GraniteShares teams up with Solactive to enter Europe's ETP leverage space; MSCI expands ESG range with new EU climate indices; Investec enters South Africa's secondary listing; Deutsche's Xtrackers hit €100 billion milestone; Hang Seng indices rolls out high div gauge.
GraniteShares, the US based ETF provider, has entered the European market with a platform of short and leveraged single stock daily exchange traded products (ETPs) for major companies, all of which are listed on the London Stock Exchange (LSE).
The ETPs track indices taken from Solactive’s new Single Stock Leverage Index Family exclusively. Products on leveraged indices have been rising in popularity, growing from US$2.4 billion in assets under management in 2006 to a substantial amount of US$75.5 billion at the end of September 2019.
Primarily, this development owes its popularity to the increasingly fast-changing nature of markets: a constantly growing interweaving of international stock markets in light of an ever more globalized world economy often results in higher market volatility, which sparks the necessity for more frequent tactical repositioning of portfolios and the ability to hedge stock risk in broad index and active funds exposures alike, according to Will Rhind (pictured), founder and CEO of GraniteShares,
‘Working with Solactive has enabled us to launch short and leveraged single stock ETPs, a new category reflecting the evolution of the ETP market from broad index solutions to the ability today to take very targeted positions. It’s a very exciting development,’ said Rhind.
The release of the ETPs creates a novum within the ETP product space since leverage on single stocks has primarily been a domain of hedge funds. The partnership is aimed at facilitates leveraged access to stock and enables sophisticated investors to place strategic positions on stocks employing only a fraction of the required capital. The ETPs also provide them with the ability to hedge stock-specific risks in portfolios, said Rhind.
‘As market uncertainty rises, investors require advanced strategies to react to market changes quickly and efficiently,’ said Timo Pfeiffer, chief markets officer at Solactive.
ESG ends 2019 on a high as MSCI releases new EU climate indices
MSCI has launched two series of provisional climate indexes which are designed to meet the minimum standards for the “EU Climate Transition benchmark” (CTB) and “EU Paris-aligned benchmark” (PAB) as defined in the “Final Report on Climate Benchmarks and Benchmarks’ ESG Disclosures” published by EU Commission’s Technical Expert Group (TEG) on Sustainable Finance on September 30, 2019.
As defined by the TEG, the CTB and PAB were created as two types of benchmarks that would allow investors not only to hedge against climate transition risks but also have the ambition to direct their investments towards opportunities related to the energy transition. The PAB is designed for highly focused climate-related investment strategies characterized by stricter minimum requirements, while the CTB allows for greater diversification.
While the final delegated acts, including the requirements for the CTB and PAB, are yet to be published, MSCI has decided to launch the MSCI Provisional Climate Change EU Climate Transition indexes and MSCI Provisional Climate Change EU Paris-Aligned indexes in order to help clients evaluate and test them.
In line with the TEG’s Final Report, both series of provisional indexes will pursue, amongst other things, a reduced carbon intensity and exclude Controversial Weapons and companies that breach global norms. They will also incorporate a year on year self-decarbonization of at least 7% on average in order to align with the trajectory of the Intergovernmental Panel on Climate Change’s 1.5-degree scenario. In addition, the MSCI Provisional Climate Change EU Paris-Aligned indexes will apply explicit screens to exclude carbon intensive companies.
‘These two new index series will allow investors to better grasp the characteristics and associated implications of the new benchmark types defined by the EU Technical Expert Group for Sustainable Finance,’ said Stephane Mattatia, head of index products Emea at MSCI.
Investec first to list ETNs on A2X
Investec Bank Limited is to secondary list two of its exchange traded notes (ETNs) on A2X Markets.
These – the ETNs Investec Top 40 Tri ETN (TOPTR2) and Investec Swix Top 40 TRI ETN (SWXTR2) will retain their primary listings on the JSE and will now also be available for trade on A2X.
‘Passive products such as ETNs are particularly cost sensitive as they track an underlying index consisting of a basket of securities. Our ETNs are market leaders as they have a zero total expense ratio. Making them available to investors on the A2X low-cost platform extends our value proposition to investors offering innovative and cost-effective products,’ said Tinus Rautenbach, head of equities at Investec Corporate and Institutional Banking (CIB) division.
These listings follow the A2X licence extension earlier this year by the Financial Sector Conduct Authority and the South African Reserve Bank’s Prudential Authority to include the secondary listing and trade of ETFs and ETNs. A2X is a licensed stock exchange which provides a secondary listing venue for companies.
Xtrackers breaks through €100 billion in assets
DWS Xtrackers exchange-traded products (ETPs) have broken through the €100 billion mark in assets under management (AUM), as investors continue to be attracted to the Europe and Asia-listed UCITS exchange-traded funds (ETFs) and exchange-traded commodities (ETCs), and to the US-listed 40-Act ETFs.
As of the end of Q3, 2019, Xtrackers ETPs had €104.9 billion in assets globally (Source: DWS, as at September 30, 2019). DWS Xtrackers is the second largest ETF manufacturer and promoter in Europe, and the first Europe headquartered ETF business to achieve €100 billion in assets under management (Source: DWS: 24 October, 2019).
Xtrackers ETFs are listed on eleven exchanges globally, with over 170 Xtrackers available covering a wide range of asset classes and investment exposures.
Hang Seng expands index range with high div strategy
Hang Seng Indexes Company Limited has launched the Hang Seng SCHK High Dividend Yield Index – a new gauge tracking the overall performance of high-dividend-yield securities that are listed in Hong Kong and eligible for trading via the southbound trading link of the Stock Connect Scheme.
The index comprises the 50 highest dividend yielding stocks among sizable Hong Kong-listed securities that have also demonstrated relatively lower price volatility and a persistent dividend payment record for the latest three fiscal years.
The new index will serve as a benchmark for investors who are looking to build a stable income-oriented investment portfolio and a basis for issuers who are looking to create index-linked financial products for dividend yield-related investment strategies.
The Hang Seng SCHK High Dividend Yield Index is calculated and disseminated in real-time at two-second intervals.