Niche index provider Solactive AG has launched a new index tracking UK listed companies whose revenues are primarily generated in the UK. The Solactive UK Domestic Index targets investors who are interested in the UK domestic market, which is the second largest market in Europe by GDP. The launch of the index comes a month after the EU Referendum result, which saw Britain vote to leave the European Union. Henning Kahre, Head of Research at Solactive AG, said in a statement: “London is one of the most important financial centres in the world and a listing on the LSE is therefore an attractive gateway to capital markets.”

Canadian exchange-traded fund provider Horizons ETFs has launched an actively managed ETF designed to keep risk levels balanced across all invested asset classes, regardless of market conditions. The Horizons Global Risk Parity ETF (Toronto: HRA) is the first locally listed ETF to offer Canadian investors access to a risk-parity strategy. Risk Parity theory states that optimal diversification is achieved through assigning portfolio allocations which target a balanced contribution of risk from each asset class. Steve Hawkins, Co-CEO, Horizons ETFs, said: “HRA strives to keep risk levels across asset classes similar to one another, which can result in lower overall volatility and potentially higher risk-adjusted returns.”

With bond yields at record lows – the 10-year gilt yield is down to 0.8% today from 3% in January 2014 – investors have been pushed towards alternative strategies for income, including European-domiciled emerging market dividend exchange-traded funds. The sector has yielded between 4% and 6% annually compared to 2% from developed market counterparts over the past three years, according to a new study from Morningstar. Iff investors want to include emerging market equities, they might be more tempted to place their capital specifically with emerging market dividend funds, where the relatively higher yield helps to compensate for the falling return of the underlying stocks.

Assets invested in the exchange-traded fund and exchange-traded product industry in Canada and the US hit a record high at the end of June, according to ETF consultancy ETFGI. Canada saw assets rise to $79.42bn at the end of last month, while in the US they hit $2.256tn. The news will be a boon to the ETF industry, which is predicted to hit assets of $7tn by 2021, according to a recent report from PWC. The firm expects the North American ETF market to grow to $5.9 trillion in AUM by 2021 (a 23% cumulative annual growth).

Assets invested in ETFs and ETPs listed in Japan hit a record of $148bn at the end of June, according to independent ETF consultancy ETFGI. The record flows were driven by increased volatility in June as a result of the UK’s vote over whether to leave the European Union. Deborah Fuhr, managing partner at ETFGI, said: “Markets and investors around the world were engulfed in the chaos following what many saw as the unexpected result of the UK’s June 23rd vote. Volatility was up significantly during the month. The S&P 500 index was up just 0.3%.”

The European ETF market netted nearly €8bn of new money in the second quarter of this year helping boost assets under management to €482.4bn – a 4.2% increase on the first quarter. This was despite the second quarter of the year being an 18% decline from the €11bn of net inflows registered in the first quarter, according to data from Morningstar. Jose Garcia-Zarate, Associate Director of Passive Strategies Research for Morningstar, said: “Given the general investment environment, we see these figures in a positive light. Investors had a tough time in the second quarter of 2016.”

ETFs and ETPs in Europe gathered $5bn in net new assets making June the 21st month of net inflows, according to independent research firm ETFGI. Last month equity ETFs/ETPs gathered the largest net inflows with $2.17bn flowing in. This was followed by fixed income ETFs/ETPs with $1.47bn, and commodity ETFs/ETPs with $1.24bn. The flows came despite Europe feeling the impact of Brexit. Deborah Fuhr, managing partner at ETFGI, said: “Markets and investors around the world were engulfed in the chaos following what many saw as the unexpected result of the UK’s June 23rd vote.”

STOXX has entered into a memorandum of understanding (MOU) with Taiwan’s largest mutual fund company Yuanta Securities Investment Trust Company (Yuanta SITC), and Japanese trust bank Mitsubishi UFJ Trust and Banking Corp. (MUTB), to expand the smart beta footprint in Taiwan. Under the terms of the agreement, Yuanta plans to license a wide variety of STOXX indices – in particular, from STOXX’s smart beta suite which includes the iSTOXX MUTB Indices – to increase its smart beta offerings to retail and institutional clients in Taiwan.

By Alan Miller, Founding Partner and Chief Investment Officer, SCM Direct.
Robo-advisers are seen by many as the saviours of financial mankind – they are going to solve the mythical advice gap, make great investment decisions and make their financial backers millionaires. In reality, most robo-advice models are simply offering direct to consumer investment solutions, via ETFs rather than genuine advice. Our conclusion is that there is little evidence of robust innovation, as new robo-advisers appear to be fundamentally financially unviable and/or seem to be regularly flouting key FCA rules.

Assets invested in ETFs/ETPs globally have hit a new record. Investor money in ETFs/ETPs hit $3.177tn at the end of June, according to independent research consultancy firm ETFGI. Despite the impact of the EU Referendum on markets around the globe, June marked the 29th consecutive month of net inflows at $31.38bn. Record assets were seen in ETFs/ETPs listed in the United States with $2.256tn, Japan with $147.67bn and in Canada with $79.14bn. In June, equity ETFs/ETPs gathered the largest net inflows with $11.72bn, followed by fixed income ETFs/ETPs with $10.80bn, and commodity ETFs/ETPs with $6.63bn.