etf radar magazine issue june 2011 (european edition)

September, 20 - 22 2011, Le Méridien Parkhotel Frankfurt, Wiesenhüttenplatz 28-38, D-60329 Frankfurt am Main, Germany

www.terrapinn.com/2011/commodities-de

Frank Schallenberger Head of Commodity ResearchLandesbank Baden-Württemberg

Dajana Brodmann Deputy Head of Alternative InvestmentsBayerische Versorgungskammer

Francisco BlanchHead of Global Commodity Research Bank of America Merrill Lynch

Paul KaplanQuantitative Research DirectorMorningstar Europe

Eugen WeinbergChief Commodities

Commerzbank

Jim RogersAuthor and Investor(Guest of The Royal Bank of Scotland)

Peter Hadasch Head of PensionsNestlé Pensionskassen

Andreas KretschmerCEO Trustee‘s BoardÄrzteversorgung Westfalen-Lippe

Harald TextorBoard MemberWittelsbacher Ausgleichsfonds

Free Admission forInstitutional Investors!

Global insights and opportunities for institutional investors and their partners

Understand what commodities can bring to your portfolio

Discover the latest trends and identify the hottest commodity opportunities for 2012

Hear case studies from leading Pension Funds, Insurance companies and Foundations

BOOKING HOTLINE:

www.terrapinn.com/2011/commodities-de | [email protected] | T +44 (0) 20 7242 2324

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September, 21 2011

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Issue No. 10ISSN 2150-9166

European Edition

June 2011

Feature

Covered Call Plays

Rankings

ETF Landscape At A Glance

The Global

Magazine

People

Amundi ETFValérie Baudson

Spotlight

ETFs Continues to ClimbInstitutional Demand for

Index InvestorStoxx Europe 600Tactical Portfolio UpdateETF of the Month

Sector Map

THE HOTSPOTSAT A GLANCE

ETF Radar Magazine | Issue June 2011

ADVERTISING

etfRadarSM

September, 20 - 22 2011, Le Méridien Parkhotel Frankfurt, Wiesenhüttenplatz 28-38, D-60329 Frankfurt am Main, Germany


Frank Schallenberger Head of Commodity ResearchLandesbank Baden-Württemberg

Dajana Brodmann Deputy Head of Alternative InvestmentsBayerische Versorgungskammer

Francisco BlanchHead of Global Commodity Research Bank of America Merrill Lynch

Paul KaplanQuantitative Research DirectorMorningstar Europe

Eugen WeinbergChief Commodities

Commerzbank

Jim RogersAuthor and Investor(Guest of The Royal Bank of Scotland)

Peter Hadasch Head of PensionsNestlé Pensionskassen

Andreas KretschmerCEO Trustee‘s BoardÄrzteversorgung Westfalen-Lippe

Harald TextorBoard MemberWittelsbacher Ausgleichsfonds

Free Admission forInstitutional Investors!

Global insights and opportunities for institutional investors and their partners

Understand what commodities can bring to your portfolio

Discover the latest trends and identify the hottest commodity opportunities for 2012

Hear case studies from leading Pension Funds, Insurance companies and Foundations

BOOKING HOTLINE:

www.terrapinn.com/2011/commodities-de | [email protected] | T +44 (0) 20 7242 2324

Silver sponsor:

Gold sponsor:

A Dinner With Jim Rogers

September, 21 2011

Exhibitor:

German/EnglishSimultaneous Translation

Voucher Code: ETFRA

Real Value.

Book todayand save!Discounts for Readers of theETF Radar Magazineavailable upon request!

Get the latest market news & insightsand discuss with real experts including:

Analyst

etfRadarGlobal Investor Intelligence

SM

ETF Media Partner:

EXCLUSIVE OPPORTUNITY:

www.etf-radar.com

Issue No. 10ISSN 2150-9166

European Edition

June 2011

Feature

Covered Call Plays

Rankings

ETF Landscape At A Glance

The Global

Magazine

People

Amundi ETFValérie Baudson

Spotlight

ETFs Continues to ClimbInstitutional Demand for

Index InvestorStoxx Europe 600Tactical Portfolio UpdateETF of the Month

Sector Map

THE HOTSPOTSAT A GLANCE


ADVERTISING

etfRadarSM


Global Summary

Industry Highlights

4

Global Round-Up

stnevE detceleS

CHICAGOMorningstar Investment Conference8-10 June 2011McCormick Place

mocr.adar-fte.www no noitces tneve eht tisiv esaelp sliated tneve lluf roF


TORONTOCanada Cup of Invest. Mgnt. 07–08 June 2011

InterContinental

►

►

MIDDLE EAST: OMAN ETF STOPPEDFalcom Financial Services has postponed the launch of Oman's first ETF. The Saudi investment bank is yet to receive an approval from the Capital Market Authority regarding the launch. The firm cited unfavorable market conditions and the tense political environment in the region as the cause for the delay. Falcom launched its first ETF in Saudi Arabia last year.

ASIA-PACIFIC: INVESTORS HUNGRY FOR SECTOR ETFSInvestors in Asia need more sector-focused ETFs to facilitate tactical asset allocation in regional investments, said market strategists from Dt. Bank, Standard Chartered and Morgan Stanley at the Dynamic Asset Allocation conference in Hong Kong. Hopefully some issuers jump on the bandwagon – and gather assets in local sector ETFs.

►

►

CANADA: CETFA SEEKS NEW MEMBERSCanadian ETF Association (CETFA) is seeking to expand its membership. The newly launched lobby group currently has Bank of Montreal ETFs, Claymore Investment and Horizons ETF as members. First Asset Capital and Invesco Trimark are also expected to join CETFA. The group has extended an open invitation to iShares. CETFA is also considering discussing ETF classification by different classification services.

EUROPE: WORLD‘S FIRST RHODIUM ETC LAUNCHEDDeutsche Bank AG launched the world‘s first physical rhodium ETC. The product is 100% backed by physical rhodium and is designed to track the dollar spot price, minus fees (0.95% p.a.). The physical rhodium that backs the ETC will be kept with Johnson Matthey in the UK.

►

►

US: FIRST ETF LINKED TO MONGOLIAN STOCKSVan Eck Global is seeking to roll out a new Mongolia fund. The Market Vectors Mongolia ETF will hold at least 80% of its assets in companies either based in or listed in Mongolia, or based elsewhere but derive at least half their revenues from business activities in Mongolia. The Central-Asian country owns large amounts of commodities like coal, gold and copper.

US: NEW DOLLAR CURRENCY ETNS LAUNCHEDDeutsche Bank and Invesco PowerShares announced the launch of two new ETNs, which are designed to provide triple long and triple short exposure to futures contracts on the US Dollar Index, an index designed to reflect the value of the US dollar compared with six of the world's most traded currencies. Trading symobls are UUPT and UDNT.

►

►

OVERALL MARKETAt the end of Q1 2011, there were 549 ETFs/ETPs providingexposure to various emerging and frontier markets indices, with 1,119 listings and assets of US$246.4 Bn3 from 110 providers on 40 exchanges in 34 countries. The number of products increased by 7.0% YTD, from 513 at year end 2010 to 549 at the end of Q1 2011. Assets in ETFs/ETPs providing exposure to emerging markets indices decreased by 0.5% YTD to US$246.4 Bn, compared to a 1.7% rise in the MSCI Emerging Markets Index in US dollar terms over the same period.

HIGH YIELD INFLOWS SURGE, BLEEDING IN COMMODITY ETP DIDN‘T STOPHigh yield bond ETP inflows surge while yields sink to record lows. According to recent estimates, High yield fixed income ETPs gathered $3.5bn in new cash in the first five months of this year, running well ahead of 2010 when they attracted $6.5bn over the whole year (see also ETF Radar Magazine, Issue May 2010).

The bleeding in commodity-related exchange-traded products didn’t entirely stop last week, but it sure slowed down. Investors took out a relatively modest $280 million from said ETPs, dropping total assets to $161 billion. But assets are actually about $1 billion higher than last week, due to modest gains in most commodity prices.

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[email protected]> 3

Global Summary

ContentsIssue June 2011

3

Industry Highlights

Global Round-Up

Top20 Global Index Provider

Hot Product Debuts

Upcoming Events

Number Cruncher

Assets under Management

Change in ADV

Change in AuM

Best-

Worst-Performer

Performer

Stoxx 600 Sector Map

Tactical

ETF of the Month

Portfolio Update

IndexInvestor 6

Rankings 14

Valérie Baudson,

Amundi ETF

People 12

Fast Lane

Get In Touch

Feature 8

Covered Call Plays

IndexCompanies and People

Spotlight 10


Dear Reader,

The global ETF and ETP industry saw record net inflows totaling USD 25.3 Bn. in April. Little wonder, that worries and concerns have begun to multiply. As we reported in the last issue, three supranational bodies (FSB, IMF and BIS) warned over risk associated with ETFs. The main critic came on sec lending and swap-based products. Meanwhile the discussions instantiated by the “big three regulators” calmed down but a new aspect in trading ETFs appeared.

