From BlackRock launching a new iShares ETF to net inflows of $27.94 billion for long-term funds, here's top news impacting mutual fund and ETF managers and providers.
Global ETF and ETP Assets Reach Record High
Flows into ETFs and ETPs listed globally rebounded in February gathering net inflows of $29.0 billion which, when combined with the positive market performance in the month, pushed assets in the global ETF/ETP industry to a new record high of $2.44 trillion, according to preliminary findings from ETFGI's February Global ETF and ETP industry insights report. The Global ETF/ETP industry has 5,183 ETFs/ETPs, with 10,210 listings, from 219 providers on 59 exchanges.
Equity and Alternative Funds Saw Inflows in 2013
Equity funds saw inflows of $567B last year, posting an organic growth rate of 6%, according to Morningstar's Global Flows Report. The company states that this is the fastest growing year for equity funds since Morningstar began tracking worldwide data in 2007. Among equity funds, passive funds continued to gain share in most regions in 2013, according to the report. One of the reasons for this growth, according to Morningstar, is the adoption of ETFs among advisors in the U.S., although ETFs in Europe are having a tougher time making such inroads.
In addition, alternative funds collected $97B, which is more than double their showing in 2012, according to Morningstar. The company also stated that alternative funds saw a 30% growth rate in the U.S., Asia and within cross-border funds in 2013.
Adjusted Operating Margins Soar in 4Q
Adjusted operating margins increased solidly coming in at 39.6% on average, vs. 38.4% in 3Q, although as usual it was highly company specific and seasonal performance was a contributing factor, according to Keefe, Bruyette & Woods (KBW). Nine of 14 managers had sequential margin improvement: AB, BLK, CLMS, FII, BEN, IVZ, JNS, LM, and WDR, the company states. While margins are already running at high levels, KBW states that they believe there is room for incremental improvement with continued revenue growth and if companies can continue to scale up key products.
Two New Versions
New versions of the S&P GSI and GSCI Single Commodities index have been unveiled by S&P Dow Jones Indices, the S&P Dow Jones Indices states. The indices are designed to measure commodity markets while seeking to reduce negative roll yield in times of contango.
The company launched a 6- and 12-month version of the S&P GSCI and forward 3-,6- and 12-month versions of the S&P GSCI Single Commodities index. "The S&P GSCI Forward Single Capped Component indices allow market participants to accentuate single commodities across various expirations while remaining well-diversified," says Jodie Gunzberg, VP at S&P Dow Jones Indices. "The addition of later dated contract indices to the existing S&P GSCI Single Capped Component and S&P GSCI Forward families improves the ability to convey views across the term structure."
New Product to Identify Income-Generating Opportunities
A new fund hits the market that seeks to identify income-generating opportunities across fixed income sectors. Janus Capital Group announced the launch of the Janus Multi-Sector Income Fund which employs an active managed approach that balanced a focus on high current income with risk considerations at the security and portfolio level, the company states. The fund will typically hold between 35% and 65% below investment grade bonds and has wide flexibility to invest across all sectors of the global fixed income market, according to Janus Capital Group.
More International iShares For Investors
With the announcement of two new ETFs, BlackRock expands its international iShares business. The company announced that it has launched the iShares Enhanced International Large-Cap ETF and iShares Enhanced International Small-Cap ETF. These two funds seek to provide investors with long-term capital appreciation and are managed using BlackRock research rather than tracking an index, BlackRock states.
"Factor investing has become increasingly popular as investors look for opportunities to potentially outperform the market over the long-term," says Patrick Dunne, head of iShares global markets and investments.
Net Inflow for Long-Term Funds
In January, long-term funds, including socks, bonds and hybrid funds, had a net inflow of $27.94B compared to an outflow of $20.05B in December, according to the Investment Company Institute (ICI). Hybrid funds posted an inflow of $5.20B in January, in caparison to an inflow of $4.86B, the company states. The bond funds had an outflow of $1,23B in January, compared with an outflow of $25.08B in December, ICI states.
Bonds Take a Back Seat
Almost $1T of net flows were poured into funds during 2013, a very similar number to the year before, according to Strategic Insight. However, unlike in the past, sales rotated away from traditional bond funds into equity, multi-assets, non-traditional income and alternative strategies, according to a recent report from Strategic Insight."Equity funds worldwide absorbed $610 billion of net inflows last year, slightly higher than the peaks in 2006 and 2007," says to Jag Alexeyev, head of global research at Strategic Insight. "But other asset classes and themes also offered big opportunities for fund managers especially outside the US. Demand for non-traditional income, liquid alternatives, and asset allocation solutions expanded, and will continue to rise alongside the equity revival."
Using ETFs to Offset Regulation
Fixed-come ETFs are poised to take on a bigger role in institutional portfolios, according to a new report from Greenwich Associates. The group states that 85% of current users have employed fixed income ETFs for at least two years and 66% of users have increased their usage since 2011. Greenwhich also points out that of the non-ETF users polled for their report, 67% plan to allocate between 6 and 10% of their fixed income portfolio to ETFs in the upcoming year.
"As institutions move to shorten duration and find new sources of yield, current users of fixed-income ETFs expect to increase their use of the product and some non-users will elect to employ ETFs in implementing their portfolio strategies," says Andrew McCollum a Greenwich Associates consultant.
Customer Satisfaction at Mutual of Omaha Retirement Services
The customer is always right, at least that's what Mutual of Omaha Retirement Services hopes is true as they report a 96% overall client satisfaction rating, according to a recent 401(k) customer satisfaction survey conducted by Chatham Partners. The company also stated that they surpassed 21 of 22 benchmarks for overall impressions and products and services measures. "As we work to simplify and improve the 401(k) experience with features that bring peace of mind to employers and employees, it is gratifying to know that our customers recognize and value our efforts," says John Corrieri, VP of 401(k). "Our commitment to listening to our customers allowed us to build on previous, strong survey results."
$40B inflows into mutual funds in January
1.4% decrease in the combined assets of the nation's mutual funds in January.
Source: Investment Company Institute