‘ETF 20/20′ industry report: October 2014

Our October ‘ETF 20/20’ industry report published earlier this month examined the key recent developments for US listed ETFs. Some highlights are:

Assets declined in September to $1.865T, largely driven by declines in broad market indices across several asset classes.

The dollar strengthened against the major currencies in Q3, making currency-hedging strategies more attractive.

We ended September with the Shiller P/E ratio (CAPE) at 26, above the historical average of 22 over the last 30 years, but well below the levels just prior to the dot.com crash.

20 new ETFs were launched in the US in September 2014.

Access the full report for free.

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2014 Active ETF Launches by Month

Of the 136 new ETFs launched in 2014 through end August, 36 of them (26%) have been active ETFs. This marks a continued trend of more active ETF launches. The chart below shows the number of ETF launches (total and active) by month this year.

Chart: Total & Active ETF Launches in the US by Month (2014)

Data: First Bridge Data

- A significant number (10) are from WBI’s August entry into the ETF market.

- Active ETF launches this year are not limited to Equities. They also include several bond ETFs such as FMB (First Trust), YPRO (AdvisorShares), among others.

- A range… see full post

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ETF Asset Growth Among Smaller US ETF Sponsors

One section of our latest ‘ETF 20/20’ industry report looks at the rapid gain in assets among the ‘second tier’ of ETF sponsors in the US.  As we can see in the accompanying chart, sponsors like First Trust, Schwab and Guggenheim have all seen rapid growth in this calendar year through end August 2014.

As noted in our report, there are several caveats that need to be kept in mind e.g. by definition, smaller firms tend to benefit in such comparisons since they are growing on a smaller base. However the data is still interesting since it shows that the… see full post

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‘ETF 20/20′ Industry Trends Report – September 2014

Our latest ‘ETF 20/20’ monthly report examines the latest trends in the US Exchange Traded Fund (ETF) marketplace. Some snapshots from this month’s report:

A lot of attention in the US ETF industry is given to the Big 3 sponsors (Blackrock, State Street and Vanguard). However in 2014, the 5 fastest growing sponsors (among those with >$5B in assets) are First Trust, Schwab, Guggenheim, FlexShares and Alerian. This suggests that there is likely to be more parity among the Top 10 providers in the next few years.

Solar energy, India-related and some agri futures (coffee, cocoa) have been the best performing… see full post

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Falling ETF Dividend Yields: June 2014

One of the natural consequences of rising NAV’s for US equity ETFs over the last 5 years is the fall in dividend yields. The chart below shows 4 widely used dividend oriented US equity ETFs. It allows a quick comparison between the yields of these ETFs as well as the change in yields over the last 18 months.

The data is from the First Bridge historical ETF dividends database.

In this yield calculation, the numerator is the sum of dividend payments (income) over the trailing 12 months from the ‘as of’ date’. Capital gains and return of capital is not included… see full post

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Global ETF Sponsor Market Share

The global ETP industry ended April 2014 with assets of $2.5T. The growth in the space over the last several years has continued to attract new entrants as well as product launches from existing players.
There are now a little over 225 ETF sponsors globally. The table below shows the global market share numbers (as of end April 2014) for the top 15 ETF sponsors. The data is sourced from the First Bridge ETF database that includes all globally listed ETPs.

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The Decline in ETN Issuance

The continued growth in the US Exchange Traded Product (ETP) space has over-shadowed an interesting development – the decline in ETN (Exchange Traded Note) issuance. The chart below shows the number of ETNs issued in the US by calendar year, including those that subsequently closed.

We see some interesting trends:

The first half of 2008 was clearly the first boom period, with 53 ETN launches. However, every one of those was launched in the 1st half of the year.  With an ETN, the investor is taking on the credit risk of the issuing bank and so the peaking of the financial… see full post

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The interesting case of Russian (RSX) ETF flows

Is Russia now a buying opportunity or a value trap? An analysis of fund flows for RSX, the largest Russia ETF, shows some interesting results. RSX was down 17% during Q1 ‘14, yet assets in RSX grew by 15% during the quarter.

We used the First Bridge ETF data set to analyze this further and we see the following trend in daily ETF new flows. Net flows refer to new creations or redemptions in the ETF i.e.

Daily Net Flows = Daily Change in ETF Assets – Daily Change due to market movements

As we can see, after the first trading day… see full post

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Ukraine Crisis: Implications for ETF Investors

This article was co-authored with John Lunt, the President of Lunt Capital, a Salt Lake City based asset management firm. His experience in Ukraine goes back 20 years through his teaching engagements, board membership and personal travel.

The ongoing crisis in Ukraine is acknowledged as the most significant geo-political event in the last 10 years. In this article we examine the possible implications of these events for investors, with a specific focus on ETFs and index-based portfolios since that is our area of expertise.

Investors may have exposure to Russia in 3 ways that can impact their portfolios.

a)     ‘Direct’ exposure e.g…. see full post

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New article on smart beta ETFs

The area of smart beta ETFs has been getting a lot of attention. In a recent article on Seeking Alpha I sized this market for domestic equity exposure. I also made the argument that expecting smart beta to always outperform traditional market cap weighted ETFs is unreasonable, and that risk factors such as size, value and volatility go through cycles of under and out-performance. The full Seeking Alpha article can be accessed here.

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