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The three key drivers of Indian performance in 2019

Mar 03, 2020

The Indian market disappointed investors in 2019, with three key drivers behind its performance. These included the non-banking financial companies (NBFC) crisis, the Indian election and India/Pakistan conflict. Despite this, the prospects for 2020 and beyond remain positive. Read the full article here. The drivers of performance Global markets were influenced by a range of events including the US/China trade war, slowing growth and recession fears in 2019. Alongside these concerns, the Indian economy was affected by a range of domestic issues, with three drivers of particular significance. 1. NBFC crisis NBFCs offer similar services to banks but don’t hold a banking license. Some examples include equipment leasing companies or infrastructure financing. These companies have been responsible for much of the financial liquidity in India through short term borrowing from banks and mutual funds. In late 2018, an NBFC called Infrastructure Leasing & Finance Services (IL & FS) defaulted on multiple loans and covenants across India. Banks and mutual funds stopped lending to NBFCs as a result, and this caused a liquidity and confidence issue across India. The crisis continued across the early parts of 2019. 2. Government election Narendra Modi returned to power in the India election, which offers ongoing political stability. However, it is common in the lead-up to an election for incumbent governments to focus more on re-election than policy implementation and 2019 was no exception to this. 3. India/Pakistan conflict Hostilities between India and Pakistan escalated in 2019, with the volatility subsequently felt in the economy. The outlook for 2020 The Indian government and Reserve Bank of India (RBI) implemented two key measures to manage the economic challenges of 2019. These included five rate cuts and a corporate tax cut to increase confidence, investment and liquidity. These are expected to support the economy for some time to come. In addition, the Indian economy is likely to continue to benefit from factors like low inflation, ongoing political and economic reform and low stable crude oil prices. Like the broader Asian region, India should also continue to experience a growing middle-class and in turn, increasing consumption spending patterns that accompany this. You can access India through the ETFS Reliance India Nifty 50 ETF (ASX Code: NDIA). For more information on the solutions ETF Securities offers, please contact us on: Sales Trading Phone +61 2 8311 3488 Email: sales@etfsecurities.com.au Phone +61 2 8311 3483 Email: primarymarkets@etfsecurities.com.au

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Weekly ETF Monitor for week ending 21 February 2020

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Feb 24, 2020

This week's highlights Chinese stocks rebounded last week on the back of tough measures to contain the coronavirus outbreak and stimulate economic activity. CNEW and CETF were both amongst the top performing ETFs for the week. Other Asian markets including South Korea and Japan suffered as outbreaks spread; IKO, UBP, IJP, IAA, UBJ and ASIA were all amongst the week’s poorest performers. Global technology stocks (TECH) also suffered on global growth and supply-chain concerns. Precious metals all gained with haven assets in demand. GOLD returned 5.3% for the week, while palladium (ETPMPD) added 10.8% and once again touched new all-time highs. Gold mining ETFs (GDX and MNRS) were the top performing equity funds for the week. Total flows into domestically domiciled ETFs were $333m, while outflows totalled $43m. Russell Australian Responsible Investment ETF (RARI) saw the largest inflows for the week, followed by a range of global equity funds (ETHI, IEM, QUAL and NDQ). Domestic equities (IOZ), fixed income (QPON, IAF and AAA) and gold (GOLD) also saw strong flows. BetaShares FTSE RAFI Australia 200 ETF (QOZ) saw the bulk of the week’s outflows. RARI was the most traded fund last week, reflecting its flows, followed by VAS, AAA and STW. GOLD and IEM saw above average volumes. ETFS S&P Biotech ETF (CURE) returned 1.5% last week and is up 7.6% year-to-date. CURE provides broad exposure to the U.S. biotechnology sector including a number of companies actively involved in developing drugs and vaccines to combat the coronavirus.

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Weekly ETF Monitor for week ending 14 February 2020

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Feb 18, 2020

This week's highlights Global markets maintained their recent highs last week. Precious metal palladium was the best performer over the week, with ETFS Physical Palladium (ETPMPD) returning 6.5%. Australian financials and property ETFs were also amongst the best performers. SPDR S&P/ASX 200 Financials ex A-REITS Fund (OZF) was up 3.6%, BetaShares S&P/ASX 200 Financials Sector ETF (QFN) up 3.6% and VanEck Vectors FTSE International Property (Hedged) ETF (REIT) up 2.7%. The worst performers over the week were Japanese equity based ETFs. iShares MSCI Japan ETF (IJP) was down 2.1% and UBS IQ MSCI Japan Ethical ETF (UBJ) also down 2%. Looking at flows for the week. Inflows totalled A$311 million whilst outflows were A$78 million. The biggest inflows were into ETFS Physical Gold (GOLD) which saw A$28.6 million. Largest outflows for the week were in Japanese and Australian based ETFs. BetaShares Australia 200 ETF (A200) had A$35.4 million in outflows and iShares MSCI Japan ETF (IJP) A$17.4 million in outflows. Year to date inflows remain strongest in Australian and international equities as well as gold.

