Alex Vynokur

The Australian exchange traded fund (ETF) market continued to break new ground in March, reaching a record high of $10.5 billion in funds under management, according to the BetaShares Australian ETF Review.

Approximately $200 million of new money flowed into exchange traded products in March, with inflows coming almost exclusively from new money rather than existing asset growth. Total industry market capitalisation increased by 2% over the month.

In a reversal of market trends from previous months, a significant number of investors exited Australian equities, with approximately $40 million flowing out of funds offering these exposures – a sign that investors are cautious about the local equities market.

The two products experiencing the highest inflows for the month were the Australian High Interest Cash ETF and Equity Yield Maximiser fund, indicating investor demand for defensive and high-yielding strategies. Indeed, four of the top five categories by inflows this month were yield oriented further exemplifying investors’ defensive positioning.

“Last month’s flows indicate that investors are showing some caution in regard to the Australian equities market. However, due to the variety of strategies available via exchange traded products, investors have been able to continue to express their investment views beyond simple broad-based equities exposures,” said Alex Vynokur, Managing Director of BetaShares.

“With investors potentially feeling unsure about the future direction of the local equities market, many are taking the opportunity to construct a more defensive portfolio, incorporating cash and yield-focused strategies to guard against potential market volatility.”

In terms of performance, products offering agriculture exposure provided the best returns, particularly due to continued uncertainty on the future supply of soft commodities, given the effects of the United States droughts.

“The best performing exposure each month this year to date has been commodities-based and highlights the value of the asset class in building a diversified portfolio, especially during times of equity market volatility,” said Mr Vynokur.

The post BetaShares Australian ETF Review March 2014 appeared first on AdviserVoice.

Arian Neiron

Market Vectors, the exchange traded fund business of US-based investment manager Van Eck Global, will shortly launch a new exchange traded fund (ETF) on the ASX with a unique equal weight methodology.

The new Market Vectors Australian Equal Weight ETF (ASX code: MVW) will be the first of its kind in Australia, providing simple and cost-effective access to the most liquid ASX-listed companies, all weighted equally, and can be accessed via a single trade on the ASX.

MVW is designed to track a purpose-built index, the Market Vectors Australia Equal Weight Index, which provides equal exposure to the largest, mid and small cap ASX-listed securities and has demonstrated the potential for strong outperformance versus traditional market cap weighted indexes.

Arian Neiron, Managing Director of Market Vectors Australia, said: “Once launched, MVW will provide investors with more diversified broad based exposure to the Australian equity market and can be used as the core of a portfolio seeking exposure to Australian equities.

“Currently, there are 77 Australian securities that are all equally weighted in the Market Vectors Australia Equal Weight Index, including the big banks such as Commonwealth Bank and Westpac, the big miners such as BHP Billiton and Rio Tinto, as well as smaller securities such as TPG Telecom and SEEK. Each security currently has an equal weighting of approximately 1.30%. This results in a more balanced exposure to Australian companies.

“We believe MVW better captures the performance and diversification of the Australian economy. It removes the large capitalisation biases found in traditional market capitalisation Australian indices, such as the S&P/ASX 200 Accumulation Index, where the top five securities account for almost 40% and top 10 securities account for over 50% of the Index,” said Mr Neiron.

“Our in-depth analysis of the performance of the Market Vectors Australia Equal Weight Index over the last 10 years has demonstrated the potential for MVW to outperform traditional market capitalisation weighted indexes.”

Neiron believes MVW will appeal broadly to all investors including self-managed superannuation funds (SMSFs), advisers and institutions who are seeking diversified exposure to the Australian equity market.

Lars Hamich, Chief Executive Officer of Market Vectors Index Solutions (MVIS), said: “Traditional indexes often don’t provide pure diversification across a given market. The Market Vectors Australia Equal Weight Index is purpose-built to give investors pure exposure to the performance of the Australian economy.

“MVIS conducts detailed analysis of ASX-listed securities in order to determine their inclusion in the Index. Our demanding liquidity screens and pure-play rules deliver a well-balanced and diversified index exposure.

“Our commitment to the best possible transparency is enhanced through easy-to-access index data on our website (marketvectorsindices.com), a free service that enables investors to monitor the underlying index around the clock – a methodology that has been developed in response to a changing global investment landscape,” said Mr Hamich.

Market Vectors now offers over 60 exchange traded products (ETP) spanning international markets, commodities, emerging markets, global equities, fixed income and currency sectors. Market Vectors has clients worldwide and has approximately $US22 billion in assets under management, making it the seventh largest ETP family in the US and the tenth largest worldwide as of 31 January, 2014.

The post Market Vectors to launch first of its kind Australian Equal Weight ETF appeared first on AdviserVoice.