The latest discussions focus on shorting ETFs: Secondary trading activity of ETFs brings with it the possibility that market participants will short the ETFs themselves. There is no real limit to the short selling which is possible in an ETF in the same way that there is with stocks. In an ETF a short seller could mostly rely on the process of creating shares in the ETF to ensure he can deliver. This could lead to the possibility that a buyer of an ETF share is buying from a short seller and that no new share has yet been created. The short interest data captured in the US-listed securities reflects the exact number of shares that have yet to be repurchased to give back to lenders.

Currently, there are short-selling levels of up to 340% like in the SPDR S&P Retail ETF. Some of these funds show a significant short-ratio over a couple of months. Hence “short” means sometimes long. But this may lead to some problems and surprises – especially in choppy markets. As investors may face new fears in the near future (thanks to Greece, our feature story covers the pros and cons when using ETFs for covered call writing strategies. These strategies have advantages but also drawbacks – like shorting ETFs.

Enjoy reading and let us know your thoughts.

Silvan SchellingHead of Relationship Management

Adam Patti (pg. 12) IndexIQ (pg. 4)

Amundi ETF (pg. 13) Ivesco PowerShares (pg. 3, 4)

Bank of Montreal (pg. 3) Invesco Trimark (pg. 3)

CBOE (pg. 8) Morgan Stanley (pg. 3)

CETFA (pg. 3) SSgA (pg. 4)

Claymore (pg. 3) Standard Chartered (pg. 3)

Commerzbank (pg. 4) Valérie Baudson (pg. 13)

Deutsche Bank (pg. 3) Van Eck (pg. 3)

ETF Securities (pg. 3)

Falcom FS (pg. 3)

First Asset Capital (pg. 3)

Greenwich Ass. (pg. 10)

Horizons (pg. 3)

Institutional Demand for

ETFs Continues to Climb

Index Investor

In May the STOXX 600 Index fell -0.96%. Is 2011 once again a May. The Automobiles and Parts Index was the worst performing year that approves the phrase “Sell in May and go away”? with a loss of -3.83% in May 2011. If investors believe in a recovery, Having a look at the sector performances you can clearly see a the contrarian pick with the beginning sector rotation as market participants believe that would be the best the economy is moving from late expansion to early choice. Best performing sector with a performance of +6.47% in contraction. Usually basic materials and energy stocks May 2011 was the STOXX 600 Health Care Index. If you believe in perform best in late expansion and consumer staple stocks an ongoing trend, the db x-trackers best in early contraction. Exactly this situation appeared in would be your best pick. .

ComStage ETF STOXX Europe 600 Automobiles & Parts (LU0378435043)

STOXX Europe 600 Health

Care ETF (LU0292103222) n

European investors shift their sector preferencesby Sebastian Stahn

The Action Plan

Stoxx 600 Sector Map

6

CONTRARIAN PICK BEST-TREND PICK

HIGH LOW LOWXSDR. GY

ComStage ETF STOXX® Europe 600 Auto & PartsISIN/Ticker: LU0378435043TER / AUM: 0.25% / 22mn.1 Year Return: +46.39%Last Price/High/Low 52-Weeks: EUR 50.70 / 34.22 / 53.80Replication: Synthetic

db x-trackers STOXX Europe 600 Health Care ETFISIN/TIcker: LU0292103222TER / AUM: 0.30% / 231.8mn. 1 Year Return: +19.33%Last Price/High/Low 52-Weeks: EUR 61.39 / 50.97 / 61.39Replication: Synthetic

RISK-REWARD-ANALYSISbased on an investment horizon of one month

RISK-REWARD-ANALYSISbased on an investment horizon of one month


CBSXAR.GYHIG

stnevE detceleS

Global Summary

5

Top10 Global Index Provider(Ranked by AuM)

Hot Product Debuts

► FIRST WAVE OF NEW SPDR ETFSState Street Global Advisorshas launched eight new ETFs at Deutsche Börse's Xetra platform. The portfolio includes seven equity-index ETFs and one bond-index ETF. The launch also includes five emerging markets equity ETFs, as well as the first local currency emerging market debt ETF to be listed in Europe. SSgA’s ETFs are intended as the first wave of a fresh assault on the European market.

FRANKFURTETF & Indexing Deutschland20-22 June 2011Radisson Blu Hotel

Ticker/ISIN: IE00B3YLTY66 TER: 0.55% - 0.65% p.a.CCY: USD

MADRIDETF & Indexing Espana15-16 Jun 2011Melia Ave. America Hotel

Sources: Event organizers, Reuters, BusinessWire, BlackRock, ETF Radar Global Research

Number Cruncher

Yield spread of crippled Greek vs. German 10-year bonds as of May, 27 2011.

► FIRST S-DAX ETF LAUNCHED Commerzbank, Germany's second largest bank, has launched an ETF linked to the country's S-DAX, making it the first product worldwide to replicate the small-cap index. The ComStage ETF SDAX TR replicates the performance of the SDAX, which comprises 50 German smallcaps stocks. ComStage, Commerzbank's ETF brand, has ca. USD 9.2 billion assets under management, making it Europe's seventh-largest ETF player.

Ticker/ISIN: LU0603942888TER: 0.70% p.a.CCY: EUR

↑

↑

→

→

► HK SMALL CAP ETF LAUNCHEDIndexIQ recently launched the first ETF dedicated to providing access to Hong Kong’s dynamic small-cap sector. HKK‘s expense ratio is fair priced compared to already available HK blue-chip ETFs. The fund has a strong exposure to Consumer Discretionary stocks and Financial companies. Investors should be aware of that this ETF trades small cap equities. Hence in volatile times increased spreads are possible.

Ticker/ISIN: HKKTER: 0.69% p.a.CCY: USD

Best 1 Month performance in May 2011, achieved by ProShares Ultra Silver ETF.

SINGAPOREWorld Islamic Conference8-9 June 2011Pan Pacific Hotel


► NEW CONVERTIBLE ETFInvesco PowerShares is launching the PowerShares Convertible Securities ETF. The fund, which is likely to issue monthly distributions, will be linked to the BofA ML All U.S. Convertibles Index and will invest at least 80% of its assets in the component securities that comprise the convertibles index, which is designed to track the performance of USD-denominated investment grade and non-investment grade convertible.

Ticker/ISIN: CVRTTER: 0.35% p.a.CCY: USD

MSCI 25.5%

S&P 23%

Barclays Capital 8.1%

STOXX 7.2%

Russell 6%

FTSE 4.3%

Dow Jones 3.8%

Markit 3.3%

NASDAQ OMX 2.6%

NYSE Euronext 1.2%

Other 15.0%

HONG KONGETF Index Investment Summit 201131 Aug. - 1 Sept. 2011JW Marriot Hotel

1455 bps. 62.43%

Monthly Performance. As of May 31, 2011.

Personal Goods & Household

+3.51%

Industrial Goods & Services

–0.97%

Travel & Leisure+0.72% Real Estate

+1.78%

FinancialServices

–0.79%

Retail+3.80% Food & Beverage

+4.00%

Health Care+6.47%

Automobiles & Parts–3.83%

Insurance–3.68%

Banks–3.31%

Construction & Mat.–3.22%

Basic Resources–2.53%

Utilities–3.58%

Oil & Gas–3.51%

Telecommunications–2.53%

Chemicals–2.45%

Media–2.06%

Technology–1.06%

BESTPERFORMINGSECTORS

WORSTPERFORMING

SECTORS

http://www.emii.com/Search.aspx?SearchStr=State%20Street%20Global%20Advisors

8

Feature

QUICK FACTS seven months, some economists argued. The market has Increasing fears among investors may lead to experienced a drawback in May due to these concerns. First

shaky markets in the near future. quarter U.S. GDP growth was weak at 1.8% and global Implementing covered call strategies would allow unemployment and housing concerns persist.

investors to hedge their portfolio partly against a drop-down of the markets. New fears in the markets

One of the bigger issues is the European debt crisis. Chances As we come to the mid way point of the year, we can see are increasing that Greece will have to renegotiate debt. the market has essentially moved sideways with high Credit spreads of Greek government bonds soared. volatility. As of May 26th, the S&P 500 is up over 5% for European Central Bank Board member Lorenzo Bini the year. The CBOE VIX volatility index trades currently Smaghi said recently that talk about Greece reneging on at 15 points which is pretty close to all time low of 2007. debt commitments “has been very damaging” and The major question is “how will the market perform suggested “that investing in the euro area is unsafe.” Even for through the next quarter?” No one can say there isn't a a country that flouted eurozone fiscal rules for a decade, “a lot on the minds of the average investor. The pressing debt restructuring, or exiting the euro, would be like the questions are: Will gas prices stay at their current level death penalty – which we have abolished in the European or possibly increase? Will the U.S. and world economies Union,” he said. continue to grow? How will the unemployment situation shake out through the remainder of the year? The ECB has already bought about 45 billion euros in Greek Employers in the States probably hired fewer workers in government bonds in the past year but Bini Smaghi said the May 2011 and factory orders grew at the slowest pace in impact of a default would fall largely on eurozone national >

►

►

by David Cohne

One way to add some protection to your portfolio is by employing a covered call strategy. ETFs offer an easy way to add buy-write insurance to a portfolio – espcially in a gradually rising or choppy market. But there are also some drawbacks.

