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<> E T F <> [LONG & SHORT]
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pharoah88
Supreme |
12-May-2011 14:49
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SINGAPORE Last year, the total value of exchange traded funds (ETFs) traded on the Singapore Exchange was S$6.6 billion. This is a mere fraction of the global ETF trade, which is estimated by asset manager Black-Rock to be worth more than US$1 trillion (S$1.23 trillion). “I think the key thing that is holding back investment at a greater rate through the ETF route is probably because of the lack of ETF innovation among the issuers,” said Mr Gabriel Yap, executive chairman of GCP Global. Analysts say issuers may be better off offering ETFs along investment themes like technology, telecommunications or oil related companies. Currently, ETFs offered here are those on single commodities or stocks, or a small basket of commodities. The allure of ETFs is that investors can hedge against risks by investing in a variety of instruments in various markets. “The advantage of ETFs is [that] you can trade in a lot of instruments which are not normally available, especially if you are in Singapore,” said Mr Loh Hoon Sun, Managing Director of Philip Capital. “You can buy a particular market, you can buy a mixture of investment or you can buy gold.” But analysts also cautioned investors to do their homework, so as to avoid a “Lehman-type situation”. ETFs may use synthetic instruments or derivatives as part of their portfolio, and investors need to be aware of the risks they are taking. Synthetic instruments are artificially created investment vehicles designed to reduce risk, increase diversification or offer a higher return. “Of course with the ETF, investors also need to be careful of what is inside the fund,” said Mr Loh. For example, an ETF of the STI (Straits Times Index) may not be holding 100 per cent of all the STI stocks they could hold a few representative stocks.” On the bright side however, ETFs are more transparent than other investments such as unit trusts. Although investors need to take the trouble to find out what is behind each ETF, this information is publicly available. — Alternative asset classes may be gaining more visibility among retail investors in Singapore, but analysts say they have not caught on in a big way. |
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pharoah88
Supreme |
12-May-2011 14:42
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Alternative asset classes have not caught on in a big way: Analysts Linette Lim linettelim@mediacorp.com.sg The allure of ETFs is that investors can hedge against risks by investing in a variety of instruments in various markets. bUt MARK UP is TOO EXHORBITANT ? ? ? ? TRANSACTION COST is mOre than DOUBLED ? ? ? ? It is LAGGING to the INVESTORS' DISADVANTAGE ? ? ? ? BIASED towards MARKET MAKERS' ADVANTAGE ? ? ? ? |
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pharoah88
Supreme |
15-Sep-2010 08:33
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Did You Know? Should the liquidity of ETFs be determined based solely on its trading volume? The trading volume of an ETF should not be the only measure of liquidity given that ETFs are open-ended funds, where new units can be created or redeemed in the primary market. For most of the ETFs listed on the Singapore Exchange (SGX), there is a Designated Market Maker to provide liquidity by quoting bid/ask prices throughout the trading day, even if there is no trading volume for that ETF. A small trading volume on screen does not imply low liquidity as the market maker can always create new units to meet the large volume demand at any time. |
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pharoah88
Supreme |
15-Sep-2010 08:30
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Understanding the potential of ETFs The Asian Exchange Traded Fund (ETF) market has grown rapidly over the past decade and is poised for even more growth in years to come. Much of this is due to the convenience and flexibility that ETFs offer. The key to tapping the full potential of ETFs is that institutions fully understand the types of ETFs available on the market and how they can be used. A Vision Focus report published earlier this year by State Street Global Advisors – which has pioneered ETFs — noted that ETF assets in the region have grown by an annual average of more than 40 percent over the past few years, and that level of growth is expected to continue. The report titled Exchange Traded Funds: Maximising the Opportunities for International Investors also illustrated how some institutional investors employ ETFs for optimal effect. These include cash equitisation, completion and core-satellite strategies, strategic asset allocation and tax management. Having an ETF in one’s portfolio delivers diversification benefits. An ETF can help an investor manage risk by giving access to previously inaccessible markets, asset classes, sectors and investment styles. With the introduction of gold ETFs, such as the SPDR Gold Shares, investors have a more convenient avenue to gain exposure to the world gold price, without having to actually hold physical bullion. In 2006, SPDR Gold Shares, an ETF listed on markets around the world, was cross-listed on the Singapore Exchange (SGX). According to SGX, SPDR Gold Shares was among the top three most actively-traded ETFs (by value) in Singapore for the first seven months of the year. The Asia-Pacific ETF market has expanded in recent years as investors are attracted by the benefits ETFs can offer, such as diversification, cost efficiency, and transparency. ETFs are traded like a stock, and continuously traded throughout the day. They also offer the potential for margin trading and short-selling, unlike other types of funds. ETFs can be used by institutional investors to improve their asset allocation, and cash management, and during transition management to keep assets fully invested during transition. |
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Hulumas
Supreme |
08-Sep-2010 14:55
Yells: "INVEST but not TRADE please!" |
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More long & less short.
