Investor sentiment has risen sharply from the lows of July and global fund managers have increased allocations to equities, most notably in Europe, according to the BofA Merrill Lynch Survey of Fund Managers for August. Having turned their backs on Europe, especially the eurozone, for much of 2012 investors are becoming far less bearish on the region. Significantly, there are more investors wanting to underweight US equities than eurozone equities.

Equities in developed markets are increasingly viewed as undervalued, the CFA UK Valuation Index has revealed. The most recent publication of the CFA Society of the UK’s quarterly survey shows that 50% of respondents rated developed market equities as either ‘undervalued’ or ‘very undervalued’, compared to 39% in Q2. Global developed market ETFs such as the PowerShares FTSE RAFI Developed 1000 ETF (PSRD) or the HSBC MSCI World ETF (HMWD) provide an efficient way to capitalise on this potential opportunity.

Rand Merchant Bank (RMB) has announced the launch of the RMB MidCap ETF, South Africa’s first mid-cap ETF. The aim of the fund is to track the performance of the FTSE/JSE Mid-Cap Index. This index includes the 60 largest companies on the JSE‚ in terms of market capitalisation‚ which are not included in the FTSE/JSE Top 40 Index. The fund therefore invests in the 41st to the 100th largest companies on the JSE.

AdvisorShares, a US sponsor of actively managed ETFs, has announced the launch of the AdvisorShares QAM Equity Hedge ETF (QEH). Listed on the NYSE Arca, QEH aims to provide investors with superior risk-adjusted returns versus the S&P 500 Index by investing in a portfolio of ETFs which echo the style and underlying allocations of the HFRI Equity Hedge (Total) Index. Essentially, QEH offers a form of hedge fund exposure without the requisite time and expertise needed to select individual hedge funds.

With fears of slowing economic growth intensifying, some investors have questioned whether the luxury segment, which has been surprisingly resilient in recent years, can continue its strong run. Despite the economic woes, luxury continues to have several tailwinds at its back and should deliver strong revenue growth in the coming years. For investors wishing to gain exposure to this segment, European consumer discretionary ETFs, which hold a large number of the world’s biggest and best-known luxury brands, provide quick and efficient access.

Investors should be cautious about the continued success of volatility targeting investment strategies, despite historical data that show such strategies would have added value in recent years, according to a report from BNY Mellon. Volatility targeting investment strategies increase allocations to stocks during periods of low volatility and sell stocks when volatility is high. These strategies have been embedded into a number of rules-based indices as well as a range of volatility targeting ETFs.

Two relative newcomers to the US ETF game, Russell Investments and FocusShares, have signalled their retreat, reflecting the intense competitive pressures within the US market as ETF giants iShares, SPDR and Vanguard monopolise inflows. Meanwhile, elsewhere, US-based Direxion, Europe-based Lyxor and Canada-based Horizons have announced the pending closure or delisting (of secondary listings) of some of their less popular funds.

Problems at market-maker Knight Capital (NYSE:KCG) appear to have had a negative impact on spreads for thinly traded ETFs. For less liquid ETFs, typically those ETFs that trade fewer than 50,000 shares per day, market-makers like Knight ensure that trades get executed at prices within an acceptable bid/ask range. However, the average spread for the 549 less liquid ETFs for which Knight acts as lead market-maker widened threefold in the aftermath of the error, according to IndexUniverse.

ETF Securities, one of Europe’s leading providers of Exchange Traded Products (ETPs), has revealed that net inflows into its physically-backed gold products have surpassed the $1 billion mark for the year, as investors look to hedge against continued financial, economic and political turmoil. ETF Securities listed the world’s first exchange-traded gold product in 2003. Today, more than $17 billion of the firm’s assets reside in products that track gold.

Total inflows into the European ETF market in the second quarter (Q2) of 2012 were just $139 million as the ongoing eurozone crisis weighed heavily on investor sentiment in the region. Although European ETFs fared relatively better in Q2 than other investment products such as mutual funds and hedge funds, they were outperformed by the ETF market in the US, which appears on track for its best ever year.