Myths and Realities of ETFs and Index Investing - Ananth Madhavan, Managing Director, Global Head of Research for ETF and Index Investing, BlackRock
Presented at the AQR Asset Management Institute conference, Perspectives: Systemic Risk in Asset Management held on 26 April 2017 at London Business School.
Presented at the AQR Asset Management Institute conference, Perspectives: Systemic Risk in Asset Management held on 26 April 2017 at London Business School.
Security analysis and portfolio managementHimanshu Jain
Live Project was all about studying the company’s financial health through the movement of their stock price. This live project deals with the basic concepts of investment in securities such as bonds and stocks, and management of such assets. It discusses various aspects of portfolio management, ranging from analysis, selection, and revision to evaluation of portfolio, securities market and risk evaluation that help in understanding the trading system better and making quality investment decisions.
This live project helped to understand how the stock prices vary. It also helped to know and calculate several technical terms. In this project, I was given 5 stocks wherein I need to update opening price, closing price, % change, total shares traded etc. every day. Then it is required to find out the beta, average return etc. of these stocks separately and construct a portfolio with Rs. 50, 00,000 keeping in mind optimum return for the investment. We need to keep in mind beta, standard deviation, risk and return of these stocks and invest to get the optimum returns.
This project helps in knowing the expected return and risk for each stock. Under this project I got to know about portfolio management as well as expected return & risk associate with each company. Through this project my future investment will be better as it helps in knowing the inside depth of companies by analysis the financial details.
In this presentation, we review methods and best practices for the portfolio construction and evaluation process. The presentation covers risk and return estimation, mean-variance optimization as well as techniques for analyzing exposure to loss and wealth potential.
netwealth educational webinar - The evolution of asset allocationnetwealthInvest
On April 14, 2016 Tracey McNaughton, Head of Investment Strategy at UBS presented to financial advisers on the evolution of asset allocation during a netwealth educational webinar.
Insight Summit 2017: Intelligent Risk Taking
Portfolio construction today - Cliff Asness, Managing & Founding Principal, AQR Capital Management
Presented at the third annual Insight Summit conference held on 7 November 2017 by London Business School’s AQR Asset Management Institute.
Presented at the AQR Asset Management Institute conference, Perspectives: Systemic Risk in Asset Management held on 26 April 2017 at London Business School.
Security analysis and portfolio managementHimanshu Jain
Live Project was all about studying the company’s financial health through the movement of their stock price. This live project deals with the basic concepts of investment in securities such as bonds and stocks, and management of such assets. It discusses various aspects of portfolio management, ranging from analysis, selection, and revision to evaluation of portfolio, securities market and risk evaluation that help in understanding the trading system better and making quality investment decisions.
This live project helped to understand how the stock prices vary. It also helped to know and calculate several technical terms. In this project, I was given 5 stocks wherein I need to update opening price, closing price, % change, total shares traded etc. every day. Then it is required to find out the beta, average return etc. of these stocks separately and construct a portfolio with Rs. 50, 00,000 keeping in mind optimum return for the investment. We need to keep in mind beta, standard deviation, risk and return of these stocks and invest to get the optimum returns.
This project helps in knowing the expected return and risk for each stock. Under this project I got to know about portfolio management as well as expected return & risk associate with each company. Through this project my future investment will be better as it helps in knowing the inside depth of companies by analysis the financial details.
In this presentation, we review methods and best practices for the portfolio construction and evaluation process. The presentation covers risk and return estimation, mean-variance optimization as well as techniques for analyzing exposure to loss and wealth potential.
netwealth educational webinar - The evolution of asset allocationnetwealthInvest
On April 14, 2016 Tracey McNaughton, Head of Investment Strategy at UBS presented to financial advisers on the evolution of asset allocation during a netwealth educational webinar.
Insight Summit 2017: Intelligent Risk Taking
Portfolio construction today - Cliff Asness, Managing & Founding Principal, AQR Capital Management
Presented at the third annual Insight Summit conference held on 7 November 2017 by London Business School’s AQR Asset Management Institute.
