By the ETF research team at Invesco.

With the Brexit leaving date quickly approaching, how is your portfolio positioned? If you are considering gaining exposure to UK equities, do you want to focus on the largest companies (FTSE 100) that generate earnings from all around the world or medium-sized companies (FTSE 250) that generate more of their earnings from domestic markets? Whatever your view, a passive ETF can offer efficient, low-cost exposure to the index.   

Pacific Global Asset Management has unveiled its newest ETF strategy with the introduction of the Pacific Global Senior Loan ETF (FLRT US) on NYSE Arca. The actively managed fund seeks to generate high current income and preserve capital by investing in a portfolio of senior floating-rate loans. Anthony J. Dufault, MD of Pacific Global ETFs, said, “We believe that passive management is an inefficient strategy for floating-rate loan funds. Our experienced team of fixed income professionals seeks to add value by carefully selecting highly liquid, floating-rate loans of non-investment-grade companies.”

Assets under management in ETFs (and ETPs) listed in Europe have surpassed $1 trillion as of the end of December 2019, according to data from ETF research firm ETFGI. Total AUM rose 4.6% during the month, from $982.1 billion to $1.027trn, driven by a combination of strong net inflows and healthy market performance. Fixed income ETFs attracted the lion’s share of flows in 2019 with $61.1bn, followed by equity ETFs with $51.7bn and commodity ETFs with $8.7bn.

Philadelphia-based Global Beta Advisors has become the latest firm to unveil an ETF with the launch of the Global Beta Smart Income ETF (GBDV US) on NYSE Arca. The fund provides exposure to US dividend-paying equities and is underpinned by a sales-driven investment philosophy. It is linked to the proprietary Global Beta Smart Income Index, which is based on the S&P 900 universe.

Invesco has announced a shake-up to its product suite in the US including the closure of 42 ETFs and listing venue changes for 22 ‘BulletShares’ funds.

Energy-related equity ETFs have chalked up impressive performance recently with several funds delivering 8%+ returns over the past week and the First Trust Natural Gas ETF (FCG US) leading the charge with a return of 9.9%. The rally comes off the back of higher oil prices which have been trending upwards following the announcement of production cuts by OPEC and allied oil producers.

By the ETF research team at Invesco.

AT1 contingent convertible bonds (“AT1s”) are securities issued by financial institutions that generally carry higher yields than traditional fixed income securities.

BMO Global Asset Management is to withdraw from the European ETF market. In a letter to shareholders in its ETFs, the asset manager announced its intention to close all of its London-listed ETFs and cease managing ETFs domiciled in Europe. It said the decision was based on a variety of factors, including the current level of assets under management and projected asset growth in the current market environment. The ETF closures raise some important questions with respect to fund due diligence and issuer viability.

Passive fund managers running China and emerging markets equity ETFs linked to MSCI indices are gearing up for the latest scheduled increase in the portfolio weight of China A shares, to be implemented as of market close on 26 November. On completion, China A shares will command weights of 12.1% and 4.1% in the widely followed MSCI China and MSCI Emerging Markets indices, respectively. Danny Dolan, Managing Director of China Post Global, said the increase was “another significant step forward” for China’s onshore equity market.

By the research team at Invesco Asset Management.

The choice between credit and duration risk is increasingly important especially in today’s low/negative yield environment. With 10-year Treasury yields converging towards the shorter end, investors are not being compensated sufficiently for taking on duration risk. In our view, investment-grade corporate bonds offer enough pick up in yield over government bonds to make credit risk arguably more appealing.