Category: ETFs

60 Seconds with SCM Direct

60 Seconds with SCM Direct

As innovative online investment managers, we offer clients direct low cost access to high end wealth management that is smart, commonsense and modern. Everything we do is underpinned by 100% transparency and treating our clients fairly.

Who are your clients?

Generally speaking they are Investors looking to bypass expensive advisers, layers of inefficiencies, and high fee underperforming traditional active funds. For UK clients our entry level is £15,000, either direct or via an ISA or SIPP wrapper. For overseas clients £150,000 or the equivalent in Euros or US Dollars. We are also delighted to work with corporates and charities.

What makes your firm unique?

As a boutique firm, the founders not only invest significant sums of their own money alongside clients on exactly the same terms and fees but also roll their sleeves up and are fully involved in every aspect of the organisation. Clients can, therefore, be confident their money is being looked after as if it were our own.

In terms of investing, our Chief Investment Officer (CIO) is one of a handful of highly respected fund managers. His 28 years’ unique track record has resulted from managing money for a wide range of clients – retail, institutional and private – across a wide range of asset classes – equities, property, fixed interest and alternative assets.

At this moment in time, we are also the only investment house that publishes our true Total Cost of Investing on our factsheets monthly, in one number – no hidden fees whatsoever!

What are the biggest challenges facing your firm at present?

As a disruptive brand we face several challenges. To compete with the deep pockets of big brand incumbents, to continue to provide exceptional service to clients whilst growing but not compromising efficiency and ethics, as well as resisting the tempting offers of external finance which would impact our principles, ethos and customer care.

What is the main aim for your business?

It is two-fold. To continue to help people to save for their future so they live the end of their days with finances that affords them dignity and security. To be successful and profitable so that profits feed into our Foundation – – which will ensure we can continue being philanthropists and help heal communities.


Equity Markets May Still Price-In “Britin” or Shake-Off “Brexit”

Equity Markets May Still Price-In “Britin” or Shake-Off “Brexit”

Uncertainty surrounding the UK’s decision whether or not to leave the EU is starting to test traders’ nerves. Implied volatility of the GBP/USD spiking to 29% – a level comparable to the extreme highs seen in the 2008 financial crisis – and 10 year gilts yielding less than 1.1% to reach new historic lows (see Chart 1) means risk-off positioning is now starting to build up.

Equity markets in Europe had resisted succumbing to significant downward pressure in the weeks leading up to the referendum. But if last year’s “Grexit” event is any guide, risk sentiment in Europe remains fragile.

As shown in Chart 2, in the final weeks leading up to last year’s “Grexit” referendum on 3 July 2015, the FTSE 100 and EURO STOXX sold off sharply, falling by about 6% over a 30 workday period prior to that referendum. Another 2% was shed off European equity markets following the rejection of Troika’s bailout package.

Comparing the same period to this year’s potential “Brexit” outcome on 23 June, equity markets in Europe remained positive up until last week, since when sentiment has soured sharply (see chart 2). Against last year’s heightened volatility instigated by slumping crude oil and China’s slowdown fears that dealt a blow to equities in Europe and elsewhere, markets must judge the reverberations of a Brexit scenario to European shares as either hugely overblown or, that such a scenario is simply not being priced-in enough. Investors may be looking for bookmakers’ odds for guidance more so than opinion polls, not least given the extent to which most pollsters have failed to accurately read the Conservatives’ strong showing in last year’s UK general election. While the opinion polls show that both the “Remain” and “Leave” camps remain essentially tied, with shifts between them moving within the margin of error, bookmakers odds have shown for some time now a persistent and decisive majority of punters betting Britain to vote “Remain”. For instance, while the YouGov / Times has UK’s EU referendum at 43% “Remain”, 42% “Leave”, and 11% “Don’t Know”, betting firms see 59% “Remain” and 41% “Leave”[1], with the best odds for those betting on “Remain” at a 34% return on their stake while the best odds for “Leave” making a 250% return[2].

Certain Uncertainty not Reflected in European Equities

While the looming threat of Greece’s default and systemic risk inherent in Europe’s banking system in an event of Greece exiting the Euro cannot be directly comparable to the risks of “Brexit”, the political and economic uncertainty is likely to be still substantial enough for investors to consider hedging their positions in European assets. The risks short to mid-term to financial markets in a nutshell are the following:

1. Britain’s Brexit camp has yet to articulate what kind of trade model is wants to adopt and, judging purely by the Brexit camp rhetoric border control and eliminating EU contributions, it is unlikely to be one of Europe’s non-EU members: Switzerland and Norway each pay into the EU budget and allow for free movement of EU citizens in exchange for free trade and capital flows. History suggests it will take several years to renegotiate trade deals and any deals struck will be on terms set by the EU, not the UK. Until then, investors will simply not know what the terms of trade and capital flows will be.