Analyse of the endowment model employed by Harvard and Yale and identify the reasons why Harvard made more losses than the other endowment funds in 2009
This deck consists of total of seventy slides. It has PPT slides highlighting important topics of Investment Portfolio Management Power Point Presentation Slides . This deck comprises of amazing visuals with thoroughly researched content. Each template is well crafted and designed by our PowerPoint experts. Our designers have included all the necessary PowerPoint layouts in this deck. From icons to graphs, this PPT deck has it all. The best part is that these templates are easily customizable. Just click the DOWNLOAD button shown below. Edit the colour, text, font size, add or delete the content as per the requirement. Download this deck now and engage your audience with this ready made presentation.
The article discusses an alternative approach to experiencing the costs of index reconstitution, called “Asset Classes,” which allow the fund manager broader leeway as to when to buy or sell, along with a broader range of holdings. This discussion begins in the section called “Decision Two: Indexing or Asset Class Investing?”
The Asset Class approach, also referred to by others as "Factor Investing," is based on what has become to be called “Evidence Based Investing” due to roots discussed in the linked "Factor Investing" article, that come from academic (peer reviewed and repeatable results) foundation that continues to this day.
My blog post discussing this article is scheduled to post 8 Feb 2017 http://wp.me/p2Oizj-Hh
Insight Summit 2017: Intelligent Risk Taking - Active vs passive investing
Is factor investing a bubble? - René M. Stulz, Everett D. Reese Chair of Banking and Monetary Economics, Ohio State University
Presented at the third annual Insight Summit conference held on 7 November 2017 by London Business School’s AQR Asset Management Institute.
How Wealthy People Use Professional Money Managementfreddysaamy
http://ekinsurance.com/financial/money-management/
Just as surgeons don't operate on themselves, wealthy people usually do not invest their own money. They have investment professionals manage their money for them.
Saving With Negative Real Interest RatesInvestingTips
As historically low interest rates persist and inflation accelerates, saving with negative real interest rates becomes increasingly futile.
https://youtu.be/d9qhofw8ZVc
Financial analysts are concerned with factors, or common sources of risk that contribute to changes in asset prices. Analysts may be able to control a portfolio’s risk more efficiently and perhaps even improve its returns by identifying such factors.
Factor analysis is a powerful tool for quantifying the risk profile of a portfolio, constructing a portfolio relative to a benchmark, and controlling risk.
There is a cost to indexing that most investors are unaware of. It is called “reconstitution.”
A blog post is scheduled for 8 Feb 2017 discussing this article.
http://wp.me/p2Oizj-Hh
The presentation tries to give an overview of why an individual (retail investor) should opt for investing in the financial markets through various vehicles for getting returns that can beat inflation and other asset classes. Reach out for getting more clarity or assistance regarding the same.
Understanding, exploring and selecting Exchange Traded Funds (ETFs)netwealthInvest
In this presentation learn about ETFs and the factors driving their popularity with Damon Gosen Vice-President of Business Development at VanEck. Damon will also discuss what you should consider when selecting an ETF for your retirement and financial goals.
Analyse of the endowment model employed by Harvard and Yale and identify the reasons why Harvard made more losses than the other endowment funds in 2009
This deck consists of total of seventy slides. It has PPT slides highlighting important topics of Investment Portfolio Management Power Point Presentation Slides . This deck comprises of amazing visuals with thoroughly researched content. Each template is well crafted and designed by our PowerPoint experts. Our designers have included all the necessary PowerPoint layouts in this deck. From icons to graphs, this PPT deck has it all. The best part is that these templates are easily customizable. Just click the DOWNLOAD button shown below. Edit the colour, text, font size, add or delete the content as per the requirement. Download this deck now and engage your audience with this ready made presentation.
The article discusses an alternative approach to experiencing the costs of index reconstitution, called “Asset Classes,” which allow the fund manager broader leeway as to when to buy or sell, along with a broader range of holdings. This discussion begins in the section called “Decision Two: Indexing or Asset Class Investing?”
The Asset Class approach, also referred to by others as "Factor Investing," is based on what has become to be called “Evidence Based Investing” due to roots discussed in the linked "Factor Investing" article, that come from academic (peer reviewed and repeatable results) foundation that continues to this day.
