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Weekly ETF Monitor for week ending 19 April 2019

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Apr 24, 2019

This week's highlights Equity markets mostly rose last week on a strong start to the U.S. earnings season and positive economic data in both the U.S. and China. Financials had a strong week with domestic ETFs (MVB, OZF and QFN) and global fund BNKS all amongst the top performers. China and Taiwan ETFs (CETF and ITW) returned in excess of 2% for the week, while technology and industrial heavy robotics-focused funds, RBZT and ROBO also posted strong performances. VanEck Vectors China New Economy ETF (CNEW) is the top performing ETF in 2019-to-date, returning 39.1%. Resource sector funds (OZR and QRE) as well as global gold mining funds (MNRS and GDX) lagged for the week. Global healthcare sector ETFs (IXK, DRUG and CURE) were the poorest performers on investor concerns relating to U.S. drug pricing reforms. Total flows into domestically domiciled ETFs were $119m for the week, while outflows totalled $27m. The biggest inflows were into broad-based Australian and U.S. equity funds (STW and IVV). Fixed income funds also attracted significant attention with ILB, IAF, CRED, AAA and BNDS all seeing net asset growth. The biggest outflows for the week were from domestic cash (ISEC), leveraged domestic equities (GEAR) and Europe (IEU). STW and AAA were the most traded funds last week, while USD and VAF saw above average volumes. ETFS ROBO Global Robotics and Automation ETF (ROBO) has posted a strong 24.9% total return since the start of 2019, and is now close to surpassing its September 2018 highs prior to the sell-off and market volatility in Q4 last year.

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Weekly ETF Monitor for week ending 12 April 2019

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Apr 16, 2019

This week's highlights The top performers for the week were dominated by Australian Property and Australian Equity Geared ETFs. The SPDR S&P/ASX 200 Listed Property Fund (SLF) was the best performer returning 2.3% closely followed by BetaShares Geared Australian Equity Fund (GEAR) which returned 2.2%. The worst performers over the week were Healthcare and Biotechnology ETFs. ETFS S&P Biotech ETF (CURE) was down 5.2% and the iShares Global Healthcare ETF (IXJ) was also down 3.4%. Looking slightly longer term. Year to date the best performers are now spread across Geared Equity, Oil and Chinese exposures. BetaShares Geared US Equity Fund - Ccy Hedged (GGUS) up 38.9%. The worst performers are strong bear equity funds. Over twelve months ETFS Physical Palladium (ETPMPD) remains the best performer returning 53.7%. The worst performer is BetaShares US Equities Strong Bear HF - Hedged (BBUS) down 25.3%. Inflows for the week totalled $213 million and outflows were $13 million. The inflows were dominated by three products, BetaShares Australian High Interest Cash ETF (AAA), SPDR S&P/ASX 200 Fund (STW) and BetaShares Australian Bank Snr Floating Rate Bond ETF (QPON).

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Weekly ETF Monitor for week ending 5 April 2019

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Apr 09, 2019

This week's highlights The top performer over the week was ETFS Physical Platinum ETF (ETPMPT) returning 6.2%. Closely followed by VanEck Vectors China AMC A-Share ETF (CNEW) up 6% and robotics and automation ETFs such as ETFS ROBO Global Robotics and Automation ETF (ROBO) up 5.4%. The weakest performer over the week was BetaShares Strong Bear Hedge Fund ETF (BBUS) returning -4.8%. Australian property ETFs also fell over the week with the SPDR S&P/ASX 200 Listed Property ETF (SLF) returning -3.2% and VanEck Vectors Australian Property ETF (MVA) fell -3.3%. YTD Chinese equity ETFs such as CNEW are up 42.2% and CETF up 37.5%. Long oil, geared equity funds and technology ETFs have also performed well with the ETFS Morningstar Global Technology ETF (TECH) returning 20.4%. ETFS Physical Palladium ETF (ETPMPD) is still the best performer over 12 months up 59.6%.  Flows for the week were dominated by domestic equity, cash and fixed Income ETFs. IOZ saw net inflows of $26 million. The ETF market as a whole saw inflows of $154 million and outflows of $29 million. 

