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.

FTSE Group has leveraged its combined index and analytics experience to launch a series of indices aimed at delivering reduced index volatility. The newly launched FTSE Global Minimum Variance Index Series provides investors with a broad, diversified and investable portfolio incorporating a low volatility/variance objective, thereby offering potential improvements to the risk/reward trade-off versus conventional indices. The index series will compete against similar products from MSCI, S&P, Stoxx and Russell and could form the basis for future ETF launches.

Research from Legal & General Investments shows emerging markets to be the most popular geographical investment destination in the next six months, with two fifths (40%) of independent financial advisers (IFAs) choosing it as the likely best performer in the short term. When it comes to emerging markets ETFs, investors are spoilt for choice with a huge range of ETFs offering broad, regional, country and sector exposure.

Invesco PowerShares, a leading global provider of ETFs, has announced the anticipated listing of the PowerShares DWA SmallCap Technical Leaders ETF (DWAS) on the NYSE Arca. The fund will be the first US small-cap ETF based on the concept of relative-strength ranking. DWAS will be the fourth PowerShares ETF based on the DWA Technical Leaders strategy.

US ETF net assets under management grow by 4% in June, ending the month with roughly $1.18 trillion, with the largest four providers (iShares, SSgA SPDR, Vanguard and PowerShares) collecting the lion’s share of new assets, according to analysis from investment data provider Morningstar. SSgA alone raked in nearly $9 billion.

European equity ETFs potentially offer long-term value for investors who can look beyond the immediate crisis currently afflicting the continent. “European equities are unloved and out of favour. But in this lies an opportunity”, says JP Morgan. “European companies are positioned to benefit from global growth, with an increasing exposure to emerging markets, so any evidence of a pickup in economic activity will be positive for earnings. At the same time, valuations are cheap, providing a potentially attractive entry point for long-term investors.”

Dividend net increases were $12.0 billion in the second quarter of 2012, setting what is believed to be a new record dividend payout in aggregate dollars for US domestic listed common stocks. “Dividends are back in style with investors looking for yields during a time when companies can afford to give more and want to satisfy shareholders – all of which makes for a very positive outlook for dividends,” said Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices.

Indications that Japan is preparing to restart a pair of idled nuclear reactors, coupled with signs China may be about to issue new reactor licenses, could be the catalyst for a turnaround in fortunes for uranium mining ETFs. This improvement in sentiment has already had a positive impact on the price of uranium, which rose last month for the first time since January 2011. This, in turn, means good news for uranium mining stocks, which are currently trading at discounted prices.

The need for action prompted by climate change and the crises surrounding energy supply security will likely trigger changes in virtually every area of the economy. A new study from Allianz Global Investors argues that this could lead to a new phase of growth. The world economy, they say, may be at the beginning of a new long-term cycle of prosperity, or sixth Kondratieff cycle, characterised by a sustainable ‘green’ path of growth. We profile a number of clean energy ETFs that are likely to benefit.