My blog post discussing this article is scheduled to post 8 Feb 2017 http://wp.me/p2Oizj-Hh
Insight Summit 2017: Intelligent Risk Taking - Active vs passive investing
Is factor investing a bubble? - René M. Stulz, Everett D. Reese Chair of Banking and Monetary Economics, Ohio State University
Presented at the third annual Insight Summit conference held on 7 November 2017 by London Business School’s AQR Asset Management Institute.
How Wealthy People Use Professional Money Managementfreddysaamy
http://ekinsurance.com/financial/money-management/
Just as surgeons don't operate on themselves, wealthy people usually do not invest their own money. They have investment professionals manage their money for them.
Saving With Negative Real Interest RatesInvestingTips
As historically low interest rates persist and inflation accelerates, saving with negative real interest rates becomes increasingly futile.
https://youtu.be/d9qhofw8ZVc
Financial analysts are concerned with factors, or common sources of risk that contribute to changes in asset prices. Analysts may be able to control a portfolio’s risk more efficiently and perhaps even improve its returns by identifying such factors.
Factor analysis is a powerful tool for quantifying the risk profile of a portfolio, constructing a portfolio relative to a benchmark, and controlling risk.
There is a cost to indexing that most investors are unaware of. It is called “reconstitution.”
A blog post is scheduled for 8 Feb 2017 discussing this article.
http://wp.me/p2Oizj-Hh
The presentation tries to give an overview of why an individual (retail investor) should opt for investing in the financial markets through various vehicles for getting returns that can beat inflation and other asset classes. Reach out for getting more clarity or assistance regarding the same.
Understanding, exploring and selecting Exchange Traded Funds (ETFs)netwealthInvest
In this presentation learn about ETFs and the factors driving their popularity with Damon Gosen Vice-President of Business Development at VanEck. Damon will also discuss what you should consider when selecting an ETF for your retirement and financial goals.
Lær mer om Exchange Traded Funds. Hva er en ETF og hvorfor burde du velge ETFer? En presentasjon av Maarja Vaikla fra iShares by BlackRock.
English: Learn more about Exchange Traded Funds. What is an ETF and why should you choose ETFs? Presentation held by Maarja Vaikla from iShares by BlackRock.
This Open ended Fund of Funds Scheme is suitable for investors who are seeking*:
1. Long-term capital growth
2. Investment in units of overseas funds which invest in equity, debt and short term securities of issuers around the world
3. High Risk**
*Investors should consult their financial advisors if in doubt about whether the Scheme is suitable for them.
**Risk may be represented as:
Low: Investors understand that their principal will be at low risk
Moderately Low: Investors understand that their principal will be at moderately low risk
Moderate: Investors understand that their principal will be at moderate risk
Moderately High: Investors understand that their principal will be at moderately high risk
High: Investors understand that their principal will be at high risk
An investment project in a virtual trading platform with the most realistic simulations available for real-time, streaming platforms that feature global equities, bonds, options, futures, commodities and more.
The project involved being a financial advisor for an investor with a total portfolio value of USD 1 million.
This project report highlights the performance and strategies used to ensure a successful and profitable Investment for the portfolio.
The trading period started on 22nd January, 2013 and ended on 12th April, 2013.
Investing globally: Key benefits and considerationsnetwealthInvest
Learn about the advantages of investing offshore as well as some strategies to manage the impact foreign currency risk can have on your portfolio from Jonathan Shead, Head of Retirement Solutions at State Street Global Advisors.
As Exchange-Traded-Funds (ETFs) continue their rapid growth with over $3 trillion in assets, what effect will this have on your company’s stock and shareholder base?
Kuwait Petroleum Corporation: Transforming leadership for 2030 and beyondLondon Business School
This case study explores the custom programme developed by London Business School for the Kuwait Petroleum Corporation in conjunction with the National Technology Enterprises Company Kuwait. The study examines the scale and accomplishments of the programme, as well as the unique tripartite collaboration between the three key stakeholders that delivered its success.
Together, Microsoft and London Business School created The Public Sector Course: a customised programme, tailoring a Massive Open Online Course (MOOC) model for Microsoft’s public sellers specifically. The programme aims to empower participants to build trust and credibility with customers.