Covered Call Plays

HIGH


QUICK FACTS and (14,60%). Most pharma stocks in the Health Care Stocks still with high MSCI HC Index have performed very

upside potential. . European stocks fell well since April and the investment Despite the crisis in Southern this week and the Euro tumbled with outlook remains bullish for the next

Europe, the consumer sector remains Greek sovereign debt fears coming back months. From a technical point of view, attractive . to the fore and recent economic data the above mentioned trio may climb

signaling that the recovery of developed above their current resistance levels. The ETF Radar Tactical portfolio is a economies may not be as robust as model portfolio that invests in five thought. Meanwhile, Moody's cut its ETFs based on an individual tactical rating on Greece by three notches to ETF rankings system maintained by Caa1. Hence we expect that the markets Cohne Investment Group. The become shaky and volatitlity levels may portfolio trades at the end of each increase.month. The holdings for June include

Based on the rankings , is the ETF of

, the month. The fund is dominated by three well-known pharma stocks:

, Novartis (16,11%), its local rival Roche (14,65%) and GlaxoSmithKline

►

►

(FR0010833558) SPDR MSCI E u r o p e S m a l l C a p E T F (FR0010149880)

SPDR MSCI Europe Health Care SPDR MSCI (FR0000001737) Amundi ETF Europe Health Care ETFMSCI Switzerland (FR0010655753)SPDR MSCI Europe Consumer Staples ETF (FR0000001745) Lyxor ETF MSCI Europe Real Estate

n

Index Investor

Tactical Portfolio Update

by David Cohne

Bullish outlook for Health Careand Consumer Staples

ETF Radar Tactical Portfolio

Source: Cohne Investment Group, exclusively for ETF Radar / June 1, 2011 Ranking

7

ETF of the Month

SPDR MSCI Europe Health Care ETF

52-Week Range $62.55-$51.61 Market Cap $43.6 millionDividends -TER 0.30% p.a.Last Volume n/a ETF Issuer SPDRs EuropeReplication Full Replication

(FR0000001737)


TICKER ETF NAME TER AUM WEIGHT

FR0000001737 SPDR MSCI Europe Health Care ETF 0.30% $43.6 million 20%

FR0010655753 Amundi ETF MSCI Switzerland 0.25% $51.7 million 20%

FR0000001745 SPDR MSCI Europe Consumer Staples ETF 0.25% $20.3 million 20%

FR0010833558 Lyxor ETF MSCI Europe Real Estate 0.40% $31.0 million 20%

FR0010149880 SPDR MSCI Europe Small Cap ETF 0.40% $5.3 million 20%

8

Feature

QUICK FACTS seven months, some economists argued. The market has Increasing fears among investors may lead to experienced a drawback in May due to these concerns. First

shaky markets in the near future. quarter U.S. GDP growth was weak at 1.8% and global Implementing covered call strategies would allow unemployment and housing concerns persist.

investors to hedge their portfolio partly against a

drop-down of the markets. New fears in the markets

One of the bigger issues is the European debt crisis. Chances As we come to the mid way point of the year, we can see are increasing that Greece will have to renegotiate debt. the market has essentially moved sideways with high Credit spreads of Greek government bonds soared. volatility. As of May 26th, the S&P 500 is up over 5% for European Central Bank Board member Lorenzo Bini the year. The CBOE VIX volatility index trades currently Smaghi said recently that talk about Greece reneging on at 15 points which is pretty close to all time low of 2007. debt commitments “has been very damaging” and The major question is “how will the market perform suggested “that investing in the euro area is unsafe.” Even for through the next quarter?” No one can say there isn't a a country that flouted eurozone fiscal rules for a decade, “a lot on the minds of the average investor. The pressing debt restructuring, or exiting the euro, would be like the questions are: Will gas prices stay at their current level death penalty – which we have abolished in the European or possibly increase? Will the U.S. and world economies Union,” he said. continue to grow? How will the unemployment

situation shake out through the remainder of the year? The ECB has already bought about 45 billion euros in Greek

Employers in the States probably hired fewer workers in government bonds in the past year but Bini Smaghi said the

May 2011 and factory orders grew at the slowest pace in impact of a default would fall largely on eurozone national >

►

►

by David Cohne

One way to add some protection to your portfolio is by employing a covered call strategy. ETFs offer an easy way to add buy-write insurance to a portfolio – espcially in a gradually rising or choppy market. But there are also some drawbacks.

Covered Call Plays

HIGH


QUICK FACTS and (14,60%). Most pharma stocks in the Health Care Stocks still with high MSCI HC Index have performed very

upside potential. . European stocks fell well since April and the investment Despite the crisis in Southern this week and the Euro tumbled with outlook remains bullish for the next

Europe, the consumer sector remains Greek sovereign debt fears coming back months. From a technical point of view, attractive . to the fore and recent economic data the above mentioned trio may climb

signaling that the recovery of developed above their current resistance levels. TThe ETF Radar Tactical portfolio is a economies may not be as robust as model portfolio that invests in five thought. Meanwhile, Moody's cut its ETFs based on an individual tactical rating on Greece by three notches to ETF rankings system maintained by Caa1. Hence we expect that the markets Cohne Investment Group. The become shaky and volatitlity levels may portfolio trades at the end of each increase.month. The holdings for June include

Based on the rankings , is the ETF of

, the month. The fund is dominated by three well-known pharma stocks:

, Novartis (16,11%), its local rival Roche (14,65%) and GlaxoSmithKline

►

►

(FR0010833558) SPDR MSCI E u r o p e S m a l l C a p E T F (FR0010149880)

SPDR MSCI Europe Health Care SPDR MSCI (FR0000001737) Amundi ETF Europe Health Care ETFMSCI Switzerland (FR0010655753)SPDR MSCI Europe Consumer Staples ETF (FR0000001745) Lyxor ETF MSCI Europe Real Estate

n

Index Investor

Tactical Portfolio Update

by David Cohne

Bullish outlook for Health Careand Consumer Staples

ETF Radar Tactical Portfolio

Source: Cohne Investment Group, exclusively for ETF Radar / June 1, 2011 Ranking

7

ETF of the Month

SPDR MSCI Europe Health Care ETF

52-Week Range $62.55-$51.61 Market Cap $43.6 millionDividends -TER 0.30% p.a.Last Volume n/a ETF Issuer SPDRs EuropeReplication Full Replication

(FR0000001737)


TICKER ETF NAME TER AUM WEIGHT

FR0000001737 SPDR MSCI Europe Health Care ETF 0.30% $43.6 million 20%

FR0010655753 Amundi ETF MSCI Switzerland 0.25% $51.7 million 20%

FR0000001745 SPDR MSCI Europe Consumer Staples ETF 0.25% $20.3 million 20%

FR0010833558 Lyxor ETF MSCI Europe Real Estate 0.40% $31.0 million 20%

FR0010149880 SPDR MSCI Europe Small Cap ETF 0.40% $5.3 million 20%

Spotlight

A recent investment study, Institutionals bullish on ETFs trader at an asset management firm performed by Stamford-based Nearly 50% of asset management firms with more than USD 250 billion AuM Greenwich Associates, reveals that interviewed expect to increase explained “If we have a fund with institutionals are increasingly bullish portfolio allocations to ETFs between inflows, we may buy an ETF before we on using Exchange-Traded Funds in now and the year 2013. Of those, decide to invest in an underlying area. their portfolios. Nearly one-half of slightly more than half expect to It's a far better option than parking the asset management firms and one- increase ETF allocations by 5% or the money in cash.” Approximately third of the institutional funds taking more. More important: Not a single 45% of participating institutional part in the study of current asset manager plans to cut ETF funds and 40% of asset managers use institutional ETF users, plan to allocations in the coming two years! ETFs as part of their regular increase the share of portfolio assets About 60% of asset managers said, they rebalancing procedures. Roughly 45% they invest in ETFs over the next two use ETFs to add alpha through tactical of participating institutional funds years. applications and about a quarter use and 40% of asset managers use ETFs

them to achieve strategic allocation to make tactical adjustments to their The research paper‘s outcome is ranges. portfolios. based on interviews conducted between February and April 2011 Multiple Usage Perfect heding instrumentwith 45 institutionals, including More specifically, institutions use ETFs In addition to the largely tactical uses, corporate pensions, public pensions, for several critical functions. 75% of the study respondents also note using endowments and foundations, as asset managers and half of the ETFs for more strategic purposes, well as 25 large asset management institutional funds use ETFs for cash such as hedging. In particular, 30% of firms in the United States. equitization or interim beta. A head participating asset managers and

10

by Tom Benson

ETFs are playing an increasingly important role in the portfolios of U.S. institutional investors. More and more institutional investors are adopting ETFs as a flexible, multi-purpose tool. The perception of ETFs as a retail product seems clearly out of date.