2. If not out of economic sense it will be for the sake of self-preservation that EU officials will impose some kind of penalty to the UK for leaving, through a custom’s charge, tariff and other barriers (such as raising product standards through labelling / packaging requirements, etc.) to preclude other EU members from following UK’s lead and prevent the disintegration of the EU. Given Britain’s overly open economy, it will effectively result in a meaningful tax for UK companies exporting to the EU.

3. The political uncertainty of Britain is also relatively large. With David Cameron’s leadership already challenged by about half its Conservative PMs, a new PM embracing a more rightist agenda may also mean major reshuffling of cabinet members, including David Cameron’s Finance Minister (Chancellor of the Exchequer) George Osborne. As a result, tax and spending policies may change and consequently the budget deficit targets.

4. Scotland and Ireland are also vocal supporters of the EU and a Brexit scenario would likely provoke another Scottish referendum for independence. Building up a UK border could also put the vulnerable peace process with Northern Ireland at risk and see tensions flare up with Ireland anew. At risk is the fracturing of Britain’s political union.

Last week’s souring sentiment in European equities may be a prelude to more risk-off positioning such as was seen in Grexit last year. Investors should be prepared for the potential eventuality that uncertainty building up in the pound may spread to rising volatility in European equities. Hedging long European equity exposures and long dollar strategies may regain appeal.

Investors sharing this sentiment may consider the following ETPs:

• Boost FTSE 100 1x Short Daily ETP (SUK1)
• Boost FTSE 100 2x Short Daily ETP (2UKS)
• Boost FTSE 100 3x Short Daily ETP (3UKS)
• Boost FTSE 250 1x Short Daily ETP (1MCS)
• Boost EURO STOXX 50 3x Short Daily ETP (3EUS)
• Boost EURO STOXX Banks 3x Short Daily ETP (3BAS)
• Boost ShortDAX 3x Daily ETP (3DES)
• Boost FTSE MIB 3x Short Daily ETP (3ITS)
• Boost Gilts 10Y 3x Leverage Daily ETP (3GIL)
• Boost Long USD Short EUR 4x Daily ETP (4USE)
• Boost Long USD Short EUR 5x Daily ETP (5USE)

For investment professionals only. This communication has been provided by WisdomTree Europe Ltd which is an appointed representative of Mirabella Advisers LLP which is authorised and regulated by the Financial Conduct Authority. 

Zyfin Launches World's First Turkish Sovereign Laddered Bond ETF

Zyfin Launches World’s First Turkish Sovereign Laddered Bond ETF

Rising interest among domestic and international investors in the Turkish domestic debt markets has led to enhanced liquidity and strength in Turkish sovereign bonds. It is the sixth largest local currency bond market among emerging economies. The Fund offers international investors low cost and easy access to Turkish sovereign bonds.

The objective of the Fund is to track the performance of the ZyFin Turkey Sovereign Bond Laddered Index (‘the Index’) which consists of a basket of sovereign bonds issued by the Government of Turkey in Turkish Lira (TRY) across various maturities (‘the Index Securities’). Underlying exposure is taken through physical replication and is therefore more efficient in tracking the index.

The Index is comprised of six bonds issued by the Government of Turkey, selected from a universe of all bonds issued by the Government, which have greater than 100m TRY outstanding amount. The bonds are divided into three baskets, with each basket containing two bonds and having a residual maturity closest to a target maturity of 2, 5 and 10 years respectively. Index Securities are issued with fixed- rates and the Index is calculated in USD.

ABank, Turkey, (subsidiary of Commercial Bank of Qatar) will provide local market expertise in the Turkish market with geopolitical and macroeconomic assessments, interest rate trends’ research and local market intelligence. These are all critical elements in Turkish sovereign bond market analysis. The synergies generated by on the ground expertise of ABank and asset management strengths of ZyFin is expected to add significant value to the product.

Nina Shapiro (Board Member, ZyFin and former VP Finance and Treasurer, International Finance Corporation) said:
“With all the global financial volatility over the past few years, the economic growth of Turkey has been all the more impressive. ZyFin is bringing to international investors an interesting opportunity to add Turkish, as well as other emerging market, exposure to their portfolios in an efficient and transparent way.”

Sanjay Sachdev, Executive Chairman of ZyFin, said:  “Straddling the continents of Europe and Asia, Turkey’s strategically important location has historically being very important. Turkey remains an investment grade destination and has enjoyed sustained GDP growth over the past 16 years with forecasts indicating continued growth of 3.5% in 2016. With research insights from ABank and backed by our expertise in asset management we have structured this attractive investment solution for investors who wish to participate in the growth momentum that we believe will unfold in Turkey.”

