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Weekly ETF Monitor for week ending 18 August 2017

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Aug 18, 2017

Tensions between the US and North Korea eased last week, proving positive for risk assets. The S&P/ASX 200 gained 1.0% and the EURO STOXX 50 added 1.2%. The S&P 500 declined by 0.7% as Fed minutes showed a divided outlook for inflation. The top performing equity ETFs for the week were Australian property funds with MVA and VAP returning 2.7% and 2.3% respectively. The Australian dollar strengthened above US 79c, trading as high as US 79.63c on Thursday. The euro strengthened by over 1% against the US dollar as the ECB expressed concern over the strength of the currency. Gold and silver declined as safe haven assets gave up some of the previous week's gains. Palladium posted a new 16-year high on rising demand from the auto sector and supply concerns. ETFS Physical Palladium (ETPMPD) was the top performing fund for the week returning 3.3%. The Australian ETF market saw inflows of A$110m and outflows of A$32m from domestically domiciled ETFs last week. Inflows were mainly across defensive assets such as US dollar cash (USD), gold (GOLD) and fixed income (PLUS, IAF and AAA). Outflows were mainly from domestic equity funds (ZOZI and HVST).

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Weekly ETF Monitor for week ending 11 August 2017

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Aug 11, 2017

Global equities sold off and safe-haven assets rallied last week as tensions between the US and North Korea escalated. The S&P/ASX 200 fell by 0.5%, the S&P 500 dropped 1.4% and the EURO STOXX 50 lost 2.9%. The top performing equity ETFs for the week were both from the gold mining sector (GDX and MNRS), often seen as a leveraged play on the price of gold. The VIX reached its highest levels for 2017 to-date. The Australian dollar fell back below US 79c, trading as low as US 78.39c on Friday. Safe-haven currencies performed strongly, with the Swiss franc up 1.2% against the US dollar and the Japanese yen climbing 1.4%. US 10 year Treasury yields fell by 7 basis points. Gold jumped by 2.4% and silver by 5.2%, with other precious metals following suit. WTI crude declined by 1.5%.

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Is AUD/USD Risk On The Downside?

Aug 09, 2017

Is AUD/USD risk on the downside? ETFS S&P 500 High Yield Low Volatility ETF (ZYUS) Key Teakeaways: The AUD/USD exchange rate is currently close to 2 year highs, at just below US 80c. US rate expectations pulled back in July as political developments have cast uncertainty over the pace of US reforms and growth. Investors with a view that the USD is undervalued or the AUD is overvalued can play a reversal via ZUSD, which is the most cost effective way to access direct US dollar exposure with an ETF. A declining USD has been the key theme in foreign exchange markets this year. The AUD has gained more than 8% from its mid-May lows, while the US Dollar Index (DXY), a measure of the value of the USD against a collection of major world currencies, has dropped nearly 7% over the same period. As shown in Figure 1 the recent appreciation of the AUD has been particularly steep, with the currency peaking at US 80.66c in late July, while the DXY has been in a downward trend for most of 2017, falling over 10% from its peak in the final days of 2016. Chaotic administration weighing on the US dollar. With the Russia investigation, continual changes in key personnel and failures to negotiate Congress, the Trump administration is failing to meet the lofty expectations set by the market last November. Whilst the Fed is now considered likely to raise rates only once more this year, the US economy is generally in good health. US 10 year treasury yields have fallen by just over 10 basis points since the start of July, suggesting that the long-term monetary policy outlook is relatively unchanged. With temporary factors and uncertainty being the main drivers of the lower dollar, a swift reversal is a possible scenario if confidence is restored. Last Friday’s US employment numbers, which exceeded analyst expectations, were an example, with the DXY jumping 0.75% almost immediately. RBA talking AUD down. The strength of the AUD has in part been a result of a shift in the expected direction of the RBA’s next rate move. However, the RBA last week noted that the higher currency is a concern for growth and cut its estimates for 2017 GDP growth by 0.5%. Further validation of a slowdown could quickly shift AUD sentiment to a bearish stance. What does this mean for investors? Investors wishing to express a bullish USD/bearish AUD view may consider the ETFS Physical US Dollar ETF (ZUSD) . ZUSD offers exposure to an appreciation of the USD against the AUD with a management fee of 0.30% per annum, making it the most cost effective ETF offering this exposure in Australia.

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Weekly ETF Monitor for week ending 28 July 2017

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Jul 28, 2017

The S&P/ASX 200 declined by 0.4% and the S&P 500 ended the week flat, while the EURO STOXX 50 gained 0.4% for the week. iShares Global Telecom ETF (IXP) was the top performing equity fund for the week. The US dollar continued to decline, with the Australian dollar gaining 0.9% to trade above US 80c for the first time in 25 months. The euro gained 0.8%, while the yen added 0.4%. Commodities posted a strong week with gold up 1.3%, silver up 0.8% and palladium gaining 2.7%. WTI Crude jumped 8.6% to approach the US$ 50/bbl mark. BetaShares Crude Oil Index ETF (OOO), BetaShares Commodities Basket ETF (QCB) and ETFS Physical Palladium (ETPMPD) were all amongst the top performing funds for the week. The Australian ETF market saw inflows of A$58m and outflows of A$14m from domestically domiciled ETFs last week.

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Weekly ETF Monitor for week ending 21 July 2017

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Jul 21, 2017

The S&P/ASX 200 declined by 0.7% as more hawkish statements from RBA saw the market dip on Tuesday. The S&P 500 gained 0.5%, also led by shifting rate expectations. The EURO STOXX 50 lost 2.1% for the week. BetaShares Global Gold Miners ETF (MNRS) was the top performing equity fund for the week as the market continued to turn positive for precious metals. The Australian dollar gained another 1.1% against the US dollar last week. The euro gained 1.7% and the yen also gained 1.2% as the US dollar fell on lower interest rate expectations and potential delays to Trump's policy agenda. Commodities posted a strong week with gold up 1.5% and silver jumping 4.6%. ETFS Physical Silver (ETPMAG) was the top performing fund for the week. Iron ore also rallied on higher than expected Chinese growth. The Australian ETF market saw inflows of A$196m and outflows of A$141m from domestically domiciled ETFs last week. The largest flows for the week were in the cash sector with inflows into BILL and QPON and outflows from AAA.

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Weekly ETF Monitor for week ending 14 July 2017

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Jul 14, 2017

Global equities rallied last week following Janet Yellen's comments suggesting that the pace of rate normalisation will be more gradual than some had anticipated. The S&P/ASX 200 added 1.1%, the S&P 500 rose 1.4%, the EURO STOXX 50 gained 1.8%, while the MSCI Emerging Markets Index jumped 4.5%. iShares MSCI BRIC ETF (IBK) was the top performing unleveraged equity ETF for the week, returning 2.3% in Australian dollar terms. The Australian dollar gained over 3% on general US dollar weakness and higher commodity prices. The euro gained 0.6% and the pound added 1.6% against the US dollar. The Japanese yen also strengthened by 1.2%. Global bonds yields climbed after a better-than-expected US jobs report offered support to the Federal Reserve's plan to raise interest rates, US 10 year Treasury yields up 0.08%. Australian 10 year government bond yields up 0.13%. Commodities rebounded with WTI crude oil up 5.2% and iron ore up 4.7%. Lower rate expectations also provided positive news for precious metals with gold rising by 1.2% for the week, its best weekly performance in two months. The Australian ETF market saw inflows of A$84m and outflows of A$67m from domestically domiciled ETFs last week.

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