HIGH


9

Feature


Institutional Demand for ETFs Continues to Climb

%

HIGH

central banks, rather than the ECB, and ultimately on taxpayers. “We care about taxpayers’ money and this is What is a buy-write index?why we warn against restructuring. We seem to be the Implementing this strategy can be difficult in a retail only ones,” he said. On Wednesday, Moodys account since the need for a margin account setup. This is downgraded Greece's local and foreign currency bond solved by investing directly in a covered call ETF. Currently ratings deeper into junk status, citing heightened risk you can track the S&P 500 Index with two exchange traded that the country will fail to stabilise its debt position products linked to the CBOE S&P 500 BuyWrite Index, without a debt restructuring. commonly known as the BXM Index. This is a benchmark

index designed to track the performance of a hypothetical buy-write strategy on the S&P 500 Index. The BXM is a passive total return index based on buying an S&P 500 stock index portfolio, and "writing" (or selling) the near-term S&P 500 Index "covered" call option, generally on the third Friday of each month. The SPX call written will have about one month remaining to expiration, with an exercise price just above the prevailing index level (i.e., slightly out of the

Portfolio insurance – for sideway markets money). The SPX call is held until expiration and cash Many of these factors could lead to a drop in the markets settled, at which time a new one-month, near-the-money or markets could trade sideways. One way to add some call is written. First ETF we analyzed is the protection to your portfolio is by employing a covered and second is the call strategy. This works well in sideways markets. A . The ETN has a 30-covered call or buy-write is a strategy when you go long year maturity and is a senior, unsecured, unsubordinated on a security or index and sell call options on that same debt security issued by Barclays Bank. PowerShares had security or index. This provides some insurance for your also launched an ETF that tracked the NASDAQ 100, but portfolio by reducing volatility and increasing income. has since liquidated it.One word of caution: Your returns will be less on the upside and that this won't provide you a full hedge. It's a ETFs to Watchstrategy that can be used in conjunction with other The hedges such stop losses, inverse ETFs and cash. tracks the CBOE S&P 500 BuyWrite Index. It was launched

on 12/20/2007. PBP has an expense ratio of 0.75% p.a. and $118 Million under management. Top holdings include Exxon Mobil Corp. (XOM), Apple Inc. (AAPL), Chevron Corp. (CVX), General Electric Co. (GE) and International Business Machines Corp (IBM). Technology and financials are the largest sectors of the portfolio which is up 2.9% for the year through May 26th. Investors morely exposed to the European markets should think aobut

. This fund tracks the performance of the DAXplus Covered Call strategy index. The ETF is listed on Frankfurt stock exchange and has an expense ratio of 0.45% p.a. – much lower than its peer linked to the BXM. The basic idea behind this index is mostly the same.

The preceding funds offer an easy way to add buy-write insurance to your portfolio. Nevertheless you should remind that hedging has drawbacks. As mentioned above, both ETFs work best in a gradually rising or choppy market. Indeed, both products will probably underperform when the volatility is low and investor sentiment is high.

PowerShares S&P 500 Buy/Write ETF (PBP) iPath CBOE S&P 500 BuyWrite ETN (BWV)

PowerShares S&P 500 BuyWrite Portfolio (PBP)

Lyxor‘s ETF DAXplus Covered Call (DE000A0C4BY2)

n

Performance (USD)

Source: Teledata as of May 30, 2011

BETTER BUT NOT BESTPerformance Comparison Of Selected Buy-Write ETFs vs. S&P500

0%

-10%

-20%

-30%

-40%

-50%

-60%

2007 2011

HYG

2009 2010

BWV

PBP

S&P500

2008

“”

This strategy provides insurance for your portfolio by reducing volatility and increasing income.

12

People

Expert Talk with

VITA

►►►

► ►

Born: 1971 Lives in: Paris Area

My first ETF, I bought in June 2008My favourite investments: Amundi ETFs

Career:Valérie has been Managing Director of Amundi ETF since December 2007. Amundi is one of the largest asset managers in the world with almost €700bn of AUM. It is 75/25% owned by Credit Agricole and Societe Generale. Prior to joining Amundi, Valerie spent eight years at Crédit Agricole Cheuvreux, the European stockbroking subsidiary of Crédit Agricole Group. From 2004 to 2007, she was Marketing Director and a Member of the European Management Committee and from 2001 to 2004 she held the position of Company Secretary and was a Member of the Management Committee. Valérie joined Crédit Agricole Cheuvreux in 1999 as Project Manager for the Senior Management team. Valérie started her career at Banque Indosuez where she managed international audit missions from 1995 to 1999. She is a graduate from HEC (Haute Ecole de Commerce, Paris) where she majored in Finance.

Valerie Baudson

The average total expense R e c e n t l y A m u n d i w a s ratio for your products associated with a "price war amounts to 27 basis points over European ETFs". Is against an average of 36 bps Amundi the coming Tesco of for rival European providers. the ETF business?Also Amundi has a smaller- Our primary concern is to offer than-average tracking error E u r o p e a n i n s t i t u t i o n a l against most competitors. investors a cost efficient with What is the secret behind high quality standard to answer these figures? their needs. The quality of our Right at the beginning, when we products is reflected through launched Amundi ETF in the choice of the index used as September 2008, we decided to well as the quality of replication, implement a competitive ie tracking error. We also pricing strategy. Cost is a key commit to filling in the gaps in criteria when selecting an ETF; the market by launching our TER is on average 25% lower innovative products. We take a than that of our competitors. very pragmatic approach to And, in addition to TERs, we innovation - innovation does carefully monitor bid/offer not mean complexity.spreads with our market makers to make them as tight as possible. We set up very close relationships with market markers such as Morgan Stanley, Merrill Lynch and Goldman Sachs, selected for their ETF trading experience and quality of service.

Which replication method you implemented for your ETFs?We decided to favour synthetic Who is Amundi's primary replication at it produces the swap counterpart for the lowest tracking error as well as synthetic (swap) replicated the lowest costs to investors. products?

The Grand Dame of Europe‘s ETF business talks about monitoring of bid/offer spreads , pragmatic approaches and provides a preview about Amundi‘s next product wave.

by Silvan Schelling

Managing Director,AmundiETF

“

”

We pragmatic approach to innovation - innovation does not mean complexity.

take a very


´

11

Spotlight

about 1 in 10 institutional funds use w i th approx imate ly 85% o f For institutional funds, expense ETFs as part of hedging programs. A participating asset managers and 78% ratios almost match liquidity in terms quoted study participant from a $450 of participating institutional funds of importance when selecting an ETF million cultural endowment explains purchasing iShares ETFs. Among asset provider or a specific ETF product. the role ETFs play in his fund's managers, 55% of participants use Almost 60% of institutional funds hedging strategies. The fund views SPDRs (State Street Global Advisors), include expense ratios in their list of its $20 million investment in a gold 45% use Vanguard, and 35% use the three most important factors ETF as long-term investment and a BLDRs/Powershares. Among insti- considered when assessing ETF core part of its overall hedging tutional funds, 44% use SPDRs, 29% providers. Ranked a close third in program. use ETFs of Vanguard, and 7% use importance in picking an ETF

BLDRs/Powershares. provider is tracking error, which is cited as an important selection

Three factors in focus criterion.Asset managers focus on three additional factors when assessing potential ETF providers: tracking error (cited by 63% of asset managers), expense ratios (cited by 58%), and the benchmarks used by the provider in individual funds (cited by 47%). Rounding out the top five factors considered by asset managers when selecting an ETF provider is the overall strength of the fund company and management behind the funds.