Learn more about our customised programmes: https://www.london.edu/programmes/executive-education/topic/executive-education-for-organisations/custom-programmes
Insight Summit 2017: Intelligent Risk Taking - Active vs passive investing
Active vs. passive – practitioner perspectives - Tim Hodgson, Head of the Thinking Ahead Institute, Willis Towers Watson
Presented at the third annual Insight Summit conference held on 7 November 2017 by London Business School’s AQR Asset Management Institute.
Insight Summit 2017: Intelligent Risk Taking – Private Equity
Partners Capital View of the Future of Private Equity Investing
Stan Miranda, Founder and CEO, Partners Capital Investment Group
Presented at the third annual Insight Summit conference held on 7 November 2017 by London Business School’s AQR Asset Management Institute.
Insight Summit 2017: Intelligent Risk Taking - Active vs passive investing
Risk taking the ATP way - Kasper Lorenzen, Chief Investment Officer, ATP
Presented at the third annual Insight Summit conference held on 7 November 2017 by London Business School’s AQR Asset Management Institute.
Insight Summit 2017: Intelligent Risk Taking - Active vs passive investing
Sharpening the Arithmetic of Active Management - Lasse Pedersen, Professor of Finance, Copenhagen Business School and NYU; and Principal, AQR Capital Management
Presented at the third annual Insight Summit conference held on 7 November 2017 by London Business School’s AQR Asset Management Institute.
Insight Summit 2017: Intelligent Risk Taking - Active vs passive investing
Money management in equilibrium - Jonathan Berk, A.P. Giannini Professor of Finance, Graduate School of Business, Stanford University
Presented at the third annual Insight Summit conference held on 7 November 2017 by London Business School’s AQR Asset Management Institute.
The ten commandments of business innovation | London Business SchoolLondon Business School
From his new book Breaking Bad Habits, LBS's Freek Vermeulen explores the ten commandments your business must follow to reinvigorate your organisation.
http://www.freekvermeulen.com/
Find out how Smurfit Kappa partnered with London Business School to design two precisely calibrated learning journeys that transformed participants from two distinct strands of leadership.
Systemic Risk in the Asset Management Industry - Michael Mendelson, Principal, AQR Capital Management
Presented at the AQR Asset Management Institute conference, Perspectives: Systemic Risk in Asset Management held on 26 April 2017 at London Business School.
Together with London Business School (LBS), Nordea created the Strategic Leadership Programme to empower its next-generation leaders to: think strategically about the future and about customers; align functions and strategies to the overarching Nordea Future Relationship Bank Strategy; and build trust across the whole business.
Learn more about our customised programmes: http://bit.ly/2mzsMM5
Want to get the best possible terms from a prospective employer without it affecting you being hired? Learn how from Associate Professor of Organisational Gillian Ku.
Emeritus Professor of Management and Marketing at London Business School Patrick Barwise and marketing leadership expert Thomas Barta explain how marketers can help change perceptions and increase business impact.
Their book, THE 12 POWERS OF A MARKETING LEADER, is out now.
[Note: This is a partial preview. To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations]
Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
Leading companies such as Nike, Toyota, and Siemens are prioritizing sustainable innovation in their business models, setting an example for others to follow. In this Sustainability training presentation, you will learn key concepts, principles, and practices of sustainability applicable across industries. This training aims to create awareness and educate employees, senior executives, consultants, and other key stakeholders, including investors, policymakers, and supply chain partners, on the importance and implementation of sustainability.
LEARNING OBJECTIVES
1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
3. Identify and define best practices and critical success factors essential for achieving sustainability goals within organizations.
CONTENTS
1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
To download the complete presentation, visit: https://www.oeconsulting.com.sg/training-presentations
RMD24 | Debunking the non-endemic revenue myth Marvin Vacquier Droop | First ...BBPMedia1
Marvin neemt je in deze presentatie mee in de voordelen van non-endemic advertising op retail media netwerken. Hij brengt ook de uitdagingen in beeld die de markt op dit moment heeft op het gebied van retail media voor niet-leveranciers.