Müge Öner, ABank Acting CEO, added: “I strongly believe that the newly established Alternatif ZyFin Turkey Sovereign Bond ETF will be an important instrument for international investors who would like to focus on the Turkish market. As ABank, we are glad to be the preferred counterparty and broker of this ETF in Turkey. With such partnerships, we will continue taking strong steps to be a key player both in Turkish banking sector and in the region, thanks to the support of our major shareholder The Commercial Bank (Q.S.C.).”

Abdurrahman Bilgiç, Ambassador of Turkey to the United Kingdom, commented:  “Thanks to the steady economic growth in Turkey, there have been important steps to bring Istanbul and London even closer in terms of economic and financial relations. In this manner, I welcome the listing of the world’s first Turkish Sovereign Bond ETF today on the London Stock Exchange, which will enable investors to invest directly into the Turkish fixed income market.”


WisdomTree Launches two Quality Dividend Growth UCITS ETFs on the London Stock Exchange

WisdomTree Launches two Quality Dividend Growth UCITS ETFs on the London Stock Exchange

WisdomTree’s Quality Dividend Growth methodology puts an emphasis on the shifting trends in dividends and focuses on fundamental metrics that the company believes are associated with future dividend growth potential. These strategies use quality metrics focused on companies who are growing their dividends using the following criteria:

Growth: Long-Term Earnings Growth Expectations
Firms expected to grow their earnings faster, based on consensus analyst estimates, should have greater potential to increase future dividends.

The constituents selected by WisdomTree’s Quality Dividend Growth Indices exhibit consistently higher median dividend growth compared to market capitalisation-weighted benchmarks excluding Emerging Markets.

Quality: Combining Quality Factors to Target Earnings Inputs

Three-year average return of equity (ROE) and return on assets (ROA) figures are used to determine how efficiently firms are generating profits.Whilst ROE offers a means of gauging profitability, it can be inflated by leverage. ROA offers a means of mitigating overleverage, and combined with ROE, offers a way of screening for sustainable earnings.

Viktor Nossek, Director of Research at WisdomTree Europe said:

“Investors are keen to explore more developed methodologies to gain access to dividend-related strategies and at WisdomTree, we believe in the power of dividends to deliver the potential for enhanced risk-adjusted returns. In building these new proprietary strategies, we employ the same ’Buffett factors’ of return on equity (ROE) and return on assets (ROA) as a driving force for stock selection in our Quality Dividend Growth strategies, tilting towards quality companies with low debt and high return on equity.

Nizam Hamid, ETF Strategist at WisdomTree Europe added:

“The addition of these new ETFs – based on an evolving but proven investment strategy focused on quality dividends – means that we now offer UCITS ETFs that cover the full spectrum of dividend and income related investment themes. The WisdomTree Global Quality Dividend Growth UCITS ETF (GGRA) also represents our first global equity product to be launched on our UCITS platform. By creating innovative and transparent strategies we aim to bring to clients a breadth of dividend-oriented investment solutions that are critical in today’s low interest rate environment.”

The WisdomTree’s Quality Dividend Growth methodology places an emphasis on future dividend potential. Kenneth French and Eugene Fama’s, “A Five-Factor Asset Pricing Model”* academic paper showed that the highest quality basket of stocks in the US market outperformed by 1.5% per annum from 1963 to 2016, leading to double the market’s return. Research by MSCI for the Norwegian Ministry of Finance** also highlighted the benefits of focusing on income and dividends with 78.6% of equity returns over the past 10 years coming from a combination of dividend growth and dividend yield, rising to 93% over 20 years. Warren Buffet has also espoused quality traits in his long run approach to investing.

Tri-Annual Outlook

Tri-Annual Outlook, April 2016 Update

After raising rates for the first time in nine years, the Fed has held back from further hikes in 2016, bowing to market tantrums. The Fed is struggling to focus on the strength of domestic fundamentals such as the strong labour market or increasing inflationary pressures and is reluctant to move too far from other central banks that are still in easing mode.

James Butterfill, Head of Research and Investment Strategy at ETF Securities said:

“The risk of waiting too long to raise rates is greater uncertainty. Such a situation seems circular, with markets fretting over Fed decisions and the Fed concerning themselves with market volatility – an issue outside the scope of its mandate.”

“Real GDP trends indicate that the pace of US economic growth is solid. While the growth path of real GDP is not as strong as pre-crisis levels, there is no evidence of a slowdown. Such a growth path warrants tighter monetary policy. Without a monetary check on inflationary pressures, even a gradual one, expectations threaten to become unanchored, something that only aggressive rate hikes can then cure. We believe that the current guidance on rate hikes will be insufficient to rein in prices and could lead to the Fed having to tighten more aggressively later in the cycle. This could lead to further unintended consequences.”

Key trends to highlight:

A global economic recovery is likely to provide a tailwind for industrial precious metal prices (silver, platinum, palladium)

Part of the reason that these industrial precious metals have been falling since 2011 is due to China’s moderating demand, as it adjusted to a slower pace of economic growth. However silver, platinum and palladium have started to recover this year, rising 14%, 11% and 7% respectively and we expect demand for these metals will likely continue as China’s industrial output appears to have found a base.

