Not in your best Interest (February 2017 Perspectives)

Not in your best InterestDodd-Frank Trump Rollback in the US; potentially derailed DOL; and here in Canada,  always a strong (and well financed – to be sure) lobby to push back against Regulatory intervention benefiting investors (incl. removal of conflicts of interest) …

All-in: Financials / Banks stocks future (profitability) looks brighter, all the while the inherent “tax” on saving for retirement (combo of high fees and under performance) will continue to have real implications for everyone’s nest egg… As aptly described in the US, the fox is in the hen house…

Why should you care … oh well, if you don’t, who will …

But hey: if you enjoy being scalped, and playing a poker’s game where your odds are the house always win – then … carry on!

Latest Developments:

  • US FED – While Friday’s January NFP numbers exceeded expections (+227K vs e +175K), the lack of wage pressures saw the odds of a March Fed hike decline => Click HERE!
  • NAFTA renegotiations – What does a renegotiated North American Free Trade Agreement look like? One to which President Trump says he wants to add an F for FAIR. FAIR to whom will be interesting to watch…
  • Travel ban in the US – Rather confusing … Read More=> Click HERE!
  • Animal Spirits welcomed – This is why a Trump Wall Street regulatory rollback in welcome => Read more=> click HERE! But then again … numbers will ultimately matter!
  • Have you noticed how … – Everything President Trump wants to tackle is a DISASTER. and everything that he will make happen will be tremendously successful. With that kind of obvious improvement, how can we all not just jump for joy???
  • Iran – Defying UN Security Council resolution =? New US sanctions?

 

ETF Industry highlights – January 2017

January – saw strong issuance propel the CDN ETF industry’s assets to $115.8 Billion ($113.7 Billion December 2016).  Net new issuance is estimated to have contributed $1.67Bn (83%) to the AUM increase, with markets making up the difference ($344MM, or 17%).

Breakdown of net new creations – Tier 1 players claimed 78.8% of net new creations, Tier 2 13.7%; and Tier 3 (14 providers) 7.5%.

Canadian ETFs – Aggregate assets  across the Canadian ETF industry rose $2.08Billion in January (1.84%) versus their December 2016 level.

Strong aggregate creations (+$3.4Bn vs $2.95Bn in December) were partly offset (-$1.8Bn vs -$2.4Bn in December) by retractions, with the net new creates nonetheless significantly exceeding the prior month’s creations (+$1.66 Billion).

ETF industry Highlights – Flows for January 2017

  • Equity flows – Rebounded, coming in at +$809.4MM in January, despite modest outflows out of XIU.
  • Fixed income flows –  Higher anticipated 2017 FED funds or not, Bonds regained their mojo in January on the creation front, coming in at $610MM.
  • Preferred Shares – Flows into Preferreds declined, but remain high considering the relative size of the category in relation to other segments (equities/fixed income). RBC GAM’s Pref ETF continues to pick up AUM quickly, and BMO had strong Pref creations in January.

Summing up creations/redemptions versus market impact in January 2017:

 

Latest market share numbers (with/without XIU):

 

ETFs by the numbers: January 2017

  • 18 ETF providers. Tier 1: 90.9% of AUM ($105.2 Bn); Tier II: 8.1% of AUM ($9.4 Bn); Tier III: 1.0% of AUM ($1.1 Bn).
  •  32.2% y/o/y AUM Growth, with year ago (January 2016) numbers negatively impacted by significant market turmoil at the time…
  • Aggregate AUM: $115.8Billion (31/1/17)
  • +$2.08 Bn: AUM increase from Dec 31, 2016 (iShares: +$503MM; BMO ETFs: +$779MM; Vanguard: +$325MM; Horizons: +$81.0MM;  First Asset: +$86MM; PowerShares ETFs: -$26MM; RBC GAM ETFs: +$133MM; FT Portfolios: +$19MM; Purpose Investments: +$53MM).