Retail media wordt gezien als het nieuwe advertising-medium en ook mediabureaus richten massaal retail media-afdelingen op. Merken die niet in de betreffende winkel liggen staan ook nog niet in de rij om op de retail media netwerken te adverteren. Marvin belicht de uitdagingen die er zijn om echt aansluiting te vinden op die markt van non-endemic advertising.
What are the main advantages of using HR recruiter services.pdfHumanResourceDimensi1
HR recruiter services offer top talents to companies according to their specific needs. They handle all recruitment tasks from job posting to onboarding and help companies concentrate on their business growth. With their expertise and years of experience, they streamline the hiring process and save time and resources for the company.
"𝑩𝑬𝑮𝑼𝑵 𝑾𝑰𝑻𝑯 𝑻𝑱 𝑰𝑺 𝑯𝑨𝑳𝑭 𝑫𝑶𝑵𝑬"
𝐓𝐉 𝐂𝐨𝐦𝐬 (𝐓𝐉 𝐂𝐨𝐦𝐦𝐮𝐧𝐢𝐜𝐚𝐭𝐢𝐨𝐧𝐬) is a professional event agency that includes experts in the event-organizing market in Vietnam, Korea, and ASEAN countries. We provide unlimited types of events from Music concerts, Fan meetings, and Culture festivals to Corporate events, Internal company events, Golf tournaments, MICE events, and Exhibitions.
𝐓𝐉 𝐂𝐨𝐦𝐬 provides unlimited package services including such as Event organizing, Event planning, Event production, Manpower, PR marketing, Design 2D/3D, VIP protocols, Interpreter agency, etc.
Sports events - Golf competitions/billiards competitions/company sports events: dynamic and challenging
⭐ 𝐅𝐞𝐚𝐭𝐮𝐫𝐞𝐝 𝐩𝐫𝐨𝐣𝐞𝐜𝐭𝐬:
➢ 2024 BAEKHYUN [Lonsdaleite] IN HO CHI MINH
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➢CHILDREN ART EXHIBITION 2024: BEYOND BARRIERS
➢ WOW K-Music Festival 2023
➢ Winner [CROSS] Tour in HCM
➢ Super Show 9 in HCM with Super Junior
➢ HCMC - Gyeongsangbuk-do Culture and Tourism Festival
➢ Korean Vietnam Partnership - Fair with LG
➢ Korean President visits Samsung Electronics R&D Center
➢ Vietnam Food Expo with Lotte Wellfood
"𝐄𝐯𝐞𝐫𝐲 𝐞𝐯𝐞𝐧𝐭 𝐢𝐬 𝐚 𝐬𝐭𝐨𝐫𝐲, 𝐚 𝐬𝐩𝐞𝐜𝐢𝐚𝐥 𝐣𝐨𝐮𝐫𝐧𝐞𝐲. 𝐖𝐞 𝐚𝐥𝐰𝐚𝐲𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞 𝐭𝐡𝐚𝐭 𝐬𝐡𝐨𝐫𝐭𝐥𝐲 𝐲𝐨𝐮 𝐰𝐢𝐥𝐥 𝐛𝐞 𝐚 𝐩𝐚𝐫𝐭 𝐨𝐟 𝐨𝐮𝐫 𝐬𝐭𝐨𝐫𝐢𝐞𝐬."
Cracking the Workplace Discipline Code Main.pptxWorkforce Group
Cultivating and maintaining discipline within teams is a critical differentiator for successful organisations.
Forward-thinking leaders and business managers understand the impact that discipline has on organisational success. A disciplined workforce operates with clarity, focus, and a shared understanding of expectations, ultimately driving better results, optimising productivity, and facilitating seamless collaboration.
Although discipline is not a one-size-fits-all approach, it can help create a work environment that encourages personal growth and accountability rather than solely relying on punitive measures.
In this deck, you will learn the significance of workplace discipline for organisational success. You’ll also learn
• Four (4) workplace discipline methods you should consider
• The best and most practical approach to implementing workplace discipline.
• Three (3) key tips to maintain a disciplined workplace.