Furthermore, all three of these metals have been in a supply deficit during the past three years. 80% of platinum and close to 40% of palladium are produced in South Africa and as the Rand depreciation abates and miners cut back on activity, supply deficits for these metals are likely to grow.

Central bank policy remains a supportive influence on gold

Along with the Swedish Riksbank, Danish National Bank, Swiss National Bank and the Bank of Japan, the ECB has adopted a policy of negative interest rates (NIRP). We argue that NIRP, whether in nominal or real terms, is positive for gold prices. Historical data suggest that there is a relationship between negative interest rates and the gold price. Gold has risen more than 15% year-to-date and is likely to rise further as US inflation increases.

Emerging Markets sentiment improves

While emerging markets (EMs) have been in the doldrums for some time, pessimism around EM bonds is overdone. Investors are being overcompensated for emerging market credit risk and this presents a buying opportunity. The emerging market bond yield spread over Bunds stood at 4.6% and emerging market bonds yields show less volatility than US High Yield bonds. By contrast, yields on many money markets hover around 0%, and yield spreads of US Investment Grade Corporate bonds over Bunds stands at 3.1%. Investing in EM bonds remains compelling in our view, as valuations appear cheap.

An upturn in EM bond demand will also have a positive impact on their respective currencies. EMs are a heterogeneous group. On the premise that investor flows search for returns within high growth and low inflation economies, emerging Asian currencies appear to be the best placed for strength in 2016. However, emerging Asian currencies do appear overvalued and from a valuation perspective we favour emerging European countries as they have relatively low levels of debt compared to their Latin American and Asian counterparts.

The recent equity market sell-off highlights an opportunity in Cyber Security

Cyber security is better positioned than overall technology, because the subsector benefits from a more diverse revenue stream owing to a wide range of products that appeal to a large customer base. Cyber security incidents are growing at a compounded annual growth rate (CAGR) of 66% since 2009,and are transpiring into profitability for cyber security companies.

The global equity market rout since the start of 2016 failed to spare cyber security stocks, but it brings their relative valuation versus the technology sector down to their historical average rather than the 70x price to earnings perspective (P/E) witnessed in December 2015.

The distinctly low beta in Cyber security stocks allows investors to get exposure to one of the fastest growing segments of technology at a comparatively low risk. The record investment in financing and deal making in 2015 is testament to the opportunity cyber security presents.

Rising ETP Industry flows

ETFGI’s March 2016 global ETF and ETP preliminary industry insights report highlights ETF Securities’ impressive performance since the start of the year, having amassed the second largest share of net ETP inflows in Europe at US$2.11 billion.

Mark Weeks, CEO at ETF Securities commented:

“During Q1 2016 we have seen strong inflows across our diverse European product range, including $2.06 billion into our commodity complex, of which $1.56 billion was into gold. Alongside our in-depth market research and commitment to investor education, this reinforces our position as the leading specialist ETP provider in Europe

“As reported in the Outlook, we believe that despite recent market turmoil, compelling opportunities continue to exist for investors and we continue to work hard, often in partnership with leading third parties, to make these opportunities across commodities, FX, thematic equities and fundamental fixed income available to all European investors.”

Boost Launches Volatility and Emerging Markets ETPs on Borsa Italiana

Boost Launches Volatility and Emerging Markets ETPs on Borsa Italiana

The new ETPs come on the back of increasing demand for Boost’s Short & Leveraged ETPs. As of 10 March 2016, ETPs issued by Boost reached almost $500 million in AUM[1] and these new ETPs add more breadth and depth to Boost ETP’s already comprehensive product list. At the beginning of March 2016[2], Boost ETPs had some 55% market share with respect to all ETC contracts traded on the Borsa Italiana. Boost has the most actively traded product and four products in the top ten most actively traded products on the Borsa Italiana’s ETFPlus segment[3].

Boost is listing the first product offering leveraged exposure to the benchmark VIX volatility index in Italy. The Index measures the return from a daily rolling long position in the first and second month VIX futures contract. The S&P 500 VIX Short-Term Futures Index ER is considered a useful tool for hedging against potential large and sudden drops in the US equity market and, historically, has had a negative correlation to the S&P 500.[4] The Boost S&P 500 VIX Short-Term Futures 2.25x Leverage Daily ETP provides 2.25 times the daily performance of the Index, adjusted to reflect fees and costs inherent to maintaining and rolling a leveraged position in the futures, plus interest revenue earned on the collateralised amount.

The Boost Emerging Markets ETPs provide 3x long and 3x short exposure to the Emerging Equities Rolling Futures Index, which tracks Front Quarter and Second Quarter MSCI Emerging Markets Index futures. The MSCI Emerging Markets Index futures provide exposure to the MSCI Emerging Markets Index, a free float-adjusted market capitalisation index designed to measure the equity market performance of the following 23 emerging markets countries: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Russia, Qatar, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates. With 835 constituents, this index covers approximately 85% of the free float-adjusted market capitalisation in each country covered.

