ETF-linked products remain in high demand in the US retail structured products market with the iShares MSCI Emerging Markets ETF appearing in the top 10 underlyings ranking by issuance. The ETF has been deployed in 52 products marketed in the US year to date with an actual sales volume of US$193m.

JP Morgan and Goldman Sachs with nine products apiece lead the issuance of notes linked to the iShares MSCI Emerging Markets ETF, but other issuers such as Morgan Stanley, UBS (seven products each), UBS and BMO (five each) and Citi (four) have also offered this underlying recently.

The iShares MSCI Emerging Markets ETF is a BlackRock tracker fund incorporated in the USA which tracks the performance of the MSCI TR Emerging Markets Index. The ETF holds emerging market stocks that can predominantly be classified as large and mid-cap, and weights the holdings using a market capitalization methodology and rebalances quarterly.

Exposure to the iShares MSCI Emerging Markets ETF is being offered mainly via enhanced tracker (43), protected tracker (41), and capped call (40) structures with terms of between two to five years (32 products), one to two year-terms (18 products) and five-year plus terms (two), according to SRP data.

Commerz's adds bullish and bearish strategies to ComStage ETF portfolio

Commerzbank has expanded its ComStage range of exchange-traded index funds with two portfolio ETFs. The new ETFs ComStage Asset Strategy Defensive Ucits ETF and ComStage Asset Strategy offensive Ucits ETF are different in their file share and complement the ComStage Asset Strategy Ucits ETF launched in 2016.

The three portfolio ETFs rely on a different allocation of assets. While the ComStage asset strategy defensive Ucits ETF - with a distribution of 40% in equity ETFs, 40% in bond ETFs, 10% in money market ETFs and 10% in gold exchange traded commodities (ETCs), has a broader diversification and lower risk, the ComStage asset strategy opens offensively Ucits ETF increased growth opportunities over an investment of 80% in equity ETFs. The division of assets is rounded off by a share of 10% in bond ETFs and commodity ETFs. Between these two new ETFs, the proven ComStage Asset Strategy Ucits ETF is positioned with a distribution of 60% in equity ETFs, 30% in bond ETFs and 10% in commodity ETFs. All three ComStage asset strategy ETFs are based on the same basic concept: they are designed purely passively and do without an active fund manager.

In addition, they invest in low-cost investment funds, which are themselves ETFs. Once a year, the respective output allocation is restored. This rebalancing, i.e. the reset to the original weight, is used to restore the risk weight desired by the investor. The choice of a portfolio ETFs means a time saving for the investor in the individual allocation of assets. An important advantage is that an investor can acquire a very broad portfolio of asset classes in just one ETF with low sums of money. This is also particularly interesting for the long-term and regular asset building of savings plans.

Launched ten years ago, ComStage now offers well over 100 ETFs to almost all asset classes. These can be bought and sold daily via the trading Places Xetra, Frankfurt and Stuttgart as well as counter at current prices via direct banks.

Deutsche adds USD corporate bond 'yield plus' ETF to Xtrackers suite

Deutsche Asset Management (Deutsche AM) has added an ETF providing US dollar corporate bond 'yield plus' exposure to its suite of Xtrackers ETFs.

Xtrackers iBoxx USD Corporate Bond Yield Plus UCITS ETF listed today on the London Stock Exchange after listing on the Deutsche Börse last Friday, March 9th, 2018. The ETF provides exposure to the highest-yielding investment-grade bonds that broadly constitute the US dollar investment-grade corporate bond market. Specifically, the ETF focuses on the top 33%, ranked by yield, of bonds that make up the Markit iBoxx USD Corporates Index. The ETF's index also allows for bonds that were investment-grade at time of inclusion but have since been downgraded ('fallen angels'), and which can remain in the index as long as they are not lower than rated BB- using average agency ratings as calculated by the index provider IHS Markit.

The resulting 'yield plus' index is composed of approximately 1,400 bonds and provides currently 0.47%2 yield pick-up versus the broader investment-grade corporate bond index, with similar duration and BBB+ average rating. The new ETF, which has an annual All-in Fee of 0.25% and is a physical replication ETF, complements Deutsche AM's existing range of yield plus Xtrackers providing exposure to Euro corporate bonds and Eurozone government bonds. The Xtrackers range of yield plus ETFs has over €1.5 billion in assets under management.

ETF Global ETP AUM decreases for the first time since 2016

ETFs and ETPs listed globally gathered US$12.38bn in net inflows, the lowest monthly amount since May 2016 when net inflows were US$10.53bn, according to ETFGI. Year to date, net inflows stand at US$118.13bn.

According to ETFGI assets invested in ETFs/ETPs listed in globally decreased by a record US$180.10bn in February 2018. The decrease of 3.50%, from US$5.148tr at the end of January 2018 to US$4.9tr, also represents the lowest monthly growth in assets since January 2016, when assets decrease of 4.69% from US$2.9tr to US$2.8tr.  The majority of the monthly net new inflows can be attributed to the top 20 ETFs by net new assets, which collectively gathered US$61.8bn during 2018. The iShares Core S&P 500 ETF (IVV US) on its own accounted for net inflows of US$10.94bn.  Similarly, the top 10 ETPs by net new assets collectively gathered US$4.4bn year-to-date during 2018.

Globally-listed Equity ETFs/ETPs gathered net inflows of US$1.42bn in February, bringing net inflows for 2018 to US$89.08bn which is less than the US$91.35bn in net inflows at this point last year. Fixed Income ETFs and ETPs gathered net inflows of US$3.2bn in February, growing net inflows for 2018 to US$14.76bn which is less than the US$27.52bn in net inflows at this point last year.

Investors have tended to invest in core, market cap and lower cost ETFs in February 2018 with the he iShares Core S&P 500 ETF (IVV US) and iShares Core MSCI EAFE ETF (IEFA US) capturing most of the flows.

Taiwan regulator opens ETN market

Taiwan's Financial Supervisory Commission (FSC) has released draft guidelines lifting restrictions on securities brokerages to issue exchange-traded notes (ETNs), according to local media reports.

It is expected that brokerage firms would need to update their back-end systems to accommodate the new type of unsecured, unsubordinated debt security, a process that will last until the end of 2018.

An ETN is an instrument that combines aspects of bonds and exchange-traded funds (ETFs), as they have a maturity date and provide investors with a relatively easy way to access returns from a wide variety of market segments, such as commodities, it said.

While ETNs and ETFs share many similarities, an ETN does not own the underlying assets it tracks, providing the advantage of lower expense ratios, as well as lower tracking error compared with ETFs. However, similar to other debt securities, ETNs carry greater credit risk, as they are only backed by the credit of the underwriting issuers, according to the FSC.

To contain credit risk, the regulator said that ETNs can only be issued by brokerages with net value exceeding NT$10 billion (US$342.1m) and a capital adequacy ratio of no less than 250%. The regulator also said that it would evaluate each ETN application based on its risk hedging design and the underwriting brokerage's investment prospectus. The assets or indices tracked by an ETN must have adequate turnover and the issuer has to be ready to meet investors' requests to redeem, as well as allow investors access to pricing information of the instrument, the FSC said. ETNs tracking the strength of the New Taiwan dollar are to be prohibited.