ETF market scaling new heights.

The Australian exchange traded fund (ETF) market continued its 18^th consecutive month of growth in November, reaching a new record high of $9.6 billion in funds under management, according to BetaShares’ November ETF Review.

ETF industry assets grew 3.2% ($297 million) in November with the bulk of the growth ($210 million) attributable to new money rather than market performance.

The trend towards international equities ETFs continued this month with all four new products launched in November offering these exposures. This trend was mirrored in terms of fund inflows, with $85 million flowing into international equities ETFs over the month.

Alex Vynokur, Managing Director of BetaShares said: “With the US and European markets continuing to show signs of recovery, investors are continuing their bullish stance on international equities and this is being reflected in this month’s ETF flows.”

All of the top three products in terms of inflows during November were also international equities ETFs, further reflecting local investors’ confidence in global markets.

Meanwhile, sentiment towards the local equities market also continued to rebound, with high levels of inflows into ETFs that offered Australian share exposures. Australian equities recorded the most inflows in November ($88m), reversing a four month trend where international equities were the most popular product category.

“Inflows into Australian equities are beginning to feature strongly as we come to the end of the year, and investor confidence in the local market grows off the back of international recovery,” said Mr Vynokur.

“It’s been an extraordinary year for the ETF market as a whole, with strong ongoing growth notwithstanding lower numbers of new product launches compared to previous years. We expect to see this positive trend continue for the last month of the 2013 as we move closer towards the $10 billion milestone,” Mr Vynokur concluded.

Click here to view the BetaShares Australian ETF Review for November 2013.

The post BetaShares Australian ETF Review November 2013: The industry continues to rise and rise appeared first on AdviserVoice.

The suite will comprise five risk-based models, ranging from high growth to conservative, and a flexible asset allocation model that incorporates a cash-plus approach with a focus on capital preservation when volatility occurs.

Mark Wills, head of SSgA Investment Solutions Group for Asia Pacific ex Japan, said: “Tactical asset allocation is increasingly gaining traction in Australia, which in turn is fuelling retail investor appetite for model portfolios that employ tactical asset allocation.

“SSgA has more than 20 years of experience designing asset allocation strategies for institutional investors. We build customised investment portfolios based on specific objectives for many of the world’s biggest institutions. With this new ETF model portfolio approach we are able to give retail investors access to this asset allocation expertise, implemented in a cost-effective, transparent way using ETFs.”

OneVue head of partner solutions Brett Marsh said having formed a strategic partnership with an ETF issuer as experienced as SSgA was a particularly pleasing feat for OneVue.

“SSgA created the first ETF globally, the first ETF domestically and currently holds the biggest share of the ETF market in Australia,” Marsh said.

“This partnership enables OneVue’s client base to leverage SSgA’s global and domestic expertise and capabilities in asset allocation, and gives clients access to model portfolios comprised of SPDR^® ETFs in addition to ETFs offered by other leading issuers.”

The suite of Australian-listed ETF model portfolios are tailored specifically for OneVue by SSgA and offer exposure to cash, domestic fixed income, domestic equities, international equities and alternatives. SSgA will advise on the asset allocation for the models, regularly reviewing the strategic allocation to ensure alignment to the stated objectives, while dynamically shifting allocations in response to significant market events. The exposure to each asset class is implemented via exchange traded products, including SSgA’s range of SPDR ETFs.

Mr Marsh continued: “In the near future these models will also become available on OneVue’s wealth management portal for organisations that cater to the self-directed market and will be an easy way for investors to diversify their portfolio in a flexible, tax effective and low cost manner,” Marsh said.

“We recognise that the adoption of ETFs continues to increase both in the advice and self-directed sectors, with the exchange traded product market reaching a record $8.8 billion in assets, according to the latest ASX Funds Monthly Update.

“ETFs provide an entry point to sectors that are more difficult to access in the Australian marketplace, for instance international markets, and they offer greater transparency as it’s possible to know precisely which securities the ETF holds daily.”

Marsh added that the addition of this suite on OneVue’s menu means advisers can tap into the skill set of qualified investment managers, while at the same time removing the challenge for direct investors in terms of what companies to pick, how they go about doing it and ways they can get exposure to different asset classes.

The post SSgA launches ETF model portfolio offering with OneVue appeared first on AdviserVoice.

BetaShares Australian ETF Review August 2013

Trading values in the Australian exchange traded fund (ETF) industry hit record highs in August, demonstrating a ‘coming of age’ for the industry as investors increasingly use the products for tactical and strategic purposes.