Short holding periodsIn keeping with the tactical applications favored by asset managers, 40% of participating professionals said they typically hold ETF investments for 1–6 months and 40% say their typical holding periods are shorter than one month. In contrast, about a quarter of participating institutional funds Finally, the perception of ETFs as a report average holding periods of 1–6 retail dominated product is (more or months, a quarter typically hold ETF less) clearly out of date. ETFs have investments for 7–12 months, and slowly but steadily gained acceptance slightly more than one-third report as an important multi-purpose tool in average holding periods of a year or institutional portfolios – but not only more. in the US. The survey shows that

institutionals with experience using Top ETF Providers to U.S. ETFs in their portfolios will increase Institutional Investors their level of investment and activity Given the importance of scale and in ETFs in the next few years. Hence trading volume in the ETF business, the ETF industry should be well a few very large providers dominate prepared for more, good questions the institutional market. The boss and requests from increasingly among them is iShares/BlackRock, sophisticated product users. n


BEYOND OLD SCHOOL ASSET MANAGEMENTETF Applications in Institutional Portfolios

THE KEY FACTORS FOR INSTITUTONLASMost Important Selection Criteria

Transitions

Asset Managers

Asset Managers

Institutional Funds

Institutional Funds

Cash equitization

Rebalancing

Tactical adjustments

Core/Satellite

Portfolio completion

Hedging

ETF overlay/Liquidity

Other

0% 20% 40% 60% 80%

0% 25% 50% 75% 100%

Source: Greenwich Associates as of May, 2011


MOSTLY A SHORT TIME INVESTMENTTypical ETF Holding Period

Asset Managers

Up to 1 month

Institutional Funds


12%

41%

41%

26%

38%

18%

24%

1 – 6 months 7 – 12 months 1 year and longer

Liquidity/trading volume

Expense ratio of fund

Tracking Error

Fund company and management behind funds

Track record of fund

Benchmark used

Servicing by sponsoring company

Breadth of ETF offerings

Harriman House is one of the UK's leading independent publishersof finance, trading and investment books.

There’s Never Been A Better Time To Learn More About The ETF Industry.

Hh Harriman HouseOn Sale Now:

www.harriman-house.com/etfradarGet 30% off the regular price!

Rankings

Top 25 ETF providers around the world ranked by Assets under ManagementAs at end April 2011

WORLDWIDE

In association with

Source: BlackRock Global ETF Research and Implementation Strategy Team

14


Provider # ETFs

AUM

(US$ Bn) % total

ADV

(US$ Bn)

#

planned # ETFs % ETFs

AUM

(US$ Bn) % AUM

% market

share

iShares 467 $636.9 43.3% $16.1 19 -6 -1.3% $58.3 10.1% -0.8%

State Street Global Advisors 123 $210.2 14.3% $23.4 49 10 8.8% $19.5 10.2% -0.2%

Vanguard 66 $173.1 11.8% $1.5 1 1 1.5% $24.6 16.6% 0.5%

Lyxor Asset Management 159 $57.4 3.9% $0.8 1 3 1.9% $4.1 7.6% -0.2%

db x-trackers 187 $54.8 3.7% $0.7 18 8 4.5% $5.7 11.6% 0.0%

PowerShares 131 $50.7 3.5% $2.9 48 1 0.8% $7.9 18.5% 0.2%

Van Eck Associates Corp 33 $23.2 1.6% $0.9 36 4 13.8% $3.3 16.3% 0.1%

ProShares 107 $23.2 1.6% $2.6 93 7 7.0% $1.6 7.3% -0.1%

Credit Suisse Asset Management 58 $18.1 1.2% $0.1 0 4 7.4% $2.5 15.9% 0.0%

Nomura Asset Management 32 $15.2 1.0% $0.1 2 0 0.0% -$1.2 -7.6% -0.2%

Zurich Cantonal Bank 7 $14.2 1.0% $0.1 0 0 0.0% $2.4 20.5% 0.1%

WisdomTree Investments 46 $12.2 0.8% $0.2 71 2 4.5% $2.3 23.0% 0.1%

Bank of New York 1 $12.1 0.8% $0.5 0 0 0.0% -$0.1 -0.9% -0.1%

UBS Global Asset Management 42 $10.8 0.7% $0.0 3 13 44.8% $4.2 64.3% 0.2%

Amundi ETF 95 $9.9 0.7% $0.1 0 3 3.3% $2.7 38.1% 0.1%

Commerzbank 90 $9.8 0.7% $0.1 0 0 0.0% $1.2 13.5% 0.0%

HSBC/Hang Seng 31 $8.2 0.6% $0.1 3 14 82.4% $0.9 11.5% 0.0%

First Trust Advisors 57 $8.0 0.5% $0.1 4 14 32.6% $2.6 47.6% 0.1%

Source Markets 62 $7.8 0.5% $0.4 15 6 10.7% $2.9 57.9% 0.2%

ETFlab Investment 40 $7.4 0.5% $0.1 0 5 14.3% $0.7 9.8% 0.0%

Nikko Asset Management 20 $6.6 0.5% $0.1 0 3 17.6% $0.1 1.2% 0.0%

Claymore Investments 30 $6.5 0.4% $0.0 5 1 3.4% $1.0 18.5% 0.0%

Direxion Shares 42 $6.5 0.4% $2.0 174 3 7.7% -$0.1 -1.2% -0.1%

EasyETF 48 $6.4 0.4% $0.0 1 -1 -2.0% $0.9 16.1% 0.0%

Rydex SGI 25 $5.6 0.4% $0.1 95 1 4.2% $0.6 12.6% 0.0%

YTD changeApr 11

13

People

Across the Atlantic:

All our Equity, Commodity and ETFs. We will continue to cross-list Money Market ETFs use Crédit and register our products on the Agricole CIB as a counterparty main European Stock Exchanges whereas Société Générale CIB acts as which are France, Germany, Italy, counterparty on our Fixed income Switzerland, the Netherlands and ETFs. the UK. In May, we made our debut

in the United Kingdom with the Who are your main investment listing of 16 ETFs on the London clients (institutionals, IFAs, Stock Exchange. We expect to Private Investors)? launch approximately 50 ETFs in Our European client base is the UK over the next 3 months.composed mainly of institutional investors (asset managers, including balanced and multi-management teams, pension funds, insurance companies etc). This is in line with the rest of the European ETF market, which i s ma in ly dr iven by institutional investors.

In which of your ETFs, you have seen the most inflows within the last weeks – and which ETF saw the most redemptions? Which ETFs an investor should The Eurostoxx 50 has been the most consider currently and why?popular and this is consistent with This all depends on the investor's the market trend. We have also had strategy and objectives. Amundi's particular success with the MSCI strategists believe that the context Nordic, S&P500 and on the fixed is still favourable to equities, income side, Euro corporate and especially in the US and the euro Short US treasury ETFs. The main zone. They also feel that the global outflows were on some Emerging picture is still credit friendly. market exposures.

Are there any plans to list further ETFs the next time? Into which asset classes you want to expand? We currently have a range of over 100 products which cover the main asset classes. We plan to launch around 15 products during the course of 2011. Our latest launch was early May on Euronext Paris and was composed of 2 Euro Corporate financial and ex financial ETFs as well as Emerging Latin America and Emerging Asia

Thank you! n

“

“

”

”

Our European client base is composed mainly of largeInstitutional Investors.

We expect to launchapproximately 50 ETFs in the UK over the next 3 months.

People

Interview withAdam S. Patti, IndexIQin the Magazine’sNorth American Edition.www.etf-radar.com


Harriman House is one of the UK's leading independent publishersof finance, trading and investment books.

There’s Never Been A Better Time To Learn More About The ETF Industry.

Hh Harriman HouseOn Sale Now:

www.harriman-house.com/etfradarGet 30% off the regular price!

