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Will Stimulus Unwinding Crush Europe ETFs?

Michael Johnston — Mon, 23 Nov 2009 06:31:59 +0000

In an unexpected development, the European Central Bank announced Friday that it will tighten the standards under which it accepts asset-backed securities as collateral from banks for refinancing tenders after March 1. While this step seems relatively minor, analysts viewed its as the first step towards unwinding the massive stimulus plans put into effect to save the struggling financial system in the wake of the global credit crisis. Following the collapse of Lehman last year, the ECB enacted several measures to ensure that banks maintained access to credit as traditional sources dried up. One of these moves was allowing bonds with lower credit ratings to be used as collateral, a response to the significant erosion in many existing securities due to the financial crisis. Under this initiative, ABS are eligible to be used as collateral if they were 1) rated AAA at time of issuance and 2) have one current [...]

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Edward Jones Discontinues Sale Of Leveraged ETFs

Michael Johnston — Wed, 22 Jul 2009 14:38:26 +0000

The swelling controversy over the risks associated with leveraged ETFs has apparently caused its first casualty. St. Louis-based Edward Jones & Co., the prominent financial services firm, decided during a regular review of its products in June to stop selling leveraged funds, citing the fact that they are “one of the most misunderstood and potentially dangerous types of ETFs,” according to mutual fund research analyst Katie Martin. Edward Jones prepared a report titled “Not All ETFs Are Created Equal” that highlights the potential pitfalls with these complex financial instruments. “Investors also need to recognize that leveraged ETFs have an increased potential for capital gains distributions and significantly higher expense ratios than the traditionally broadly based stock market ETFs, negating some of the benefits of purchasing an ETF,” the report said. Edward Jones’ decision to drop the product line comes as calls for regulation of leveraged ETFs are reaching a fever pitch. [...]

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June ETF Data: Big Bumps For PowerShares, PIMCO, and ProShares

Michael Johnston — Fri, 03 Jul 2009 12:58:34 +0000

The National Stock Exchange has released its monthly statistical bulletin for June, and the ETF industry certainly seems to have avoided any sort of “June swoon.” Although the trends for the industry as a whole are overwhelmingly positive, a trio of fund sponsors enjoyed particularly successful months. A few of the highlights from the report: Total ETF/ETN assets under management increased from approximately $594.3 billion to $603.5 billion, representing a monthly increase of approximately 1.5%. This modest increase is even more significant considering that most U.S. and emerging markets equity indexes were down slightly for the month. The total number of exchange-traded products increased from 829 to 837, following a month-over-month decline in May. 405 ETF/ETNs had net inflows, while only 154 had net outflows. The number of ETF/ETNs with more than $100 million in assets under management increased from 335 to 347. Those making the jump included the iPath Dow [...]

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ProShares Strengthens Grip on UltraShort ETF Market

Michael Johnston — Thu, 18 Jun 2009 15:02:55 +0000

ProShares launched four new international ETFs on Thursday, expanding its already dominant line of inverse leveraged ETFs focusing on foreign markets. With the launch of these four funds, ProShares doubles the size of its product line in this area, which already featured -200% leveraged funds tracking the MSCI Japan Index, Xinhua 25 China Index, MSCI Emerging Markets Index, and MSCI EAFE Index. “With this broad line-up, investors can make tactical shifts as conditions change in markets around the world,” said ProFunds Group Chairman and CEO Michael L. Sapir. The new funds are: UltraShort MSCI Europe (EPV) UltraShort MSCI Pacific Ex-Japan (JPX) UltraShort MSCI Brazil (BZQ) UltraShort MSCI Mexico Investable Market (SMK) All of the new ETFs will seek results that correspond to 200% the inverse of the daily performance of their underlying indexes. The expense ratios for each of the funds is 0.95%, consistent with ProShares’ existing leveraged ETFs. While many ETFs [...]

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Will Stimulus Unwinding Crush Europe ETFs?

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Edward Jones Discontinues Sale Of Leveraged ETFs

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June ETF Data: Big Bumps For PowerShares, PIMCO, and ProShares

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