ETFs in January 2017: Aggregate Creations/Redemptions across ETF providers:

equities fixed income preferreds portfolios commodities Jan-17 Flows by Category
-$76,094,591 $304,870,109 $2,163,980 $4,543,476 $- $235,482,973 ishares
-$11,664,590 -$76,952,691 -$5,391,441 $309,658 $6,915,568 -$86,783,497 ishares claymore
$40,892,121 -$5,786,351 $18,052,456 -$3,027,119 $17,203,592 $67,334,699 horizons
$378,520,227 $247,871,971 $147,539,127 $3,211,199 $- $777,142,524 bmo etfs
$41,980,768 $45,567,393 $52,379,620 $- $- $139,927,780 rbc gam etfs
$- $1,468,495 $- $- $- $1,468,495 td am
$66,161,836 $9,193,038 $1,080,803 $- $- $76,435,677 first assets
$31,057,126 -$62,384,838 -$10,764,891 $2,061,531 $- -$40,031,072 powershares
$222,367,398 $93,825,360 $- $- $- $316,192,758 vanguard
-$2,838,881 $18,607,490 $- $966,069 $- $16,734,678 ft portfolios canada
$30,428,434 $20,463,280 $- $980,080 $- $51,871,794 purpose
$- $- auspice capital
$1,120,332 $- $- $- $- $1,120,332 questrade
$4,578,644 $4,578,644 lysander
$13,689,419 $13,689,419 hamilton capital
$2,005,600 $- $- $- $- $2,005,600 sphere etfs
$51,077,630 $13,222,570 $- $- $- $64,300,200 mackenzie etfs
$- $- Wisdom Tree
$20,667,993 $- $- $- $- $20,667,993 Harvest Portfolios
$809,370,823 $609,965,825 $209,638,298 $9,044,893 $24,119,160 $1,662,138,998

Top creations; Top redemptions – by provider (with tickers):

ETF Provider Net Creations: Top Creations: Top Redemptions:
bmo etfs $777.1 ZCN; ZAG; ZSP; ZPR; ZQQ; ZCS; ZWH; ZCM; ZBK; ZPL ZDM; ZFM; ZLB; ZDY; ZFS; ZEB; ZUH; ZLI; ZLU
vanguard $316.2 VSC; VCN; VFV; VAB; VUN; VXC; VEE; VGG; VDY; VUS VBG; VA; VAH; VEF
ishares $235.5 XBB; XFN; XGB; XWD; XUS; XCB; XSC; XSP; XAW; XHB XIU; XRE; XSB; XMH; XIC; XGD; XST; XDV; XIG; XMD
rbc gam etfs $139.9 RPF; RLB; RUD; RID; RCD; RQE; RPD.U; RHP; RPD
first assets $76.4 RWW.B; XXM; TXF; RIT; FLI; FIG CES.B; YXM; VXM.B; FHB; FCY.B
horizons $67.3 HXT; HPR; HXU; HGD; HNU; HXE; HXX; HUZ; HVU; DLR HXS; HGU; HMP; HAB; HND; HVI; HHF; HAZ; HSU; HAD
mackenzie etfs $64.3 MXU; MKB; MEE N/A
purpose $51.9 PSA; PDF; PYF PBI.B
harvest portfolios $20.7 HHL N/A
ft portfolios canada $16.7 FSL FDE; FTB
hamilton capital $13.7 HBG N/A
lysander $4.6 PR N/A
sphere etfs $2.0 SHZ N/A
td am $1.5 TDB N/A
questrade $1.1 QRT N/A
auspice $- N/A N/A
wisdom tree $- N/A N/A
powershares -$40.0 PSB; PXC; PSY.U; PXU; BKL; PDC; PXS; QQC PGL; ULV; PPS
ishares claymore -$86.8 CMR; CGL.C; CLG; CEW; CLU.C; CIF; CDZ; CWW; CBN; FIE CLF; CBO; CUD; CVD; CGR; CPD; CBO.A; CLF.A; CIE; COW
$1,662.1 Total Source: ETFi DB as at Jan 31, 2017

 

  • Min/Low Vol ETFs –  Outflows, still, but moderating at -$82MM (-$283MM in December)
  • Dividend ETFs – Still decent inflows: +$152MM  (+$373MM in December).
  • High Yield  – Inflows picked up: +$119MM (+$45MM Dec 2016)
  • EM flows – Still quasi non-existent: +$13MM (+$15.8MM in December).
  • Europe – Modest inflows in January: +$18MM (versus outflows: -$16.6MM in December).

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