Rankings

Top 25 ETF providers around the world ranked by Assets under ManagementAs at end April 2011

WORLDWIDE

In association with


14


Provider # ETFs

AUM

(US$ Bn) % total

ADV

(US$ Bn)

#

planned # ETFs % ETFs

AUM

(US$ Bn) % AUM

% market

share

iShares 467 $636.9 43.3% $16.1 19 -6 -1.3% $58.3 10.1% -0.8%

State Street Global Advisors 123 $210.2 14.3% $23.4 49 10 8.8% $19.5 10.2% -0.2%

Vanguard 66 $173.1 11.8% $1.5 1 1 1.5% $24.6 16.6% 0.5%

Lyxor Asset Management 159 $57.4 3.9% $0.8 1 3 1.9% $4.1 7.6% -0.2%

db x-trackers 187 $54.8 3.7% $0.7 18 8 4.5% $5.7 11.6% 0.0%

PowerShares 131 $50.7 3.5% $2.9 48 1 0.8% $7.9 18.5% 0.2%

Van Eck Associates Corp 33 $23.2 1.6% $0.9 36 4 13.8% $3.3 16.3% 0.1%

ProShares 107 $23.2 1.6% $2.6 93 7 7.0% $1.6 7.3% -0.1%

Credit Suisse Asset Management 58 $18.1 1.2% $0.1 0 4 7.4% $2.5 15.9% 0.0%

Nomura Asset Management 32 $15.2 1.0% $0.1 2 0 0.0% -$1.2 -7.6% -0.2%

Zurich Cantonal Bank 7 $14.2 1.0% $0.1 0 0 0.0% $2.4 20.5% 0.1%

WisdomTree Investments 46 $12.2 0.8% $0.2 71 2 4.5% $2.3 23.0% 0.1%

Bank of New York 1 $12.1 0.8% $0.5 0 0 0.0% -$0.1 -0.9% -0.1%

UBS Global Asset Management 42 $10.8 0.7% $0.0 3 13 44.8% $4.2 64.3% 0.2%

Amundi ETF 95 $9.9 0.7% $0.1 0 3 3.3% $2.7 38.1% 0.1%

Commerzbank 90 $9.8 0.7% $0.1 0 0 0.0% $1.2 13.5% 0.0%

HSBC/Hang Seng 31 $8.2 0.6% $0.1 3 14 82.4% $0.9 11.5% 0.0%

First Trust Advisors 57 $8.0 0.5% $0.1 4 14 32.6% $2.6 47.6% 0.1%

Source Markets 62 $7.8 0.5% $0.4 15 6 10.7% $2.9 57.9% 0.2%

ETFlab Investment 40 $7.4 0.5% $0.1 0 5 14.3% $0.7 9.8% 0.0%

Nikko Asset Management 20 $6.6 0.5% $0.1 0 3 17.6% $0.1 1.2% 0.0%

Claymore Investments 30 $6.5 0.4% $0.0 5 1 3.4% $1.0 18.5% 0.0%

Direxion Shares 42 $6.5 0.4% $2.0 174 3 7.7% -$0.1 -1.2% -0.1%

EasyETF 48 $6.4 0.4% $0.0 1 -1 -2.0% $0.9 16.1% 0.0%

Rydex SGI 25 $5.6 0.4% $0.1 95 1 4.2% $0.6 12.6% 0.0%

YTD changeApr 11

13

People

Across the Atlantic:

All our Equity, Commodity and ETFs. We will continue to cross-list Money Market ETFs use Crédit and register our products on the Agricole CIB as a counterparty main European Stock Exchanges whereas Société Générale CIB acts as which are France, Germany, Italy, counterparty on our Fixed income Switzerland, the Netherlands and ETFs. the UK. In May, we made our debut

in the United Kingdom with the Who are your main investment listing of 16 ETFs on the London clients (institutionals, IFAs, Stock Exchange. We expect to Private Investors)? launch approximately 50 ETFs in Our European client base is the UK over the next 3 months.composed mainly of institutional investors (asset managers, including balanced and multi-management teams, pension funds, insurance companies etc). This is in line with the rest of the European ETF market, which i s ma in ly dr iven by institutional investors.

In which of your ETFs, you have seen the most inflows within the last weeks – and which ETF saw the most redemptions? Which ETFs an investor should The Eurostoxx 50 has been the most consider currently and why?popular and this is consistent with This all depends on the investor's the market trend. We have also had strategy and objectives. Amundi's particular success with the MSCI strategists believe that the context Nordic, S&P500 and on the fixed is still favourable to equities, income side, Euro corporate and especially in the US and the euro Short US treasury ETFs. The main zone. They also feel that the global outflows were on some Emerging picture is still credit friendly. market exposures.

Are there any plans to list further ETFs the next time? Into which asset classes you want to expand? We currently have a range of over 100 products which cover the main asset classes. We plan to launch around 15 products during the course of 2011. Our latest launch was early May on Euronext Paris and was composed of 2 Euro Corporate financial and ex financial ETFs as well as Emerging Latin America and Emerging Asia

Thank you! n

“

“

”

”

Our European client base is composed mainly of largeInstitutional Investors.

We expect to launchapproximately 50 ETFs in the UK over the next 3 months.

People

Interview withAdam S. Patti, IndexIQin the Magazine’sNorth American Edition.www.etf-radar.com


http://books.global-investor.com/books/373325.htm?ginPtrCode=21720

16

Rankings

Top 10 ETFs by Change in Average Daily VolumeAs at end April 2011

WORLDWIDE

Top 10 ETFs by Change in Assets under ManagementAs at end April 2011

WORLDWIDE


► DAX LOVERSA rTop10 AuM list is the DAX index. Obviously an increasing number ofbuyers is convinced by the strongness of the German economy and its bluechips. The „German Angst“ seemsto be a phrase of the past.

emarkable newcomer within the


Rankings

10

Top 10/Top 5 ETFs by Assets under ManagementAs at end April 2011

UNITED STATES

EUROPE

MIDDLE-EAST/AFRICA

ASIA-PACIFIC

JAPAN

15Source: BlackRock Global ETF Research and Implementation Strategy Team


ETF Bloomberg ticker

AUM

(US$ Mn)

ADV

('000 shares)

ADV

(US$ Mn)

SPDR S&P 500 SPY US $95,287.1 131,642 $17,532.1

Vanguard MSCI Emerging Markets ETF VWO US $49,449.5 15,088 $752.5

iShares MSCI Emerging Markets Index Fund EEM US $41,760.0 51,364 $2,536.2

iShares MSCI EAFE Index Fund EFA US $41,350.5 12,886 $791.2

iShares S&P 500 Index Fund IVV US $29,024.4 2,830 $384.5

PowerShares QQQ Trust QQQ US $27,244.7 47,605 $2,748.6

iShares Barclays TIPS Bond Fund TIP US $20,475.7 673 $73.9

Vanguard Total Stock Market ETF VTI US $20,237.9 1,292 $89.1

iShares Russell 2000 Index Fund IWM US $19,144.0 46,905 $3,946.7

iShares Russell 1000 Growth Index Fund IWF US $13,859.9 1,748 $106.2


AUM

(US$ Mn)

ADV

('000 shares)

ADV

(US$ Mn)

iShares S&P 500 IUSA LN $9,933.5 7,338 $96.8

ZKB Gold ETF (CHF) ZGLD SW $8,547.4 11 $25.9

iShares DAX (DE) DAXEX GY $8,316.5 2,886 $287.1

Lyxor ETF Euro STOXX 50 MSE FP $7,321.5 2,164 $95.4

iShares MSCI Emerging Markets IEEM LN $7,080.7 1,509 $72.6

db x-trackers DAX ETF XDAX GY $6,638.8 1,236 $131.8

iShares FTSE 100 ISF LN $6,306.9 7,416 $74.6

iShares EURO STOXX 50 (DE) SX5EEX GY $5,976.7 1,455 $63.8

db x-trackers MSCI Emerging Market TRN Index ETF XMEM GY $5,606.7 1,476 $67.2

iShares Markit iBoxx Euro Corporate Bond IBCS GY $4,849.0 134 $23.5


AUM

(US$ Mn)

ADV

('000 shares)

ADV

(US$ Mn)

NIKKEI 225 ETF 1321 JP $6,923.5 402 $49.7

TOPIX ETF 1306 JP $6,814.5 2,422 $26.0

Listed Index Fund 225 1330 JP $3,113.7 416 $51.6

Listed Index Fund TOPIX 1308 JP $3,036.8 501 $5.3

Daiwa ETF TOPIX 1305 JP $2,655.6 624 $6.7


AUM

(US$ Mn)

ADV

('000 shares)

ADV

(US$ Mn)

iShares FTSE A50 China Index ETF* 2823 HK $7,900.2 88,878 $151.5

Tracker Fund of Hong Kong (TraHK) 2800 HK $7,419.8 20,636 $63.6

Hang Seng Index ETF 2833 HK $3,996.9 48 $1.5

China AMC SSE 50 510050 CH $3,266.3 367,639 $119.4

Hang Seng H-Share Index ETF 2828 HK $2,726.3 1,834 $31.6

E Fund SZSE 100 159901 CH $2,679.7 489,427 $59.6

SPDR S&P/ASX 200 Fund STW AU $2,529.9 360 $18.1

ABF Pan Asia Bond Index Fund 2821 HK $2,434.8 4 $0.5

Samsung Kodex200 ETF 069500 KS $2,275.0 1,356 $36.9

Polaris Taiwan Top 50 Tracker 0050 TT $1,958.6 19,597 $42.6


AUM

(US$ Mn)