Attending a job Interview for B1 and B2 Englsih learnersErika906060
It is a sample of an interview for a business english class for pre-intermediate and intermediate english students with emphasis on the speking ability.
3.0 Project 2_ Developing My Brand Identity Kit.pptxtanyjahb
A personal brand exploration presentation summarizes an individual's unique qualities and goals, covering strengths, values, passions, and target audience. It helps individuals understand what makes them stand out, their desired image, and how they aim to achieve it.
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Improving profitability for small businessBen Wann
In this comprehensive presentation, we will explore strategies and practical tips for enhancing profitability in small businesses. Tailored to meet the unique challenges faced by small enterprises, this session covers various aspects that directly impact the bottom line. Attendees will learn how to optimize operational efficiency, manage expenses, and increase revenue through innovative marketing and customer engagement techniques.
1. Myths and Realities of ETFs and
Index Investing
Ananth Madhavan
Global Head of Research for ETFs and Index Investing
BlackRock
April 26th, 2017
20170410-134120-365694
2. Similar trends across the world
Source: Simfund MF for US Domiciled Mutual Funds. Simfund Global for Non-US Domiciled Mutual Funds. iShares GBI for ETFs. Excludes Fund of Funds (except for Multi-Asset),
Money-Market and Closed-End Funds. As of 11/16. Cumulative flows for active EQ MFs and ETFs as of 1/9/2017.
(1.0)
(0.5)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Mutual fund cumulative flows ($tn)
US Non-US
Active
equity
-$1.0
(1.0)
(0.5)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
ETFs
$1.2
Alternative Investments
$0.2
Active
equity
-$0.3
ETFs $0.5
Factors
$0.1
Multi-asset
$0.0
20170410-134120-365694
3. A security…
Price transparency – real-time, public
Secondary liquidity – non-intermediated
Simplicity – trades on an exchange like a stock
…and an investment tool
Most seek to track benchmark indexes
Low cost
But unlike traditional mutual funds, creations/redemptions do not require the fund
to interact with the market
ETFs - Combine Elements of Stocks and Mutual Funds
Individual
corporate
bonds
High Yield
Corporate
Bond ETF
20170410-134120-365694
4. Clients choosing among four financial
instruments
ETFs small relative to potential
Notes: ETFs as of Sept 2016, Global market as of Aug 2016, MFs as of Aug 2016, ETPs as of Aug 2016.
Source: Bank for International Settlements, Strategic Insight Simfund, BlackRock, Bloomberg.
The competitive set is large – there is a huge runway for adoption
$18
Stocks
$65
Bonds
$95
$3.8
$21
$49
$160
ETFs Global Mutual
Funds
Equity Index
Futures &
Swaps
Equity &
Fixed Income
Securities
$3
Index
Securities
ETFs
“Active” low value
funds: closet
index & factor
huggers
Index funds /
separate accounts
Single
security
holdings
Futures
and swaps
F: $25
S: $24
S: $24
20170410-134120-365694
5. Fixed income market penetration is still very low
US equity
ETFs
US equity
mutual funds
US fixed income = $46T
Europe equity = $11T Europe fixed income = $14T
US market: All data as of 30/06/2016. Equity data sourced from BlackRock, Bloomberg, Simfund. Fixed Income data sourced from BlackRock, Bloomberg, Sifma, Morningstar.
European market: All data as of 30/12/16. Data sourced from BlackRock, Morningstar. Mutual funds sourced from Morningstar category “Europe OE & ETF & MM”. Europe equity market size = sum of market
capitalisation of MSCI Europe IMI Index. Europe fixed income market size = sum of market capitalisation Barclays Pan Euro Aggregate + Barclays Pan Euro High Yield indices..