The Boost Emerging Markets 3x Leverage Daily ETP and the Boost Emerging Markets 3x Short Daily ETP provide three (3) times long and (3) times short (respectively) the daily performance of the Index, in both cases adjusted to reflect fees and costs inherent to maintaining and rolling a leveraged position in the futures, plus interest revenue earned on the collateralised amount.

Boost’s S&L ETP platform now covers the world’s major asset classes, which include equities, volatility, fixed income, currencies, and commodities. This brings BOOST ETP’s product range to a total of 128 listings on Borsa Italiana, the London Stock Exchange, and Germany’s Xetra.

Viktor Nossek, Director of Research at WisdomTree Europe, commented:

“This years’ volatility underpinned by China’s slowdown and slumping commodities has soured sentiment in risk assets, forcing global growth expectations down and creating opportunities to position bearishly in equities. US equity markets’ relative high exposure to tech stocks suffering from recent disappointing financial results and downgraded growth expectations has added to the rise volatility in the US equity markets. With a leveraged S&P 500 VIX futures ETP, investors can short term efficiently position around rising risks in equity markets by using less capital to obtain the same (unlevered) exposure or amplify their exposure with the same capital.

“The geared long and short ETPs tracking Emerging Markets are a way to position tactically around the uncertainty in the region, as 2016 begins with a stark divergence in the outlook on growth within the region: Russia and Brazil are in recession, China’s politically orchestrated rebalancing is enforcing an economic slowdown, even while India still sustains a boom. However, much of these expectations remain driven by volatile commodity prices, and the recent rebound of crude oil is giving EM commodity exporter stocks another boost. Until the dust settles and the economic picture for the region stabilises, investors may look for short-term opportunities to trade in and out, or hedge their EM exposure which, using leverage, requires less capital to achieve. These new products provide investors with a new set of momentum and hedging opportunities within the Boost S&L ETP range”.

Nik Bienkowski, Co-CEO of WisdomTree Europe commented:

“Boost, as an issuer, is delighted to be at the forefront of meeting demand from clients to extend our already market leading range of ETPs in the Italian market. These new products provide additional diversification opportunities and solutions to allow our clients to manage their portfolio exposures. These exciting new listings help build out our coverage across all the key asset classes including a unique exposure to equity volatility.”

[1] Source: WisdomTree Europe, as at 10/03/2016.
[2] Source: Borsa Italiana, data for the week 29/02/2016 -04/03/2016.
[3] Source: Borsa Italianasd
[4] Source: S&P Dow Jones Indices LLC

BATS ETF Marketplace Welcomes MomentumShares ETF

BATS ETF Marketplace Welcomes MomentumShares ETF

BATS Global Markets (BATS), the #1 U.S. market for the trading of exchange-traded funds (ETFs), today welcomed the MomentumShares U.S. Quantitative Momentum ETF , which began trading today on BATS Exchange.

The MomentumShares U.S. Quantitative Momentum ETF invests primarily in U.S. equity securities that the Adviser believes has positive momentum. MomentumShares is advised by Alpha Architect, an SEC-registered investment firm that seeks to design affordable, active-management strategies for ETFs and Separately Managed Accounts. Alpha Architect’s strategies are rooted in the science of behavioral finance with a goal of beating behavioral bias. Alpha Architect has two of its ValueShares ETFs also listed on BATS Exchange.

“We were thrilled when Alpha Architect selected BATS as the listing destination for their ValueShares ETFs last year and we are pleased to further grow our partnership with the launch of their first MomentumShares ETF,” said Laura Morrison, Senior Vice President and Global Head of Exchange-Traded Products at BATS. “Through innovative products such as QMOM, Alpha Architect is providing investors with new ways to reach their investment goals.”

BATS ranks as the top exchange operator for ETF trading with the BATS Exchanges – BYX, BZX, EGDA, EDGX – executing 26.5% of all ETF trading in November. BATS has been the #1 U.S. market for ETF trading for every month of 2015 and the #2 U.S. market for overall equities trading.

Qatar: A Haven for Emerging Markets Investors?

Qatar: A Haven for Emerging Markets Investors?

Qatar might not be the first emerging market that springs to an investor’s mind – or even the first in the Gulf region – but recent months have shown that its economy boasts a combination of significant advantages: a long-term investment plan and a level of resilience to external economic shocks and commodity price fluctuations.

Once known predominantly for being the wealthiest country in the world by per capita income, Qatar has found itself in the news recently with uncertainty surrounding its hosting of the football World Cup in 2022 and has faced the new normal of lower oil prices and emerging market volatility. However, look beyond the headlines and you will see a country where growth remains on-track and is increasingly opening up to international investors.

