Mar 26, 2019
This week's highlights Last week saw mixed results for Australian listed ETFs as markets digested the Fed’s stance on interest rates. VanEck’s China New Economy ETF (CNEW) continued its strong YTD performance up 4.6% for the week. Whilst BetaShares’ Global Gold Miners ETF (MNRS) returned 3.1% and ETFS Physical Platinum (ETPMPT) rounded out the top three best weekly performers. The top performers over the previous 12 months are still ETFS Palladium (ETPMPD) up over 70%. Followed by domestic and international property ETFs; GLIN, VAP and SLF. Resources ETFS also featuring in the top ten for the week were OZR and QRE. Domestically domiciled ETFs saw total flows in of $A127 Million for the week and flows out of $A162 Million. The best flows for the week were seen across local beta ETFs A200 and IOZ with a cumulative flow of over $A40 Million. Fixed interest ETFs continued their steady positive flows over the week. FLOT, PLUS and CRED all saw inflows. The largest outflow for the week was from iShares IVV, which saw an outflow of over A$43 Million. Looking at turnover, unsurprisingly broad-based ETFs and cash products topped Average Daily Traded Value metrics for the week and also YTD.
Mar 19, 2019
This week's highlights Risk-on sentiment returned last week as U.S.-China trade tensions cooled. Energy and technology sectors outperformed. ETFS S&P Biotech ETF (CURE), NDQ, RBTZ and FUEL were amongst the top performers for the week. China-focused funds (IZZ and CNEW) outperformed following strong economic data. ETFS EURO STOXX 50 ETF (ESTX) returned 3.2% as the UK Parliament voted against a no-deal Brexit. The U.S. dollar weakened last week with USD, ZUSD and YANK all amongst the poorest performers. Australian banks also underperformed with QFN, OZF and MVB all dropping more than 1%. Total flows into domestically domiciled ETFs were $165m for the week, while outflows totalled $81m. The biggest inflows were into U.S. equity funds (IVV and IJR) along with global ex-U.S. equities (IVE) and bearish Australian equities (BBOZ). BetaShares Australian High Interest Cash ETF (AAA) saw the bulk of the week’s outflows. IVV and AAA were the most traded funds last week, while IJR, IVE and UBA saw above average volumes. ETFS S&P Biotech ETF (CURE) posted a positive return of 4.9% for the week, taking its total return since inception (8 Nov 2018) to 11.5% and its gain from the bottom of the market in December to 38.2%.
Mar 14, 2019
Europe Stacks up Despite Brexit Product in Focus: ETFS EURO STOXX 50 (ESTX) Brexit uncertainty has impacted on investor sentiment towards Europe . However there are multiple indicators that the negativity around the rest of Europe has been overdone . EURO STOXX 50 up 9.4% year to date in line with S&P 500 . Europe will always be a core part of investor portfolios. Perhaps now is a good time to allocate? Uncertainty surrounding the protracted Brexit negotiations has seen many investors shy away from European equity markets in favour of higher returns in the US. Yet, with the US economy looking increasingly vulnerable to a slowdown, it might be time for your clients to refocus their sights on Europe – 20% of the world’s GDP. Why have Australian Investors Been Wary of Investing in Europe? Economic conditions in Europe have been surprisingly resilient throughout the political to-ing and fro-ing that has accompanied Brexit. European stock prices, however, have lagged their US counterparts. In 2018, the primary benchmark EURO STOXX 50 Index fell by around 14.3%, compared to a decline of just 6.2% by the S&P 500 during the same period. Poor performance by banking and auto stocks due to jitters around interest rates and tariffs, respectively, were the primary factors depressing European markets last year. Investor sentiment on Europe has been dampened by a range of factors. The cloud over Brexit, and its likely impact for the UK and continental Europe, is the obvious culprit. Ongoing budgetary conflict between Italy and the European Union, fears of an escalation in global trade wars and speculation on when the European Central Bank will raise rates, have also weighed heavily. But Do These Fears Stack Up? So far in 2019, it is a different story. The EURO STOXX 50 is up 9.4% year to date, tracking similarly to the S&P 500 (also up 9.4%) and relative valuations look more attractive. The euro is also approaching two year lows, which could provide a boost to Europe’s export sector. There are also suggestions that underlying economic conditions in the powerhouse economies of Europe are stronger than sentiment would suggest. This view is supported by the release earlier this month (March) of the Markit Eurozone Composite PMI numbers for February which were revised upwards to 51.9, the first increase (albeit slight) in private sector activity in three months. The PMI index tracks business trends across manufacturing and services based on data from over 5,000 companies. Another sign that the negative sentiment around Europe might have been overdone is the Citibank European economic surprise index. This index (which measures data surprises relative to market expectations) while still in negative territory, has been ticking upwards since the beginning