associated with the products mentioned in this publication and should reach an investment decision on the basis of the information in the relevant offering circulars. Neither the staff of the ETF Radar Magazine nor any other person shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary loss or damages, including without limitation lost profits arising in any way from the information contained in the material. All designated trademarks and brands are the property of their respective owners.
Additional InformationAll figures are subject to market fluctuation and change. Investments that are concentrated in a specific sector or industry may be subject to a higher degree of market risk than investments that are more diversified. An index is not managed and is unavailable for direct investment. Total returns assume reinvestment of all distributions, including dividends and capital gains. Reinvestment does not assure a profit or protect against a loss in declining markets. Total returns do not include commissions, fees, other transaction variables or the effects of taxation. Past performance does not guarantee or predict future results. The investment discussed may not be suitable for all investors. Investors must make their own decisions based on their specific investment objectives and financial circumstances. This communication is not an offer to sell or solicitation of offers to buy any securities mentioned herein. This report is not a complete analysis of every material fact in respect to any fund or fund type. The opinions expressed here reflect the judgment of the author as of the date of the report and are subject to change without notice. Statistical information has been obtained from sources believed to be reliable but its accuracy is not guaranteed. The ETF Radar Magazine does not render legal, accounting or tax advice. Please consult your tax or legal advisors before taking any action that may have tax consequences.
The performance provided is past performance, which does not guarantee future results and current performance may be lower or higher than the performance data quoted. The investment return and principal value will fluctuate when sold and may be worth more or less than the original cost.
EXCHANGE TRADED FUNDS ARE SOLD BY PROSPECTUS. PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISK, CHARGES AND 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.
Disclaimer
Important notice to our readers
19
ETF Radar Magazine | Issue July 2011