Undoubtedly Gulf markets have faltered in recent months as a result of the volatility in emerging markets. Investor concern about the slowing growth of the Chinese economy is contagious and sustained low oil prices are adding to fears that other emerging economies might follow. The MSCI Emerging Markets Index fell 6.0% between 14 August and 21 August 2015 and over the same period the Bloomberg GCC Index was down over 11%. However, whilst easy to group markets in the Gulf region together, it is important not to overlook the variance in how the economies are faring. For example, for the quarter to date the performance of the Qatari market has outperformed its GCC peers, with the Qatar index falling 11.9%, against a decline of 17.9% and 15.5% for Saudi Arabia and Dubai, respectively.

So what distinguishes Qatar from its neighbours?

Certainly, Qatar is a small country with very large natural resource reserves, mostly natural gas, and so solid GDP growth is to be expected. But the economy is seeing the benefits of the government’s long-term economic planning to diversify, with over 60% of its GDP now derived from non-hydrocarbon industries. In fact, these industries are growing faster than hydrocarbons – rising 11.5% last year. This is the reason that, despite the oil price plunge, Qatar’s growth remains stable at between 6% and 7%.The focus on infrastructure development is continuing – the sound logic being that if robust infrastructure is provided, economic development will follow.

Spending on infrastructure of $240 billion is expected ahead of the FIFA World Cup 2022 – $182 billion in the next 5 years alone. While the World Cup was a catalyst and is a deadline for some of these developments, the lion’s share of infrastructure spending is aimed at continuing long-term development which was planned or underway long before Qatar won the right to host the event.

This is encouraging not just for construction and related firms, but for financial services companies, as well as for the tourism, transport and leisure sectors.

Take the consumer and retail market in Qatar which is transforming, with over 1 million sq m of retail space set to open in the next two years. Consumer sentiment is the highest in the MENA region and as a result the retail sector is forecast to grow at an average 9.8% annually between 2013 and 2018, compared to 6-7% in the rest of the region. High-end hospitality is booming too, catering for a population forecast to rise by 7% by the end of 2015, as well as an increasing number of international visitors. 125 hotels are under construction and are expected to bring the number of hotel rooms in the country to 35,000, with 85% of hotels rated 4* or above.

This certainly creates a much more sophisticated investment prospect than any you could find in the emerging sub-Saharan African region, for example, where inefficiencies in governance and insufficient investment in infrastructure impose limits to the sustainability of growth.

What is more, the sophistication of Qatar’s stock market is developing rapidly and whilst European investors often hear of the Qatar Investment Authority – the country’s sovereign wealth fund – making high profile property investments overseas, the country is taking measures to encourage foreign investment domestically. Just last year index provider MSCI upgraded Qatar from frontier to emerging status, as liberalisation of the market in the country gathers pace. The Qatar Exchange (QE) has also relaxed companies’ foreign ownership limits, recently increasing the limit from 25% to 49%. Furthermore, investors from elsewhere in the Gulf have been re-designated as non-foreign, further encouraging liquidity in Qatari shares, to the benefit of international investors.

This all sounds like it is moving in the right direction, but how do returns and valuations compare?

Fortunately for UK investors, Qatar provides attractive dividends. The Qatar market yields 4.7% and is forecast to pay 5.2% for 2015. Compare that to the 2015 forecast yields of 3.54% for the UK FTSE All Share and 2.04% for the US S&P 500. Despite this, Qatari stocks are continuing to trade on attractive valuations, with a forward P/E ratio of only 10.6x – compared with 11.6x in Saudi Arabia.

With the economy increasingly diversifying, investment in Qatar is becoming an attractive option for those looking for exposure to a high-growth emerging market, which has proved itself more resistant to the market volatility felt by mainstream asset classes and less sophisticated emerging markets. It is comforting for investors in Qatari shares to know that even if the oil price bounces back, future returns are not reliant on the commodities cycle.

Blockbuster Year for Mixed Asset Funds In European Investment Inflows

Blockbuster Year for Mixed Asset Funds In European Investment Inflows

Mixed asset mutual funds drove the bulk of long-term net inflows from European investors through July 31, 2015, according to new data released in two reports from Broadridge Financial Solutions, Inc. The European Fund Market Mid-Year Review and July 2015 FundFlash Monthly Snapshot reports both detail continued momentum in mixed asset products – those that invest in equities, bonds, cash and other funds – and strengthening equity investments following June’s market correction.

Broadridge’s European Fund Market Mid-Year Review and FundFlash – formerly published by Thomson Reuters Lipper – offer a high-level overview of European fund and ETF investment trends. The reports include commentary and insight based upon a new partnership between Broadridge and MackayWilliams LLP, a leading mutual fund market analysis and research company firm for the domestic pan-European and cross-border fund markets.

