BlackRock

ETF Issuers and the Missed Education Opportunity

Posted by Anu Heda on Feb 20, 2017, in Thoughts , tagged with BlackRock, SSGA, Vanguard, WisdomTree

In January, Ignites published a piece titled “AQR Second to Vanguard in Active Flows” (subscription required). The primary points orbit active fund flows. What caught my eye was a link to 2016 passive and active fund flows from Morningstar. From their data, only 6% of passive ETF fund flows ($31.5B) went to issuers outside the top five (Vanguard, BlackRock, SSgA, Fidelity, and DFA). That means 120 ETF issuers split $31.5B (issuer list via etfdb). Seems like a massive issuer group sharing a small slice of the ETF flow pie. What types of products do these issuers provide?

To learn more, I sifted through issuer lists and AUM data. Many of the issuers offer leveraged or inverse ETFs (Direxion, ProFunds) while others have thematic ETFs (GlobalX, VelocityShares). To focus my research, I searched for ETFs with investment strategies classified as “alternatives.” Here’s a list of the top 25 alternatives ETFs (image to the right). Only one comes from BlackRock, SSgA, or Vanguard (it’s from SSgA). To support alternative products, issuers need to educate prospective buyers. That’s basic communication strategy. So, I studied the Web sites of the four firms with the 5 largest alternative ETFs: 2 from IndexIQ (now part of New York Life by way of MainStay), WisdomTree, First Trust, and Hull Capital. None of them highlight education on their homepages or product profiles. Rather, they model their sites off of traditional active managers with promotions of thought leadership (2017 Outlook, anyone?), product, and firm.

I think that’s a massive mistake. Focus on education by answering: what’s an alternative ETF? why should you care? how does it precisely fit into an asset allocation plan?

2017 Outlooks are like Snowflakes

Posted by Anu Heda on Jan 16, 2017, in Best Blogs of the Week, Thoughts , tagged with AB, American Century, BlackRock, MandG, TIAA

The industry’s blogs are currently awash in two post types: the year in review (2016) and outlooks (for 2017). I reviewed a dozen (list here; PDF) 2017 outlooks posted over the last four weeks. No two posts are alike. The lack of any standardization in tone, length, and type of prediction is informative in its own right. For a time-strapped FA, I can clearly see why he/she may gravitate to same 2 – 3 firms known from years past.

Three interesting takeaways about outlooks:

There’s nearly no overlap across firms. I expected to see significant topical commonality, such as 50%+ offering an end-of-year target for the S&P 500. Not the case.
Two firms use “2017 Outlook” in the post’s title and offer no predictions. I think the typical reader sees that title and expects some amount of prognostication.
Many firms do not provide clear predictions and include a tremendous volume of “may see” and “could occur” woven into the text. This may be compliance related for some firms, though others (e.g., AB, BlackRock) are comfortable with their investment professionals writing predictions.

Across the 12 firms, I counted 28 predictions (my threshold: need a definitive statement or graphic related to a 2017 prediction). The BlackRock post had the most (6) and the average was 2.3 predictions/post. In case you’re curious of some differences, here are four examples how firms provide predictions.

AB – Says it with a chart. (chart too large to include)

American Century – Casts winners and losers. “And the Potential Winners Are… Regional banks with commercial loan exposure could benefit from rising inflation expectations and a steeper yield curve.”

M & G – Makes it relative to a geography or asset class. “Brazil will not be the outperformer in 2017 as existing valuations are priced for a perfect execution of policy.”

TIAA – Uses Straight-talk and blunt languge. “The rise in the U.S. dollar pauses even if rates move higher.”

Best Blogs of the Week #255

Posted by Anu Heda on Jan 03, 2017, in Best Blogs of the Week , tagged with American Century, BlackRock, Columbia Threadneedle, Russell, SSGA

Three, as in the rule of three. As you may expect, the week between Christmas and New Year’s (plus an extra day) means a significant amount of prognostication. Everyone got the memo: say it in threes! Here are the posts I thought were most influential.

American Century – Trump Policies and Current Market Trends – The housing industry potentially sees headwinds from higher mortgage rates, with the existing trend of rising rates reinforced. Tighter labor markets may also have an impact on cost. The auto industry may also see an impact from rising rates as well as sub-optimal supply chains. In addition, export-oriented companies may see an offset from the impact of a stronger dollar.

BlackRock – Why stock market tranquility is unlikely to last – Political Risk is elevated but not reflected.

Columbia Threadneedle – 3 emerging market charts you need to see – Emerging markets forecasted to outpace developed markets

Rule of Three: Idea #1

Russell – The Low-Return Imperative: Investing uncomfortably – The low return environment is real and it presents investors and their advisors with critical decisions.

SSgA – The Hunt for Yield in 2017: 3 Potential Investment Ideas – The appearance of high dividends is not necessarily indicative of actual delivery of yield or dividend yield growth.

Industry Viewpoints: Creating an Effective Blog

Posted by Anu Heda on Dec 27, 2016, in Best Blogs of the Week, Thoughts , tagged with BlackRock, SSGA, Vanguard

Last month I was fortunate to present thoughts and ideas on industry blogs to 20+ marketers at a break-out session of PAICR‘s annual meeting. Obviously, writing the “Best Blogs of the Week” column for five years informed my point of view. And so much has changed in these five years. Two quick examples of change; first, when I started there were 6 asset managers with blogs; now there are over 40. Second, five years ago most blog posts were authored by “admin” with no graphs, charts, or tables; now that would be unconscionable.

The hour-long session was interactive and engaging. I appreciated the high volume of questions and even some attendees offering answers. Here are three notable takeaways, from the attendees.

“Blogs are not serious.” – This is a message one CEO said to his marketing team (yes, in 2016). Some firms will need generational change at the top echelons of management for this attitude to change. Apparently showcasing BlackRock, Vanguard, and SSgA as firms maintaining vigorous blogs isn’t sufficient anecdotal evidence.
“Our blog is our content engine.” – This came from a firm with a high-volume blog in reference to their content syndication program. The Marketer made reference to the blog as central to all social and e-mail campaign efforts.
“Three years in; we still don’t feel efficient [in creating posts].” – This message had over half the room nodding heads. Some firms leverage outsourced writers while others have in-house staff partnered with investment professionals. In both cases (and situations in-between) there’s a sense that too much time and effort goes into each post.

So while the industry has grown to use blogs in unbelievable (to five years ago) ways, I believe we’ll see more firms introduce blogs and currently blogging firms try to become more efficient.

Best Blogs of the Week #254

Posted by Anu Heda on Dec 19, 2016, in Best Blogs of the Week , tagged with BlackRock, WisdomTree

The industry blog flow continues to be brisk as we come towards the end of 2016. Two posts of interest in this week’s review. The first is the best of many posts related to increase of the Fed Funds Rate. The post includes a straightforward analysis showing the impact of (potentially) lower corporate taxes on US public companies’ earnings growth.

BlackRock – The Fed makes its move – At this stage, very low interest rates (especially negative rates) and flat yield curves for long periods of time do little to support growth in the real economy.

WisdomTree – Impact of Potential Tax Reform: Size and Sector Analysis – Small caps—being taxed more predominantly in the U.S. at higher rates than large caps with global earnings—should see a relatively higher increase in earnings from a reduction in U.S. corporate taxes.

via WisdomTree