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pharoah88
Supreme |
08-Sep-2010 14:51
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What are the similarities and differences between ETFs and unit trusts? They are investment funds managed by professional fund managers. While ETFs are traded on an exchange, units trusts are unlisted funds distributed through financial intermediaries such as banks and finance companies. Investors of ETFs can trade in and out of the market at known prices throughout the trading day, while investors of unit trusts can only buy and sell units at end-of-day prices quoted by financial intermediaries. With unit trusts, investors have to pay upfront sales charges; for ETFs, investors pay brokerage and exchange fees and do not incur upfront sales charges. |
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pharoah88
Supreme |
08-Sep-2010 14:36
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What are the similarities and differences between ETFs and unit trusts? They are investment funds managed by professional fund managers. While ETFs are traded on an exchange, units trusts are unlisted funds distributed through financial intermediaries such as banks and finance companies. Investors of ETFs can trade in and out of the market at known prices throughout the trading day, while investors of unit trusts can only buy and sell units at end-of-day prices quoted by financial intermediaries. With unit trusts, investors have to pay upfront sales charges; for ETFs, investors pay brokerage and exchange fees and do not incur upfront sales charges. | ||
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pharoah88
Supreme |
08-Sep-2010 14:20
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Understanding ETF liquidity The importance of understanding the liquidity of an ETF cannot be understated. Unlike stocks which trade with a fixed number of shares, ETF units can be freely created and redeemed.
Instead of focusing on turnover, when choosing an ETF to invest in, it isimportant for investors to analyse other factors such as: - the historical tracking performance of the ETF and - whether it is being offered at a fair price. |
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pharoah88
Supreme |
01-Sep-2010 16:14
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China in your hands An interesting market phenomenon has been observed recently: The difference in premiums of A-shares traded in mainland China and H-shares traded in Hong Kong Stock Exchange had narrowed to a historical low since 2008. Yet the premium at which the China A-shares Exchange Traded Funds (ETFs) trade above their respective Net Asset Values (NAV) rose to about 10 per cent at the same time, said UOB Asset Management. Exclusivity of the A-shares market This premium of China A-Shares will likely remain as direct access to the market is given only to domestic Chinese investors and foreign investors with a Qualified Foreign Institutional Investor (QFII) licence. Such is the challenge of investing in restricted emerging markets such as China. The QFII regulatory framework was set up in 2002 to let foreign investors invest directly in China’s capital markets. While its rules have been amended over the years, the Chinese authorities’ original intention to attract long-term investors and discourage speculative money remains. The application process is generally stringent and approval conditions are equally strict. According to the China Securities Regulatory Commission, there are less than 100 estimated approved QFIIs in the current list since the first licence was given to UBS AG in May 2003. China A-shares ETFs still attractive The ETF creation and redemption process typically offers investors the ability to arbitrage any significant differences between its traded price and NAV. This difference can be a premium if the traded price is higher than the NAV. However, the premium remains as investors may find this arbitraging method difficult for restricted markets such as the China A-shares market. Despite this, investors still prefer the A-shares market over B-shares, H-shares or S-chips (listed in the Singapore Exchange) markets for exposure to the Chinese domestic economy. Many blue chips are listed only on the A-shares market, and ETFs remain an attractive tool for investors to gain exposure to a diversified portfolio of these securities. The combination of these benefits and exclusivity is what keeps China A-shares ETFs attractive. China A-shares ETFs may continue to trade at a premium but these are trending lower. Chinese equity markets have dipped since January this year and, as fears of overheating and a hard landing recede, there is potential that investors may soon get access to China at relatively cheaper levels. |
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pharoah88
Supreme |
30-Aug-2010 09:25
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Charting the recovery in India
Uncertainty in the American market and the fear of a global slowdown in recovery spurred many equity markets around the world to decline over the past week. The MSCI World Equity Index ended Thursday at 1.5 per cent lower week on week to close at 1,077 points. Bourses in Asia weakened and the MSCI Asia-Pacific ex Japan index closed Thursday at 400 points, down 1.8 per cent week-on-week. In our earlier commentary dated June 21, we spotlighted India’s growth momentum. Since then, the CNX Nifty Index — one of the country’s key indices — rose by approximately 4 percent, from 5,262 points to 5,477 points last Thursday. The recovery was spurred on by its strong economic performance. India‘s exports rose 13.2 per cent year on year after recording its ninth consecutive month of growth in July. Robust corporate profits, growing investments due to favorable financing conditions and the International Monetary Fund’s revised growth projection from 8.8 per cent to 9.5 per cent also contributed. While the withdrawal of advanced countries’ stimulus measures might impact demand, it appears that the country is still on track to reach its 2010 fiscal year export target of US$200 billion ($265.2 billion). The consistency of the recovery of India’s stock market looks set to continue through the second half of the year. While the CNX Nifty underwent some consolidation over the last week, the market is ripe for continued recovery and technical signals are pointing to an end of the current downtrend. As such, investors who are interested in the India market should explore buying into Exchange Traded Funds such as the DBXTNifty 10US$ and the Lyxor India Nifty 10 — both of which track the Nifty Index, and the IS MSCI INDIA 100US$ which tracks the MSCI India Index. Traders who are looking for opportunities in the Singapore market can look out for call warrants on stocks that have been resistant to sell offs on the Straits Times Index. Stocks such as Noble Group and Wilmar seem to have bottomed out last Visit www.siasresearch.com for daily market calls and investment strategies reports. Contributed by Edmund Seow from SIAS Research. week and leveraged longs using call warrants would allow traders to take advantage of the volatility in the market for quick trades. |