Additional findings from Broadridge’s reports include:
• Investors pumped €55bn into European investment funds including €31bn into long term funds in July
• Mixed asset products accounted for 55 percent (€124bn) of total inflows in the first half and 23 percent (€7bn) in July
• The top three markets by estimate net sales in July were Italy, Germany, and the United Kingdom
• The top fund firms by sales in July were BlackRock, DeAWM, GAM Holding, Intesa and Vanguard

“It’s been a challenging year for asset managers in Europe with some periods of intense market volatility and increasing competition coming from the banks,” said Diana Mackay, chief executive officer of MackayWilliams, “But low interest rates continue to drive flows into retail funds and mixed asset funds, in particular, are having a blockbuster year.”

“Our new partnership with MackayWilliams follows our recent acquisition of the Fiduciary Services and Competitive Intelligence unit from Thomson Reuters’ Lipper division,” said Frank Polefrone, senior vice president of Broadridge’s data and analytics business. “Together, these investments demonstrate our ongoing commitment to providing our clients with innovative data, analytics and insights to enhance their sales efforts.”

Strong Growth Expected in European ETF Market

Strong Growth Expected in European ETF Market

 Source, one of the largest providers of Exchange Traded Products (ETPs) in Europe, has launched a multi-million pound advertising and marketing campaign to help raise its profile, as new research reveals financial advisers are set to increase their clients’ exposure to these investment products.

Source is already capitalising on this market growth as it reveals today that it has attracted US$3.4 billion of assets so far this year (as of 15 September 2015), equivalent to 20% of the firm’s assets under management at the beginning of the year. Just over half of this (US$1.8bn) has been into fixed income ETFs, with US$1.3 billion into equity ETFs and US$0.3 billion into commodity products.

Most of the European investment in ETFs comes from institutional investors, but Source is forecasting that there will be a significant increase in demand from retail investors, primarily through their advisers.
New research[1] from Source reveals that over the past 12 months, nearly one in five (18%) financial advisers say their clients have increased their exposure to ETFs as opposed to 3% who have seen clients reduce it. Over the next year, one in three (34%) IFAs expect clients to increase their exposure to these investment products compared to 4% of IFAs who anticipate exposure will fall. Some 59% of IFAs say that lower charges give ETFs an advantage over other investment funds, and this was followed by 21% who said it was about innovation, and 13% who cited the wide choice of ETFs available.

These findings are supported by new data from the London Stock Exchange (LSE), which reveals there are currently more than 1,200 ETFs and ETPs listed on its main exchange and that the total value of ETFs traded on-exchange this year is £175.7 billion.

Gillian Walmsley, Head of Listed Products at the LSE, said: “London has long been seen as the capital of the ETF industry in Europe, with deep liquidity and a strong emphasis on promoting transparency. In 2015, 101 new ETFs and 25 new ETPs listed on the LSE. Total on-exchange value traded for ETFs this year is up 61% compared to the same period last year.”

Factor Advisors Launch New EFTs

Factor Advisors Launch New EFTs

Factor Advisors, a subsidiary of the ETF Managers Group, has debuted the PureFunds ISE Mobile Payments EFT and the PureFunds ISE Big Data EFT.

Both EFTS began trading on the NYSE Arca on 16th July. The new funds come less than nine months after the successful launch of PureFunds ISE Cyber Security EFT, adding to the growing family of specialty tech ETFs from the PureFunds, Factor Advisors, and ISE ETF Ventures consortium. Andrew Chanin, CEO of PureFunds, was keen to highlight the benefits these new EFTs add to the firm’s growing portfolio.

‘These new ETFs will offer investors an opportunity for exposure to two industries shaping the future of technology. These two technology sectors are transforming traditional commerce and data management, and their solutions are bringing exciting changes to everything from how we pay for a cup of coffee to how we access and interpret vital information.’

The new ETFs will seek to correspond generally to the price and yield performance of the ISE Mobile Payments Index, which tracks companies at the forefront of the mobile, electronic, and digital payments industry. The index will work in partnership with the new funds.

Kris Monaco, Head of ISE ETF Ventures defined the funds and highlighted how vital they are for investors.
‘By creating indexes to track companies in the mobile payments and big data segments, we are defining and quantifying these industries into original investment themes. Similar to our creation of the first cyber security index, these are emerging sectors within technology that warrant the visibility and investment opportunity made possible through a standalone index.’

Sam Masucci, founder and CEO of ETF Managers Group, said of the partnership:
‘We are pleased to continue working with PureFunds and ISE ETF Ventures to deliver two more compelling ETFs. We believe that the ability to broadly access these market segments through an ETF is an excellent way to position a portfolio for potential future growth in these specialty tech sectors.’


STOXX Licenses Leveraged Indices to ETF Securities

STOXX Limited, a leading provider of innovative, tradable and global index concepts, has announced that the EURO STOXX 50 Daily Leverage 3 and LevDAX x3 indices have been licensed to ETF Securities to serve as the underlying for two exchange-traded products (ETPs).

