While much-needed attention is being paid to liquidity, there’s another piece of ETF mechanics investors ought to be aware of—the underlying index. A good article in the Financial Times a couple of weeks ago unpacks some of the key issues with many bond indices, including the outsized impact of the weakest performers.
New research points to cash flows over profits.
So far as I write this it’s been a nasty Monday morning for global equity markets as investors reacted to bad news from China and a host of other political and economic threats around the world. Against a backdrop clearly marked by flashing red screens, a few ETF headlines stand out against the gloom and doom.
new paper by a group of academics finds that the growing popularity of exchange-traded funds (ETFs) is leading to some unwanted side effects -- higher trading costs and less analyst coverage for stocks with high ETF ownership.
Another day, another set of data showing record inflows into exchange-traded funds (ETFs), continuing the upward trend we’ve seen over the last few years.
We know that assets in exchange-traded funds have overtaken hedge funds - but an article by Eric Balchunas for Bloomberg last week pointed out that the amount of money flowing through ETFs has topped the U.S gross domestic product. Consider that in the last 12 months, US$18.2 trillion in ETF shares were traded -- the U.S. GDP stands at $17.4 trillion.
ETFs hit yet another new milestone: assets in the global ETF industry surpassed assets in global hedge funds at the end of the second quarter according to research firm, ETFGI. Since 2008 investors have been focused squarely on costs, liquidity and transparency. While ETFs have easily fit that bill, hedge funds have faced an uphill battle, especially as positive equity performance has made index investing more compelling.
To be honest, I wasn’t all that clear on precisely what Carl Icahn’s specific concerns about fixed income ETFs were - but his exchange with Laurence Fink continues a conversation that’s been going on for months about investors’ thirst for liquidity and their growing use of bond ETFs especially as the anticipated Fed rate hike draws closer.
Are exchange-traded funds (ETFs) a systemic risk? A debate is emerging between two of the biggest asset managers in the world: Janus' Bill Gross and BlackRock. No matter which side you're on, however, the debate points to the need for some important changes.
Global ETFs drew in US$20.8 billion with no thanks to bonds. In all, outflows from bond ETFs hit a nine-month low at US$2.9 billion, as investors fled from investment grade corporate and high yield bonds.