Ossiam, a smart beta investment management firm and affiliate of Natixis Investment Managers, has listed the Ossiam Solactive Moody's Analytics IG EUR Select Credit ETF on Euronext Paris. The new smart beta fixed-income ETF replicates the Solactive Moody's Analytics IG EUR Select Credit Index which differentiates itself from traditional credit benchmarks in seeking to maximise the total return of a liquid and diversified selection of EUR-denominated investment grade corporate bonds, while maintaining a low credit risk profile.

Bonds are selected by applying Moody's Analytics public-firm EDF (Expected Default Frequency) credit measures, which are forward-looking, point-in-time default probabilities. These measures are based on information from equity markets and are combined with a detailed picture of a company's capital structure. Moody's Analytics combines EDF metrics with other inputs to produce a credit spread valuation framework, known as FVS (Fair Value Spreads).

The methodology selects a liquid and investable bond portfolio from the components of the Solactive Euro IG Corporate Index which is first filtered to retain only the most liquid bonds. It is then further refined by a quality filter based on Moody's Analytics EDF credit measures to remove the bonds displaying the highest downside risk.

The final stage of the process is to compare the remaining bonds' Option Adjusted Spread to their Moody's Analytics Fair Value Spread to select the 100 most-undervalued bonds. The Solactive Moody's Analytics IG EUR Select Credit Index is equally-weighted, re-balanced quarterly and aims to maintain the same sector and duration exposure as the investment universe. The index allows a maximum weighting of 5% per issuer. The index is calculated and published by Solactive.

Global ETP assets break through the US$5tr milestone

Assets invested in ETFs/ETPs listed globally grew by a record US$313bn in January, according to ETFGI's January 2018 Global ETF and ETP industry insights report. The increase of 6.47%, from US$4.84tr at the end of 2017, also represents the greatest monthly growth in assets since March 2016, which saw a monthly increase of US$221bn.

January 2018 also marked the 48th consecutive month of net inflows into ETFs/ETPs listed globally, with US$106bn gathered during the month; 68.6% more than net inflows at this point last year.

The majority of these flows can be attributed to the top 20 ETFs by net new assets, which collectively gathered US$62.6bn in January 2018. The SPDR S&P 500 ETF Trust (SPY US) on its own accounted for net inflows of US$19.8bn.

Equity ETFs/ETPs listed globally gathered net inflows of US$87.7bn in January and fixed income ETFs and ETPs gathered net inflows of US$11.6bn. Investors have tended to invest in core, market cap and lower cost ETFs in January 2018.

Solactive dominates ETF issuance

German index provider Solactive has reported a record number of index-linked launches, making it the number one provider of indices for ETFs in January 2018. With 55 ETF launches globally, 25 have involved Solactive as either creator, calculator, or administrator of the underlying index. ETF launches have covered both the equity and fixed-income spaces, and have involved a wide array of strategies including broad-based benchmark solutions and more niche strategies, such as smart beta or thematic indices.

Examples of ETF launches based on Solactive indices have included: UBS Global Gender Equality UCITS ETF, Xtrackers High Beta High Yield Bond ETF, KraneShares Electric Vehicles and Future Mobility ETF, Mackenzie International Equity Index ETF, and ETFS Pharma Breakthrough Go Ucits ETF. The German company is working on 'multiple fronts to expand its current offering of services and increasingly respond to clients' specific needs'. 'The aim is to offer the full value chain, from creation, calculation and maintenance of the index, to the delivery of supporting services, such as ETF services, state-of-the-art index research, factsheet generation and other reporting documentation,' stated the firm.

Solactive has also launched Solactive Technologies, a subsidiary based in Dresden, aimed at 'integrating sophisticated automation tools and high-end technology to make services faster, more efficient and customizable'. Key areas in 2018 will continue to be the enlargement of the Solactive Global Benchmark Series, the creation of innovative ESG indices, and the development of alternative factor indices, such as the Solactive Low Downside Volatility strategies, according to the index provider.

US provider deploys iStoxx quality value

Stoxx has licensed its iStoxx American Century USA Quality Value Index to American Century Investments as an underlying for an ETF.

The iStoxx American Century USA Quality Value Index concept allocates dynamically to both a value and an income strategy. The allocation of the strategies is governed by a risk-adjusted momentum signal. The value strategy of the index is the iStoxx American Century USA Value Index which aims at investing in quality companies with sound fundamentals and attractive valuation. The income strategy is the iStoxx American Century USA Income Index which aims at investing in quality companies with sustainable income and are high dividend payers.

WisdomTree eyes Asia expansion

ETP provider WisdomTree Investments has entered into an agreement with Premia Partners Company Limited, a Hong Kong-based investment firm that focuses on ETFs and smart beta solutions, through which Premia Partners will support WisdomTree with respect to its US-listed ETFs on promotional, marketing, product consulting and general education activities in specific Asian countries, excluding Japan.

'WisdomTree's global expansion is a critical part of our growth strategy, and this new relationship complements our existing business in Japan,' said Kurt MacAlpine, wisdomtree executive vice president and head of global distribution.

Deutsche AM dispatches Bloomberg Barclays high yield 'very liquid' bond

Deutsche Asset Management (Deutsche AM) has expanded its fixed income ETF range with the listing of the db x-trackers USD High Yield Corporate Bond UCITS ETF (DR).

The ETF, which listed on the London Stock Exchange this morning and on the Deutsche Börse last Friday (February 9, 2018), tracks an index from the Bloomberg Barclays High Yield Very Liquid Bond Index family. The benchmark consists of approximately 640 sub-investment grade bonds. The ETF has an all-in fee of 0.35% per annum and uses direct, physical replication to track its index.

Blanca Koenig, Deutsche AM Fixed Income ETF Strategist, said the new ETF complements the existing Xtrackers EUR high-yield offering as well as the existing USD bond ETF providing exposure to Treasuries, investment-grade corporates and USD emerging market bonds. Deutsche AM has over 50 fixed income ETFs plus additional currency-hedged share classes. Approximately two-thirds of the range uses direct, physical replication.