Reviewing the industry's recent notable highlights and trends:
- Dollar Hedge Demand Thrives Among ETFs
U.S. investors are investing record amounts into funds that protect them from the risk that the dollar's world-beating rally will not extend through next year, Bloomberg reports. According to data compiled by Bloomberg, assets invested in U.S. ETFs that hedge currency risk grew 18% since September to $21.2 billion, the largest quarterly increase in the class since mid-2013.
Some funds have delivered results, Bloomberg reports: this year the $4 billion WisdomTree Europe Hedged Equity Fund returned 3.1%, but the $7.4 billion, unhedged European fund iShares MSCI EMU ETF tumbled 7.7%. The dollar has rose 3% against 16 of its fellow currencies since June. As a result, U.S.-based ETFs that guard against currency swings for overseas investing has seen growth, numbering 36 from 13 at the beginning of last year, and assets up 42%, totaling $8.9 billion.
- Securian Continues Insurer Trend of Acquiring Asset Managers
Securian Financial Group is the latest insurer to acquire an asset manager, agreeing to take majority ownership of Asset Allocation & Management Co. from a private-equity fund overseen by Stone Point Capital, Bloomberg reports. The St. Paul, Minn.-based Securian will add $16.4 billion in assets under management for other insurers as a result. "The transaction deepens our commitment to the asset management business and supports our long-term strategy as an enterprise," said Chris Hilger, president of Securian Financial Group, in a statement. The firm is the latest insurer to buy asset managers to gain fee revenue from third-party clients, the report adds. Other insurers who have acquired asset managers include Cathay Financial, which recently bought Hartford, Conn.-based Conning, Allied World Assurance and Principal Financial Group.
In other acquisition news, global consulting firm Mercer announced it was acquiring SCM Strategic Capital Management AG, a Swiss-based specialist private markets advisor, to bolster its alternative investment capabilities. Mercer notes that as of the end of September, it had $108 billion in assets under management, including $13 billion in alternative assets under management.
- Largest Mutual Fund Share Belongs to Baby Boomer Households
Baby Boomers represent the largest share of mutual fund-owning households in the U.S. in mid-2014, according to survey research by the Investment Company Institute. "Our 2014 household survey showed that mutual funds are an investment staple in about half the households headed by either a Baby Boomer or member of Generation X," said Sarah Holden, ICI senior director of retirement and investor research, in a statement. "Among mutual fund-owning households, most are headed by individuals in their peak earning years, most own mutual funds in a tax-deferred account, and nearly all are focused on retirement saving."
ICI's survey also said an estimated 50 million households owned mutual funds through employer-sponsored retirement plans, IRAs and variable annuities, compared with 14.6 million households owning funds outside tax-deferred accounts. Among households owning mutual funds in mid-2014, the survey found, 83% held more than one fund and 86% owned equity funds.
- Global X Funds Offers China Bond Market ETF
Global X Funds is the latest ETF provider to offer U.S. investors access to China's onshore bond market. The firm launched its Global X GF China Bond ETF, which tracks the S&P China Composite Select Bond Index. The firm says the fund will hold Chinese yuan-denominated debt issued in mainland China, and will largely be exposed to Chinese government and agency bonds. The firm said the fund's portfolio balance will be 23% exposure to Chinese government bonds, 32% to agencies, and 45% to central state-owned enterprises.
Global X is offering the fund in partnership with GF International Investment Management Limited, a leading Chinese fund manager. "Onshore government bonds currently offer a significant yield pickup from dim sum bonds and the sovereign debt of other major economies," said Nathan Lin, CEO of GF International, in a company statement. Earlier in November, Van Eck Global launched the Market Vectors ChinaAMC China Bond ETF.