ADV

('000 shares)

ADV

(US$ Mn)

SATRIX40 STX40 SJ $1,014.8 1,338 $6.0

STANLIB SWIX 40 Fund STANSX SJ $369.0 84 $0.1

Satrix Dividend Plus STXDIV SJ $160.0 959 $0.2

SATRIX Financials STXFIN SJ $126.8 68 $0.1

Bips Government Inflation Linked Bond Fund BIPINF SJ $126.5 29 $0.1


ADV

(US$ Mn)

ADV

('000 shares)

AUM

(US$ Mn)

SPDR S&P 500 SPY US $17,532.1 131,642 $95,287.1

iShares Russell 2000 Index Fund IWM US $3,946.7 46,905 $19,144.0


iShares MSCI Emerging Markets Index Fund EEM US $2,536.2 51,364 $41,760.0

Energy Select Sector SPDR Fund XLE US $1,198.0 15,351 $10,448.1

iShares MSCI Brazil Index Fund EWZ US $893.0 11,481 $13,348.4

iShares MSCI EAFE Index Fund EFA US $791.2 12,886 $41,350.5

Vanguard MSCI Emerging Markets ETF VWO US $752.5 15,088 $49,449.5

SPDR Dow Jones Industrial Average ETF DIA US $736.6 5,928 $10,370.3

Financial Select Sector SPDR Fund XLF US $686.1 42,119 $7,965.5


AUM

(US$ Mn)

Apr-11

AUM

(US$ Mn)

Dec-10

Change

(US$ Mn)

iShares MSCI Emerging Markets Index Fund EEM US $41,760.0 47,551 -$5,791.5

SPDR S&P 500 SPY US $95,287.1 89,915 $5,371.8


Vanguard MSCI Emerging Markets ETF VWO US $49,449.5 44,570 $4,879.7

iShares MSCI EAFE Index Fund EFA US $41,350.5 36,923 $4,427.4

iShares S&P 500 Index Fund IVV US $29,024.4 25,799 $3,225.2

db x-trackers DAX ETF XDAX GY $6,638.8 3,693 $2,945.8

iShares MSCI Japan Index Fund EWJ US $7,625.8 4,883 $2,742.5

iShares S&P MidCap 400 Index Fund IJH US $12,019.8 9,332 $2,687.8

iShares DAX (DE) DAXEX GY $8,316.5 5,918 $2,398.8

► SPY -30% ADVEven if it‘s still the number one inour ADV count, the lost nearly30% of its Average Daily Volume counted in USD. Some outflowsand declining prices in the underlying stocks hit ‘s AuM.

SPY

EEM

Rankings

18

Top 30 Worst Performing ETPsAs at end of May 2011

WORLDWIDE

Source: GlobalFundData/Morningstar as of May 30, 2011

► VOLA BETS UNDER FIREVolatility levels in North America and Europe decreased despite bad signals from Greece and Irelandin the last days which may leadto a new episode in the Europeandebt drama. Perhaps, now is thebest time to think about a vola shiftand positioning on the long side.


Top 30 Best Performing ETPsAs at end of May 2011

WORLDWIDE

Rankings

17

Source: GlobalFundData/Morningstar as of May 31, 2011

► SILVER: BACK IN THE RACE?After a hard hit silver is back in the race and one of the best performingunderlyings of the last month.Still opinions are largely dividedif prices will climb back above USD 45 and beyond.


ETF/ETP Listing Region 1 Mth 12 Mth Inception Net assets (USD)

ProShares Ultra Silver North America 62.43% 468.60% 205.73% 1,090,646,365

ETFS Leveraged Silver ETC Europe 62.39% 487.40% 42.40% 41,856,559

Horizons BetaPro COMEX Silver Bull North America 62.34% 476.65% 237.23% 113,962,424

ETFS Leveraged Silver (DE) ETC Europe 55.33% 426.44% 69.02% 31,479,481

ETFS Physical Silver Shares Europe 29.68% 160.65% 103.74% n/a

ETFS Leveraged PrecMtls DJ-UBSCI ETC Europe 28.77% 136.86% 30.64% 3,897,651

iShares Silver Trust North America 28.57% 160.38% 31.11% n/a

ETFS Physical Silver ETC Europe 28.55% 160.27% 35.65% 1,221,002,822

JB Physical Silver Fund A (USD) Europe 28.51% 158.90% 112.25% 626,476,652

JB Physical Silver Fund A (GBP) Europe 28.29% 155.81% 109.67% 375,597,812

PowerShares DB Silver North America 28.28% 157.87% 35.37% n/a

JB Physical Silver Fund A (EUR) Europe 28.25% 155.59% 109.03% 422,270,322

Horizons BetaPro COMEX Silver ETF North America 28.09% 154.10% 89.87% 26,164,112

ETFS Silver ETC Europe 28.08% 156.02% 34.49% 130,399,173

ZKB Silver ETF (USD) Europe 27.16% 155.60% 93.00% 832,245,652

ETFS Leveraged Cocoa ETC Europe 26.48% -9.93% -9.60% 7,451,663

ETFS Leveraged Corn ETC Europe 26.06% 182.53% -23.15% 7,008,196

UBS Bloomberg CMCI Silver EUR Hdgd ETC Europe 25.51% n/a n/a n/a

UBS Bloomberg CMCI Silver USD ETC Europe 25.48% n/a n/a n/a

ETFS Leveraged Coffee ETC Europe 25.08% 289.80% 14.83% 2,503,605

ETFS Leveraged PrecMtls DJ-UBSCI(DE) ETC Europe 23.17% 112.28% 48.51% 2,931,345

ETFS Physical Silver (DE) ETC Europe 22.96% 133.26% - 823,004,742

ETFS Silver (DE) ETC Europe 22.51% 129.45% 30.25% 87,894,259

ETFS Physical Silver (AU) ETC Asia-Pacific 21.78% 121.93% 55.07% n/a

ZKB Silver ETF (EUR) Europe 21.63% 129.07% 79.37% 615,062,827

ETFS Short Cotton ETC Europe 20.25% -60.49% -24.40% 42,950,870

UBS E-TRACS CMCI Silver TR ETN North America 19.75% 141.52% 35.99% n/a

ETFS Leveraged Gasoline ETC Europe 18.08% 70.94% -20.53% 918,041

Direxion Daily Real Estate Bull 3X Shrs North America 17.41% 47.48% 163.42% n/a

ProShares Ultra MSCI Europe North America 17.14% 50.20% 50.14% n/a

ETF/ETP Listing Region 1 Mth 12 Mth Inception Net assets (USD)

ProShares UltraShort Silver North America -42.41% -90.54% -83.36% 552,859,484.50

Horizons BetaPro COMEX Silver Bear North America -41.02% -88.98% -81.05% 18,381,447

ETFS Leveraged Cotton (DE) ETC Europe -37.42% 234.68% 35.33% 1,771,943

Barclays Short D Lvgd Inv S&P 500 TR ETN Europe -34.29% -73.73% -67.09% n/a

ETFS Leveraged Sugar ETC North America -27.09% 120.25% -10.46% 6,293,419

ETFS Short Silver ETC Europe -22.88% -65.72% -37.84% 5,098,477

iPath S&P 500 VIX Short-Term Futures ETN Europe -21.52% -72.64% -71.85% n/a

Source S&P 500 VIX Futures ETF Europe -20.02% n/a n/a 22,526,373

ETFS Leveraged Lean Hogs (DE) ETC Europe -19.97% -33.67% -37.73% 1,369,318

ETFS Cotton (DE) ETC Europe -18.82% 95.23% 9.17% 31,741,051

ETFS Sugar (DE) ETC Europe -18.00% 48.88% 1.98% 30,365,989

ETFS Leveraged Lvstck DJ-UBSCI (DE) ETC Europe -17.78% -13.75% -24.05% 783,238

ETFS Short Corn (DE) ETC Europe -17.03% -57.03% -8.73% 2,826,504

iPath VSTOXX Sh-Term Futures TR (DE) ETN Europe -16.80% -63.73% -62.35% n/a

ETFS Leveraged Live Cattle (DE) ETC Europe -16.31% 0.30% -15.97% 953,651

Direxion Daily Real Estate Bear 3X Shrs North America -16.28% -65.17% -83.26% n/a