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ZUSD - It's All About The Benjamins

Apr 08, 2019

Product in Focus: ZUSD: ETFS Enhanced USD Cash ETF Most portfolios hold cash to provide liquidity and downside protection Investors can seek to increase the return on their cash allocation using ZUSD Current US rates are significantly higher than Australian rate The deposit rate of ZUSD is currently 2.36% (as of 7 April 2019), enhanced by holding funds in deposits ranging from overnight to 3 months Cash Is King Defensive assets such as cash hold an important place in portfolios not only for liquidity but also downside protection. When you look at the typical asset allocation ranges for the five main risk profiles it’s clear what a critical part cash plays in a portfolio; now more than ever with many deeply concerned about the end of the equity cycle. However, many Australian investors only consider cash as AUD cash. This is understandable, but cash balances should be diversified in the same way as equities and fixed income. This gives the benefit of both diversification and, often, better yields. The ETFS Enhanced USD Cash ETF (ZUSD) achieves this for the low cost of 0.30% p.a. The United States Of Play The Federal Reserve has two main objectives. They are: Low and stable inflation over the long term (a target of 2% in the U.S) Full employment With both objectives looking stable in the current US economic environment Powell looks to be fulfilling his mandate and this has been reflected in the current Fed Target rate - set at a range of 2.25% to 2.5% - giving the market a strong indication that rates are likely to be unchanged for the remainder of the year and if on what looks like to be a small chance there is a change, it is likely to be in the form of a cut. He is unphased by short term misses of inflation targets and concentrates on long term trends. This resonates with his recent statement (March 2019) about the use of Monetary policy, he stated that: “We don’t see data coming in that suggest that we should move in either direction. They suggest that we should remain patient and let the situation clarify itself over time.” The Fed And The Reserve – Are They Kicking Goals? The current US yields are higher than the equivalent Australian duration. As you can see in the chart above the 10-year yields on government bonds are over 50 basis points better in yield terms in the US than Australia right now. Even with the yield curve displaying inverted characteristics, shorter duration US yields are better than the Australian equivalent. Current Market Deposit Rates For US And Australian Cash The cash rates on offer on US cash deposits are significantly higher even in the scenario that the RBA raises rates and the Federal Reserve holds. Even in the unlikely event that the RBA has consecutive increases (given inflation looks stable and economic growth looks late in the cycle) to the cash rate and the Fed held rates constant, the cash deposit rates on offer to investors could remain in favour of those with US deposits. In the graph below the spread between US and Australian deposits has been more beneficial to US deposits since March 2018. Product Solution Investors holding US Dollar Cash should be aware of the benefits of the ZUSD - ETFS Enhanced USD Cash ETF that achieves the following: Exposure to US dollar cash Enhanced yield Quarterly distributions ZUSD makes use of higher yielding deposits out to a term of 3 months in duration to help enhance the yield for investors in the fund. Using a combination of “at call”, 1M and 3M duration deposits ZUSD is designed to give investors an enhanced US dollar cash position rather than just holding exposure to the physical US dollar. Investors should consider diversifying their cash positions by holding non-domestic cash in addition to Aussie dollars via ZUSD.

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Weekly ETF Monitor for week ending 29 March 2019

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Apr 02, 2019

This week's highlights The top performer over the week was ETFS S&P Biotech ETF (CURE) which ended the week up 2.9%. BetaShares Geared US Equity fund (GGUS) was up 2.5% and iShares products Core S&P Small Cap and Core S&P Mid Cap were both up 2.2%. Precious Metals, Miners and Agriculture ETFs were the worst performers over the week. ETFS Physical Palladium ETF (ETPMPD) ended the week down -10.7% and ETFS Physical Precious Metals Basket (ETPMPM) was down -4.1%. BetaShares Agricultural ETF (QAG) was down -3.2%. VanEck Vectors China New Economy ETF (CNEW) remains the best performer over the year to date. Followed by geared equity and oil ETFs. The worst performers year to date are BetaShares Bear and Strong Bear products. Looking longer term ETFS Physical Palladium ETF (ETPMPD) remains the best performer returning 54%. Infrastructure and property ETFs such as the AMP Capital Global Infrastructure Fund (GLIN) and ETFS Morningstar Global Technology ETF (TECH) rounded out the top 10.  Top inflows for the week were seen by BetaShares Australia 200 ETF (A200) with $118.1 million of inflows. The market overall saw $207 million of inflows and $19 million of outflows for the week. 

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Weekly ETF Monitor for week ending 22 March 2019

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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.

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