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pharoah88
Supreme |
18-Aug-2010 22:17
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Did You Know? Why do I not see an increase in the price of the call or put Warrants respectively when the price of an underlying increases or decreases? Other than the price of the underlying, the price of a warrant will also be affected by other factors such as time to maturity, volatility, interest rate, dividend and the supply and demand of the warrant. |
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pharoah88
Supreme |
18-Aug-2010 22:13
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ETF currency risk Another point of confusion for investors is when the ETF’s underlying currency differs from its trading currency. Most ETFs do not have a currency hedging policy and the performance of the ETF corresponds to the underlying market movement. The market movement refers to the movement of both the stock price and the trading currency on the index portfolio at the same time. So when investors hold on to the ETF, they are exposed to the underlying market that the ETF is in, at its local currency. For example, an investor trading a Taiwan ETF is exposed to Taiwan’s stock market movement and the Taiwan Dollar movement. If the stock market gains strength and the Taiwan Dollar appreciates against the US Dollar concurrently, the investor can benefit from both. If the underlying market currency moves opposite of the stock market direction, it will dilute the ETF earnings. Market risk and local currency risk are the two main factors that determine the price of the ETF. As long as you’re holding on to ETF units, you will be exposed to its underlying market risks. Investors will only see the trading currency risk (if US Dollar is the transaction currency) only after they cash out the ETF units with cash — in US Dollar — sitting in their trading account. |
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pharoah88
Supreme |
18-Aug-2010 22:06
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ETF liquidity and currency risk explained Exchange-Traded Funds (ETFs) let retail investors take advantage of opportunities in the global markets. This article serves to clarify two main misperceptions of ETFs: Liquidity and currency risk. ETF liquidity ETFs trade like stocks, many investors have the misconception that its liquidity is linked to its trading volume. However, ETF units can be created and redeemed at any time. ETF managers can create more units to serve the market if there is more demand. As ETFs are index tracking mutual funds, its price movement closely corresponds to the underlying market. For optimum liquidity, the investor should avoid public holidays of the underlying market and not to place orders when the underlying market is closed. For example, liquidity for Japan, Korea and Taiwan ETFs are better in the morning than the afternoon session of the Singapore Exchange (SGX) trading hours; however, European ETFs will have a better liquidity in the afternoon trading session. Although America has no overlapping trading hours in Asia, the 24-hour electronic trading of US Futures provide ample liquidity for Asian investors at all times. |
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pharoah88
Supreme |
18-Aug-2010 21:24
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<> INVERSE ETF <> No longer buy and hold ETFs now offer more sophisticated investment strategies Julie Quek juliequek@mediacorp.com.sg SINGAPORE with more active or sophisticated strategies. German-based Deutsche Bank, which launched an ETF here last year that allows investors to take a short position in the United States market, is now seeking local regulatory approval to introduce another ETF using hedge fund strategies. The bank has already lodged the prospectus for the db x-trackers DB Hedge Fund Index ETF on the Monetary Authority of Singapore Opera website. This latest ETF offering is designed to track the performance of the db Hedge Fund USD Index which is Luxembourg-domiciled. Such ETFs using hedge fund strategies will allow investors to take long or short positions in a particular index or other underlying asset. The growing trend here mirrors that in other developed markets. Earlier this month, international fund manager BlackRock was reported to be seeking regulatory clearance from the US authorities to introduce ETFs that use complex investment strategies. Until active ETFs came to market about two years ago, passive ETFs took centrestage as they were designed to track a specific index or industry sector. On the other hand, active ETFs are designed to beat or outperform the index. Both active and passive ETFs are considered simple financial instruments with lower transaction costs, but active ETFs are likely to incur slightly higher costs than passive ones. Analysts say demand for active ETFs are slowly picking up, as such ETFs still enjoy lower transactional costs compared to unit trusts. Earlier, the SGX reported that the growing popularity of ETFs has boosted its turnover by 33 per cent to about $5 billion in the last 12 months ending June 30. With the rising interest in this investment instrument, the number of ETFs has also doubled in the SGX to 73. But analysts warn investors to know what they are getting into. SIAS Research analyst Liu Jinshu said: “When you invest in an inverse ETF where you are holding on to a short position, then of course there is a risk that you will lose a significant amount of your principal at the end of your investment tenure, if the market conditions turn better.” — Exchange Traded Funds (ETFs) are traditionally known for being passive investments but banks are increasingly offering these instruments |
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hpong5
Master |
18-Aug-2010 21:18
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BOTH | ||
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pharoah88
Supreme |
18-Aug-2010 21:16
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<> E T F <> LONG & SHORT |
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