of the year. Emotions Do Not Equal Facts The tendency for sentiment to run at odds with economic reality was raised recently by Martin Beck, chief economist at Oxford Economics. He spoke of the “the difficulty of separating emotion from hard economic developments in driving survey responses” during times of high uncertainty. A number of factors underscore the view that Brexit uncertainty is having a disproportionate impact on investor sentiment. Unemployment across Europe continues to fall and is at 10 year lows, wages growth has picked up and German retail sales rebounded in January, rising more than 3%. ….And What About BREXIT So how great are the Brexit risks for European stock performance? Certainly the economic fortunes of the UK are deeply entwined with those of the EU. The UK is among the EU’s three largest trading partners, accounting for about 13% of its trade in goods and services. While Brexit uncertainty has been damaging for both the UK and the Eurozone, the worst case ‘no deal’ scenario is likely to hit UK companies much harder than their European counterparts. The IMF has forecast that a no deal Brexit could result in a 4% hit to the UK’s GDP BY 2030 should Britain end up adopting the default World Trade Organisation rules for its trading relationships with the EU. The two countries with the largest weighting in the EURO STOXX 50 index, France and Germany by comparison are expected to suffer declines of only 0.2% and 0.5% of GDP, respectively. Meanwhile, a more benign Brexit scenario preserving access to the single market but not membership of the customs union would have only “negligible” impact on output and employment for the EU, according to the IMF. The ultimate consequences of Brexit for both the UK and Eurozone countries, however, are likely to take many years to materialise and will depend on whatever shape any eventual deal takes. Europe Without the UK - ETF Securities’ EURO STOXX 50® ETF As with any late cycle investment strategy, the key to any European foray is to focus on quality companies with strong earnings track records. To this end, Europe offers some of the world’s most prestigious blue-chip names. The EURO STOXX 50, includes the 50 largest and most liquid stocks operating in the Eurozone. The top 10 stocks in the EURO STOXX 50 Index (which is updated annually) are Total, SAP, Sanofi, Linde, Allianz, LVMH Moet Hennessy, Siemens, Unilever, ASML Holdings and Banco Santander. For investors looking to gain exposure to Europe, exchange traded funds offer a way to gain widespread diversification at a low-price. The ETFS EURO STOXX 50® (ESTX) offers broad based exposure to the 50 largest companies across the Eurozone by tracking the performance of the EURO STOXX 50 Index. For the year to date, ESTX is up 8.0% (in AUD). Source: Bloomberg data as at 11th March 2019
Mar 11, 2019
This week's highlights Defensive sectors outperformed last week as most global equity benchmarks sold off. Gold mining ETFs (GDX and MNRS) and domestic real estate ETFs (MVA, SLF and VAP) were all amongst the week’s top performers. High beta funds including CURE, ROBO, HACK and RBTZ as well as Asia-focused ETFs (HJPN and IKO) were amongst the underperformers, all falling by more than 3%. Precious metal ETFs all declined, with platinum (ETPMPT) posting the biggest drop for the week. Total flows into domestically domiciled ETFs were $165m for the week, while outflows totalled $32m. The biggest inflows were into iShares Core Cash ETF (BILL) and iShares Global Consumer Staples ETF (IXI), while there were significant inflows into geared-short Australian equities (BBOZ) and outflows from geared-long Australian equities (GEAR). BILL and IXI also ranked highly in the most-traded ETFs for the week. VAS was the most traded fund for the week, while STW saw significantly below average turnover. ETFS Global Core Infrastructure ETF (CORE) posted a positive return of 0.7% for the week and is amongst the top performers on a 12 month basis, with a total return of 20.9% over a volatile period.
Mar 05, 2019
This week's highlights China A-shares posted big gains last week as the U.S. announced it would delay planned tariff increases. CETF and CNEW returned 7.1% and 6.1% for the week respectively. European equities also rallied as the prospect of a no-deal Brexit lessened. ETFS EURO STOXX 50 ETF (ESTX) returned 2.3%, BetaShares British Pound ETF (POU) gained 2.0%. ETFS S&P Biotech ETF (CURE) was the week’s top performing ETF, returning 7.6% and is now up 26.2% year-to-date. Commodity ETFs were mixed with gold, silver and oil declining, while platinum and palladium rose strongly. Gold mining ETFs, GDX and MNRS, were the poorest performing ETFs for the week. Total flows into domestically domiciled ETFs were $181m for the week, while outflows totalled $50m. Fixed income funds IGB, IHCB, AAA, ILB and QPON all saw strong inflows. The week’s biggest outflows were from STW and GOLD. Trading volume was dominated by the usual suspects; AAA, STW, VAS and IVV, with above average trading seen in IGB, GOLD and IHVV. ETF Securities’ “Future Present” range of funds has continued its strong start to 2019 with CURE, ROBO and TECH all returning in excess of 17% year-to-date and ACDC up 7.3%.