“The EURO STOXX 50 Daily Leverage 3 and LevDAX x3 provide sophisticated market participants access to the three times leveraged performance of the leading blue-chip indices for Europe and Germany, respectively,” said Hartmut Graf, Chief Executive Officer of STOXX.

Townsend Lansing, Head of Short and Leveraged Platform, ETF Securities said: “The EURO STOXX 50 Daily Leverage 3 and LevDAX x3 indices are highly liquid and transparent blue chip strategy indices, which enable investors to take short term views and make tactical trades. We look forward to continue working with STOXX on existing and new products.”

The EURO STOXX 50 Daily Leverage 3 Index is linked to the daily performance of the EURO STOXX 50 Index in a triple leveraged way: for example, a positive performance of the EURO STOXX 50 Index results in approximately a triple positive performance of the EURO STOXX 50 Daily Leverage 3 Index, and vice versa. The index is calculated in euro and U.S. dollars. Daily historical index values are available back to Dec. 31, 1991.

The LevDAX x3 Index follows the methodology of the LevDAX indices. Designed for investors with an appetite for risk, the performance of the LevDAX indices are directly linked to the performance of the DAX and proportionate to its leverage factor. For example, the LevDAX x3 gains three times the value of the DAX, and vice versa (not taking into account positive effects from the financing term).

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TOM Offers Best Execution in ETFs

TOM Offers Best Execution in ETFs

As of today, TOM (The Order Machine) offers best execution in Exchange Traded Funds (ETFs) with the product scope now consisting of equities, options and ETFs.

This is a unique approach in Europe and clients can benefit from using a single TOM connection to trade a wide range of products while receiving best execution in all those financial instruments according to MiFID requirements.

Willem Meijer, CEO of TOM said: “We are continuously looking for possibilities to expand our product offering and are therefore very pleased to add ETFs to our range of tradable instruments. We plan to expand the number of ETFs tradable via TOM in the near future as the market has seen significant growth in this asset class.”

Martijn Rozemuller, Managing Director of Think ETFs added: “As the first Dutch issuer of ETFs we feel that this is a very positive development for the investor. ETFs are playing an increasingly important role in the market for investment products in the Netherlands, mainly due to the overall low costs of the product. The best execution mechanism of TOM has the ability to reduce the already low costs of trading even more.” 
TOM is a trading venue in that offers equity and options trading and aims at optimal competition between markets. To be able to guarantee best execution of client orders, TOM developed a search engine (‘TOM Smart Execution’), which quickly compares prices between markets. The client’s order is executed at the trading venue showing the best available price at that moment. TOM has established a substantial market position in equity and options trading and boasts shareholders including ABN AMRO Bank, BinckBank, IMC, Nasdaq OMX and Optiver.

CIBC Mellon Earns $1.1bn Mandate Expansion

CIBC Mellon Earns $1.1bn Mandate Expansion

CIBC Mellon has announced that Horizons ETFs Management has selected CIBC Mellon to provide fund administration, custody and exchange-traded fund (ETF) services for the Horizons family of 38 leverage and inverse ETFs.

This CAD$1.1bn mandate expands on the asset servicing solutions CIBC Mellon already provides for the Horizons ETFs family of actively-managed ETFs. With the addition of these 38 ETFs, CIBC Mellon now services all of Horizons’ Canadian ETF business.

“We’ve been very happy with the service provided by CIBC Mellon on our actively managed ETF business. Both the technology used by their platform and the client service they offer have been terrific,” said Kevin Beatson, Chief Operating Officer of Horizons ETFs. “We’re quite happy to transition the rest of our ETF business to their custody and fund administration platforms, and feel our unit holders will be well served by this partnership.”

“We are committed to great service, strong support and continuous improvement here at CIBC Mellon, and we have enjoyed a very strong working relationship with Horizons – we are very pleased they have again selected us to service their family of funds. We look forward to delivering strong solutions for Horizons ETFs as they continue to expand their business and serve their investors,” said Ronald C. Landry, Executive Director, ETFs & Investment Funds, CIBC Mellon.

Horizons Exchange Traded Funds Inc. is an innovator in both actively-managed ETFs and inverse and leveraged ETFs. They are currently the largest provider of both actively managed ETFs and leveraged ETFs in Canada.

CIBC Mellon is a leading provider of ETF-servicing solutions in Canada, currently serving the majority of ETF sponsors operating in the Canadian market. Leveraging the award-winning capabilities of BNY Mellon, a global leader in investment servicing, CIBC Mellon’s ETF solution includes indicative net-asset-value (NAV) production, automated basket creation and redemption features, and a designated broker interface offering flexible, end-to-end automation of the order process. This solution delivers support and flexibility, meeting the operational needs of a spectrum of ETF industry participants.