US bond ETF
penetration is only
one-tenth equity ETF
penetration
European bond ETF
penetration is similarly
small
US equity market = $24T
US bond
mutual funds
0.8%
US bond ETFs
38.0
%
7.6%
6.7%
15.1%
Europe
domiciled
bond
ETFs,
0.6%
Europe
domiciled
bond mutual
funds
21.3%
Europe
domiciled
equity
ETFs,
1.5%
Europe
domiciled
equity mutual
funds
20170410-134120-365694
6. Case study: US HY ETF in stressed markets
Fixed income ETFs have weathered many stressed markets including:
Credit Crisis (2008) European Sovereign
Debt Crisis (2010)
U.S. Treasury
Downgrade (2011)
Taper Tantrum
(2013)
Oil Selloff
(2014)
12/11/2015
During each of these stressed periods, many bond ETFs have displayed:
INCREASED VOLUMES DISCOUNTS TO NAV NO FORCED SELLING
Bond ETFs may trade more during a crisis
Source: BlackRock and Bloomberg as of 30 September 2016. There can be no assurance that an active trading market for shares of an ETF will develop or be maintained
Fixed income ETFs in stressed markets
0%
5%
10%
15%
20%
25%
30%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
US HY ETF Create/Redeem as % of HY Cash US HY ETF Exchange Volume as % of HY Cash
Financial Crisis
European
Debt Crisis
US Treasury
Downgrade
Taper Tantrum
Oil Sell Off
(2014)
High Yield
Sell-Off
(2015)
20170410-134120-365694
7. US HY ETF trading activity has limited impact on the underlying
bond market
Sources: BlackRock and Bloomberg, as of 30 September 2016. For illustrative purposes only. The performance quoted represents past performance and does not guarantee future results.
The dollar value of the ETF shares traded on the exchange divided by the gross dollar value of the
flows into and out of the ETF
Date
Creations / redemption
($m)
On-exchange volume
($m)
On-exchange to creation /
redemption ratio
Volume crossed on-
exchange ($m)
2015 high yield sell-off
11/12/2015 560.63 4,310.75 7.69 3,750.12
14/12/2015 395.40 3,033.06 7.67 2,637.66
15/12/2015 191.04 2,910.50 15.23 2,719.46
16/12/2015 104.09 2,460.44 23.64 2,356.35
18/12/2015 0.00 1,873.21 N/A 1,873.21
2013 Taper Tantrum
29/05/2013 178.99 1,028.63 6.56 849.63
03/06/2013 214.17 1,320.47 4.54 1,106.29
06/06/2013 64.401 1,088.41 17.84 1,024.01
On-exchange to creation /
redemption ratio of bond ETFs
tends to increase over time
A US HY ETF secondary to
primary ratio has tended to be
around 6:1 (i.e. for every 1 unit
of this US HY ETF that is
created/redeemed $6 trades on-
exchange
ETF secondary to primary ratio for a US HY ETF on large volume days
0
5
10
15
20
25
Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16
SecondarytoPrimaryRatio
(20-DayRolling)
20170410-134120-365694
8. Considerations re: indexed markets
Reduce price discovery:
• Passive so large, price discovery impaired
• Reduced ability of active managers to generate alpha
1
2 Reduction in liquidity of underlying assets
(Fixed Income)
3 Additional Volatility induced by ETF trading
4 Reduced product market competition from
common owners
5 Insufficient monitoring by passive investors
• Information velocity of active managers much higher passive
• Premise: The ability to generate alpha is independent of the correlation
environment because longs and shorts (vs. benchmarks) cancel each other out
• Main drivers of increased correlations are central banks
• More passive flows by non-information motivated traders could provide more
alpha opportunities for active managers
• Traders are choosing ETFs because of declining underlying liquidity, not the
reverse
• Fixed Income ETFs add to overall market liquidity through direct un-
intermediated secondary trading
• Especially valuable in stress - acts as a safety valve
• Trading of ETFs is a source of price discovery
• In times of stress, people trade more ETFs
• No evidence of any communication or implicit collusion among large
shareholders
• Passive managers have clearly stated governance principles
• As long-term scale players, the large passive investors invest far more in
governance than do dispersed individual shareholders or smaller active managers
Governance
Market functioning
20170410-134120-365694
Data from GBI except Futures and Swaps
Futures and Swaps include: Exchange Traded Futures, OCT Equity-linked contracts and CDS sourced from BIS.
Breakdown of futures and SWAPs
Exchange traded futures: $24,918B
OTC equity-linked $7,545B
OTC commodity $1,671B
CDS $14,596B
TOTAL $48,730B