According to the BetaShares Australian ETF Review for August 2013, the value of ETF trading in the local market reached $1.2 billion over the month, or an average value of $56m a day. This represents a 40% increase from the previous month’s trading figures – and a 128% increase compared to the same period last year.

“The latest figures reveal increased sophistication in the way investors are using ETFs in their portfolios”, said Alex Vynokur, BetaShares’ Managing Director. “While ETFs continue to be used by many investors as long-term ‘buy and hold’ investments, others are realising that they can take advantage of the unique structure of ETFs to make tactical allocations to particular sectors or asset classes.”

Along with the record trading figures in August, the industry also hit a fresh record high for the eleventh consecutive month to reach $8.71bn in assets under management. Assets under management increased by $456 million with almost 75% related to new inflows (i.e. structural industry growth), rather than market capitalisation growth.

This month, the segment to receive the highest level of inflows was developed international equities with investors continuing to be bullish on the US economic recovery. However, there was a substantial increase in inflows into other developed markets suggesting investors are also looking at potential recoveries in other regions such as Europe.

“ETFs provide an excellent guide to investor sentiment, and as evidenced by this month’s inflows and trading values, we’re clearly seeing an increasing amount of activity supporting the economic recovery in developed markets with a tilt towards US and Europe,” he said.

Additionally, yield remains a focus for Australian investors, being the second most popular product class in terms of inflows. Additional trading themes also revealed a continuing increase in gold ETF redemptions, despite the rally in gold prices – a likely indicator that investors are skittish about the possibility of quantitative easing coming to an end in the US.

“Gold continues to be out of favour with investors but has actually been one of the best performing asset classes on the ASX for the last two months, continuing to reverse the April price slide.” he said.

Commenting on the broader exchange traded fund sector, Mr Vynokur said: “In January, we predicted the exchange traded products sector to end the year with $9 billion in assets under management. It is only August and we are just shy of that number with growth exceeding our expectations. We now believe the Australian market will finish the year at $10 billion.”

Click here to download the BetaShares Australian ETF Review for August 2013.

The post BetaShares Australian ETF Review August 2013 appeared first on AdviserVoice.

Equity ETFs and ETPs gathered the largest net inflows with $11.6 billion, followed by fixed income ETFs and ETPs with $1.3 billion, and active ETFs and ETPs with $1.1 billion, while commodity ETFs and ETPs experienced net outflows with $4.9 billion.

Year to date through end of February 2013, ETFs and ETPs have seen net inflows of $49.1 billion.  Equity ETFs and ETPs gathered the largest net inflows year to date with $45.1 billion, followed by fixed income ETFs and ETPs with $2.8 billion, and leveraged inverse ETFs and ETPs with $2.5 billion, while commodity ETFs/ETPs had net outflows of US$5.3 billion.

“The flows into equity ETFs and ETPs show investors are rotating out of cash and fixed income into equities as investor confidence continues to improve,” says Deborah Fuhr, Managing Partner at London-based ETFGI.

In February, equity ETFs and ETPs had net inflows of $11.6 billion. North American equity ETFs and ETPs gathered the largest net inflows $6.6 billion, followed by developed Asia Pacific equity indices with $3.4 billion, and global (ex-US) equity $1.8 billion, while emerging market equity ETFs and ETPs experienced the largest net outflows with $1.4 billion.

The global ETF industry had 3,345 ETFs, with 7,660 listings, assets of $1.86 trillion, from 180 providers on 54 exchanges at the end of February 2013. Including ETFs and other ETPs, at the end of February, the global ETF and ETP industry had 4,764 ETFs and ETPs, with 9,799 listings, assets of $2.04 trillion US dollars, from 209 providers on 56 exchanges.

Vanguard gathered the largest net ETF and ETP inflows in February with $5.95 billion, followed by iShares with $4.23 billion and WisdomTree with $2.16 billion net inflows.

S&P Dow Jones has the largest amount of ETF and ETP assets tracking its benchmarks with $518 billion, reflecting 25.4% market share; MSCI is second with $440 billion and 21.5% market share, followed by BarCap with $182 billion and 8.9% market share.

The top 100 ETFs and ETPs, out of 4,764, account for 59.6% of global ETF and ETP assets. 296 ETFs and ETPs have greater than $1 billion in assets, while 63.3% of all ETFs and ETPs have less than US$100 million in assets, 54% have less than $50 million in assets and 28% have less than $10 million in assets.

The post $11.4 billion net inflows into global ETFs and ETPs appeared first on AdviserVoice.

Year to date through end of November 2012, ETF and ETP assets have increased by 23.8% from US$1.5 trillion to US$1.9 trillion.