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Weekly ETF Monitor for week ending 7 February 2020

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Feb 11, 2020

This week's highlights Healthcare and technology sectors had a strong week as repercussions on markets as a result of the Coronavirus were more subdued than first thought. The Australian Dollar continued to weaken having a positive effect on unhedged international ETFs. ETFS S&P Biotech ETF (CURE) was the best performing equity ETF over the week returning 6.8%. BetaShares Asia Technology Tigers ETF (ASIA) was up 5.3% and ETFS Battery Tech & Lithium ETF (ACDC) was up 4.5% as Tesla and Orocobre had strong weeks. The worst performers were Chinese equity ETFs, with VanEck Vectors ChinaAMC A-Share ETF (CETF) down 5.4%. Oil and Mining ETFs also had a negative week. VanEck Vectors Gold Miners ETF (GDX) was down 3.6% and BetaShares Crude Oil Index ETF - Ccy Hedged (OOO) was down 2.4%. The best flows were into fixed income products. VanEck Vectors Australian Floating Rate ETF (FLOT) topped the weekly inflows with A$25m. ETFS Physical Gold (GOLD) also had a strong week with A$13m in inflows. The biggest outflows were seen in BetaShares Australia 200 ETF (A200), which had outflows of A$119m. Total inflows over the week were A$296m and total outflows were A$148m.

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The conflicting challenges of retirement

Feb 11, 2020

To access the 'No retirement for investments' white paper, please click the download now button above. Important notice: a previous version of this whitepaper incorrectly stated the ASFA comfortable retirement standards for a couple as $43,787/year and superannuation balance of $545,000. These figures relate to the comfortable retirement standards of a single not a couple. The standards for a couple are $61,786/year and $640,000 in superannuation balance. Managing a retirement portfolio for income and growth Retirement portfolios offer a particular challenge in advice, given their more complex needs. They need to generate a stable income, preserve capital and still offer some level of growth to allow investors to manage inflation and longevity risks, along with a reasonable standard of lifestyle. In the paper No retirement for investments, ETF Securities considers how assets, portfolio construction and product selection can be used to manage retirement in the current market environment. You can download the full paper above, or read the summary following. Part of the solution comes down to diversification of the assets used for income. Retired investors have traditionally relied on domestic fixed income to support their yield needs but are now forced to consider other options. Fixed income can still play a role, for example, diversifying to international sources such as US fixed income which currently offers a higher interest rate may be part of the answer. Commonly, investors are being forced into riskier income approaches, such as through dividend streams. High yield equities may work for some retired investors, pending their risk tolerance along with overall portfolio construction. For example, they may consider how to offset the higher risks of high yield shares in other parts of their portfolio. Using alternatives in the form of commodities like gold may assist with offering stability and diversification to manage the volatility which could occur in high yield shares. Alternatively, looking to investments in more stable, less cyclical industries may be more suitable. Infrastructure is one option. It includes many essential services areas like utilities, telecommunications, industrials and transport which tend to be less vulnerable to market movements and cycles. Finally, product choice can be part of the solution to market conditions. Flexibility is important in this environment, but retired investors also need to be conscious of costs, risks and quality. Bearing these in mind, ETFs may be a suitable option due to characteristics such as low costs, ease of use, liquidity and a wide range to assist in meeting specific portfolio needs or gaps. For more information on the solutions ETF Securities offers, please contact us on: Sales Trading Phone +61 2 8311 3488 Email: infoAU@etfsecurities.com.au Phone +61 2 8311 3483 Email: primarymarkets@etfsecurities.com.au

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Three ways to manage a retirement portfolio

Feb 11, 2020

To access the 'No retirement for investments' white paper, please click the download now button above. Important notice: a previous version of this whitepaper incorrectly stated the ASFA comfortable retirement standards for a couple as $43,787/year and superannuation balance of $545,000. These figures relate to the comfortable retirement standards of a single not a couple. The standards for a couple are $61,786/year and $640,000 in superannuation balance. The duelling forces of retirement It is normal for retired investors to need to manage their portfolios for a stable income, a level of growth and capital protection, but current market conditions are making this particularly challenging. Faced with globally low interest rates on one hand as a threat to their income, and market volatility from geopolitics like corona virus and tensions in Iran affecting growth assets, how should retired investors manage their portfolios? ETF Securities recommends three options summarised below: product selection, income diversification and portfolio construction. You can read the full paper by downloading above. 1. Product Selection In retirement, investors need to be conscious of the quality, flexibility and costs of the products they use for their investments. One product type investors may consider are ETFs which hold characteristics such as lower costs compared to active funds, typically high liquidity allowing investors greater flexibility and are easy to use with less administration compared to shares or bonds. 2. Income diversification Investors have traditionally looked to Australian fixed income for their key yield option. In the current environment, they should consider diversifying their income,such as looking at fixed income internationally where there may be higher yields available or through dividend streams. Dividend streams can be a riskier option, and where some retired investors may use high yield shares and offset the risks in other ways, others can look to options in more stable, less cyclical industries like infrastructure. 3. Portfolio construction Retired investors should consider the overall construction of their portfolios and ensure they are diversified across assets and regions for growth and income, after all, the portfolio still needs to grow and support the lifespan. One area retired investors may wish to look at incorporating as part of the overall construction is alternatives, in the form of commodities like gold which can assist with stability and diversification. For more information on the solutions ETF Securities offers, please speak to your financial adviser or contact us on: Sales Trading Phone +61 2 8311 3488 Email: infoAU@etfsecurities.com.au Phone +61 2 8311 3483 Email: primarymarkets@etfsecurities.com.au

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