ETFS Short Precious Mtl DJ-UBSCI(DE) ETC Europe -16.24% -46.28% -26.30% 548,094

PowerShares DB Gold Double Short ETN North America -16.20% -46.30% -34.89% n/a

Direxion Daily Dev Mkts Bear 3X Shrs North America -16.20% -59.73% -62.74% n/a

ProShares UltraShort MSCI Europe North America -16.11% -54.65% -51.90% n/a

ETFS Short Cocoa (DE) ETC Europe -15.80% -18.65% -12.92% 954,644

ETFS Short Coffee (DE) ETC Europe -15.53% -62.31% -24.64% 4,146,611

ETFS Leveraged Softs DJ-UBSCI (DE) ETC North America -15.51% 197.39% 42.46% 1,122,984

Source S&P GSCI Cotton TR T-ETC North America -15.47% 117.72% 75.65% 1,789,992

ETFS Leveraged Lead ETC North America -15.41% 3.06% -36.57% 3,015,180

iPath DJ-UBS Cotton TR Sub-Idx ETN North America -15.25% 120.18% 21.77% n/a

ETFS Cotton ETC North America -15.13% 117.84% 12.71% 47,090,753

UBS Bloomberg CMCI Cotton CHF Hdgd ETC Europe -14.86% n/a n/a n/a

Horizons BetaPro COMEX Gold Bullion Bear North America -14.83% -45.94% -37.46% 3,448,901

UBS Bloomberg CMCI Cotton USD ETC Europe -14.81% n/a n/a n/a

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General InformationThe views and expectations presented in the analyses, data and product presentations in this publication should not be viewed as investment recommendations of and by the ETF Radar Magazine or any of affiliates or associates. Investors should seek independent professional advice. Contributors of this publication and/or its affiliates may invest in or act as a market maker for the securities or indices or other products referred to in this publication for own account or the account of a third party. Editorial contributors may also have a business relationship with issuers of such securities or providers of such indices or products and may represent members of such issuers' or providers' decision-making bodies.

While the information in this publication has been obtained from sources believed to be reliable, neither the ETF Radar Magazine nor any contributor makes any representation as to accuracy or completeness. The ETF Radar Magazine does not act as an registered investment advisor or fiduciary for anyone unless otherwise agreed. Any evaluations in this publication reflect only the author's opinion at the time of the analysis. The opinions, forecasts, assumptions, estimates, derived valuations and target price(s) contained in this material are as of the date indicated and are subject to change at any time without prior notice. This publication is general and for information only and does not constitute any form of recommendation, an offer to sell or a solicitation to buy any security or other financial instrument.

Prospective investors should understand the risks associated with the products mentioned in this publication and should reach an investment decision on the basis of the information in the relevant offering circulars. Neither the staff of the ETF Radar Magazine nor any other person shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary loss or damages, including without limitation lost profits arising in any way from the information contained in the material. All designated trademarks and brands are the property of their respective owners.

Additional InformationAll figures are subject to market fluctuation and change. Investments that are concentrated in a specific sector or industry may be subject to a higher degree of market risk than investments that are more diversified. An index is not managed and is unavailable for direct investment. Total returns assume reinvestment of all distributions, including dividends and capital gains. Reinvestment does not assure a profit or protect against a loss in declining markets. Total returns do not include commissions, fees, other transaction variables or the effects of taxation. Past performance does not guarantee or predict future results. The investment discussed may not be suitable for all investors. Investors must make their own decisions based on their specific investment objectives and financial circumstances. This communication is not an offer to sell or solicitation of offers to buy any securities mentioned herein. This report is not a complete analysis of every material fact in respect to any fund or fund type. The opinions expressed here reflect the judgment of the author as of the date of the report and are subject to change without notice. Statistical information has been obtained from sources believed to be reliable but its accuracy is not guaranteed. The ETF Radar Magazine does not render legal, accounting or tax advice. Please consult your tax or legal advisors before taking any action that may have tax consequences.

The performance provided is past performance, which does not guarantee future results and current performance may be lower or higher than the performance data quoted. The investment return and principal value will fluctuate when sold and may be worth more or less than the original cost.

EXCHANGE TRADED FUNDS ARE SOLD BY PROSPECTUS. PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISK, CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE PROSPECTUS, WHICH CONTAINS THIS AND OTHER INFORMATION, CAN BE OBTAINED FROM THE ETF SPONSOR OR YOUR FINANCIAL ADVISOR. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.

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To attend a FREE Forex Seminar in the UK book now at

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General InformationThe views and expectations presented in the analyses, data and product presentations in this publication should not be viewed as investment recommendations of and by the ETF Radar Magazine or any of affiliates or associates. Investors should seek independent professional advice. Contributors of this publication and/or its affiliates may invest in or act as a market maker for the securities or indices or other products referred to in this publication for own account or the account of a third party. Editorial contributors may also have a business relationship with issuers of such securities or providers of such indices or products and may represent members of such issuers' or providers' decision-making bodies.

While the information in this publication has been obtained from sources believed to be reliable, neither the ETF Radar Magazine nor any contributor makes any representation as to accuracy or completeness. The ETF Radar Magazine does not act as an registered investment advisor or fiduciary for anyone unless otherwise agreed. Any evaluations in this publication reflect only the author's opinion at the time of the analysis. The opinions, forecasts, assumptions, estimates, derived valuations and target price(s) contained in this material are as of the date indicated and are subject to change at any time without prior notice. This publication is general and for information only and does not constitute any form of recommendation, an offer to sell or a solicitation to buy any security or other financial instrument.

Prospective investors should understand the risks associated with the products mentioned in this publication and should reach an investment decision on the basis of the information in the relevant offering circulars. Neither the staff of the ETF Radar Magazine nor any other person shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary loss or damages, including without limitation lost profits arising in any way from the information contained in the material. All designated trademarks and brands are the property of their respective owners.

Additional InformationAll figures are subject to market fluctuation and change. Investments that are concentrated in a specific sector or industry may be subject to a higher degree of market risk than investments that are more diversified. An index is not managed and is unavailable for direct investment. Total returns assume reinvestment of all distributions, including dividends and capital gains. Reinvestment does not assure a profit or protect against a loss in declining markets. Total returns do not include commissions, fees, other transaction variables or the effects of taxation. Past performance does not guarantee or predict future results. The investment discussed may not be suitable for all investors. Investors must make their own decisions based on their specific investment objectives and financial circumstances. This communication is not an offer to sell or solicitation of offers to buy any securities mentioned herein. This report is not a complete analysis of every material fact in respect to any fund or fund type. The opinions expressed here reflect the judgment of the author as of the date of the report and are subject to change without notice. Statistical information has been obtained from sources believed to be reliable but its accuracy is not guaranteed. The ETF Radar Magazine does not render legal, accounting or tax advice. Please consult your tax or legal advisors before taking any action that may have tax consequences.

The performance provided is past performance, which does not guarantee future results and current performance may be lower or higher than the performance data quoted. The investment return and principal value will fluctuate when sold and may be worth more or less than the original cost.

EXCHANGE TRADED FUNDS ARE SOLD BY PROSPECTUS. PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISK, CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE PROSPECTUS, WHICH CONTAINS THIS AND OTHER INFORMATION, CAN BE OBTAINED FROM THE ETF SPONSOR OR YOUR FINANCIAL ADVISOR. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.

Disclaimer

Important notice to our readers

19


The teachings of GREG SECKER live in the UK. At your exciting and highly lucrative complimentary seminar, one of Greg’s Elite Forex Tradersshows you in step by step detail how to use the Forex Market as your personal cash machine.

At this FREE

Seminar you will discover:• How Forex, traded correctly - is the fastest way to become � nancially

independent and quit your day job in 6 months or less

• You’ll discover the simple systems veteran forex trader Greg Secker uses daily to rake in thousands of pounds - that anyone can use!

• How to automate everything in 20 minutes per day, so you setup walk away and collect your pro� ts at the end of the day - using proven strategies that work!

To attend a FREE Forex Seminar in the UK book now at

www.easyfxprofits.co.uk or call 0203 384 6859

Disclaimer: Our Seminars are purely educational in nature. We do not advise upon or tip any trades shown in any seminar. All trades demonstrated whilst on Knowledge to Action’s courses are for educational and illustration purposes only. These products are not suitable for all investors. Please make sure you understand the risks involved.

Millionaire Forex Trader Secrets

Report FREE to all attendees

...LEARN

THE SECRETS OFMILLIONAIRE CURRENCY TRADERS

THINKING OF ACAREER CHANGE...

ADVERTISING

www.easyfxprofits.co.uk

etf radar magazine issue june 2011 (european edition)

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