Over the past 10 years the global compounded annual growth rate (CAGR) of these products has been 30.2%.  There are currently 4,726 ETFs and ETPs, with 9,719 listings, assets of US$1.9 trillion, from 208 providers on 56 exchanges.

With the outcomes of the US elections and super storm Sandy known, and a sense among investors that a solution to the looming fiscal cliff will be negotiated, US$9 billion was invested into ETFs and ETPs providing exposure to US equity indices, reversing nearly all of the outflows during October.

Overall, US$ 21.3 billion of net new money went into ETFs and ETPs in the month of November.  Looking year to date through end of November 2012, ETFs and ETPs saw net inflows of US$223 billion, US$69 billion above the level of net new assets at this time last year. Equity ETFs and ETPs have gathered the largest net inflows accounting for US$127 billion followed by fixed income ETFs and ETPs with US$61 billion and commodity ETFs and ETPs capturing US$22 billion.

“We are likely to end 2012 with a record level of assets in ETFs and ETPs and with a record level of net new assets invested into the products during the year” according to Deborah Fuhr, Managing Partner at ETFGI.

Equity focused ETFs and ETPs have gathered US$127 billion which is US$36 billion more than all of last year. Products providing exposure to North American equity indices have been the most popular receiving US$62 billion, followed by emerging market equity with US$38 billion and Asia Pacific equity with US$9.6 billion.

Fixed Income ETFs and ETPs have proven to be very popular tools this year with US$61 billion in net new assets, gathering US$16 billion more than all of last year. Corporate bond products have gathered the largest net inflows with US$24.5 billion, followed by high yield with US$14 billion.

Commodity flows at US$22.5 billion are US$5.5 billion above this time last year. Precious metals have gathered the largest net inflows with US$19.8 billion, while agriculture experienced the largest net outflows with US$1.4 billion.

The post ETF and ETP assets reach all-time high of 1.9 trillion US dollars appeared first on AdviserVoice.

The BEAR Fund will trade under the ASX Code “BEAR” and seeks to generate returns that are negatively correlated with the movements in the S&P/ASX 200 Index. More simply, the BEAR Fund is expected to go up when the Australian share market goes down.

The fund employs a simple structure, investing all of its assets in cash and cash equivalents and obtaining short exposure via futures contracts (ASX SPI 200 futures).

In addition, the fund will be quoted on the ASX, which provides investors with the ability to buy and sell units during the course of the trading day, just like any share. To mark the occasion of the launch of the BEAR Fund, BetaShares “opened the market” by ringing the bell at the ASX on Tuesday.

12 July 2012

The post BetaShares launches BEAR fund on ASX appeared first on AdviserVoice.

Using the ticker code VGB, investors can now access Vanguard’s newest addition to its ETF line up, which can be accessed through a broker in the same way as individual shares. 

ETFs continue to gather pace in Australia. The latest data from the ASX show total market capitalisation of ETFs in Australia is $5.4 billion (including ETCs).

 Commenting on the new ETF listing, Robyn Laidlaw, Vanguard’s Head of Product Management and Development, said, “Fixed income is an important diversifier to a portfolio overweight in equities or cash.” 

“Accessing individual bonds using the traditional over-the-counter method can be difficult for individual investors and can involve large investment outlays,” she said. 

“At a cost of just 0.20 per cent per annum, this new ETF provides a very cost-effective way to incorporate a diversified portfolio of bonds which investors can trade just like shares.” 

Vanguard also this month launched a new wholesale inflation-linked bond fund, the Vanguard® Australian Inflation-Linked Bond Index Fund, and announced a lowered total annual fund operating expense for its Vanguard® US Total Market Shares Index ETF (VTS), which has decreased from 0.07 to 0.06 per cent per annum.

The post New Vanguard Bond ETF begins trading appeared first on AdviserVoice.

The ETF, which will trade under the ASX code “QCB”, aims to track the performance of the S&P GSCI Light Energy Index. The Index tracks the price performance of futures contracts on 24 major global commodities from a range of sectors comprising energy, industrial metals, precious metals, agriculture and livestock.

The ETF is currency hedged, substantially eliminating the impact of movements in the AUD/USD exchange rate to provide a purer exposure to commodities.

Investors are increasingly seeking to obtain exposure to commodity price movements, and commodities are now accepted as one of the building blocks of a balanced porfolio by global investors. The ETF allows investors to gain broadly diversified commodities exposure without the need to invest in the futures market or take physical delivery of commodities.

In addition, investors should note that the ETF offers significant commodity exposure above and beyond the “bulk commodities” (e.g., iron ore and coal) that drive stocks such as BHP and Rio. Bulk commodities are not included in the index tracked by the ETF.

The post BetaShares launches Commodity Basket ETF appeared first on AdviserVoice.