AdvisorShares Active ETF Market Share Update – Week Ending 9/20/2013
Last week, total AUM in all active ETFs increased by almost $80.2 million. Assets in the two largest categories “Short Term Bond” and “Global Bond” fell by $20.65 million and $38.585 respectively. As the dollar weakened on the Federal Reserve’s decision to delay tapering, the “Foreign Bond” category increased by $65.725 million and “Currency” active ETFs added $7.43 in value. Just like the previous week, the second largest increase in AUM came in the “High Yield” ETF category, which this time rose by over $44.35 million, mainly due to creation units. The “Alternative Income” category increased by $13.033 million, bringing total year-to-date inflows for the category to over $1 billion. While some funds in the “Alternative” category had creations and others experienced redemptions, the change in AUM was a fall of almost $2.252 million. Finally, the “US Equity” and “US Bond” categories increased by $5.81 and $2.51 respectively, largely driven by performance of the underlying ETFs over the course of a week where both stocks and bonds experienced healthy gains.
Highlights of the Prior week
For the week of September 16 – September 20
Stock Markets
The market rose for the third week in a row and once again the news about Federal Reserve was the most important factor for the market’s movements. On Monday, the started off on a positive note after Larry Summers withdrew his name from the race to become the next Fed Chairman. Although Summers hasn’t made many public statements about monetary policy, many investors were concerned that he would be more hawkish in tightening monetary policy than Janet Yellen, the current Vice Chair of the Fed who is now considered the most likely candidate to get the top job. However, the best day for stocks last week was Wednesday, when the Dow Jones Industrial Average and the S&P 500 reached new highs. The much-anticipated Federal Open Market Committee ended in the afternoon with the Fed pledging to continue purchasing $85 billion in new bonds and mortgage-backed securities. Fed chairman Ben Bernanke gave a press conference where he explained that the Fed had decided to delay tapering asset purchases due to a weak labor market, rising interest rates over the summer and the possibility of a government shut down or even the possibility of Congress failing to raise the debt ceiling. However, the market fell on Friday after a Fed official said that it was possible that tapering could begin after the Federal Reserve meeting next month. In August, industrial production increased by 0.4% and the CPI only rose 0.1% but the best news was about the housing market. Sales of existing homes rose to an annual rate of 5.49 million in August (the highest level since 2007), while housing starts increased to 891,000 for the same month.
Bond Markets
US Treasuries rallied on news that the Fed was delaying its anticipated tapering of asset purchases. Shorter-term maturities did especially well last week. Municipal bonds had a good jump after lagging the bond market for several weeks. High yield debt performed particularly well as investors rushed to riskier assets in order to receive higher yields. Many companies with below investment grade ratings took advantage of the strong investor demand for high yield paper to issue new debt. After a rough summer, emerging market debt had a great week after investors became more interested in investing outside the low-yielding US bonds markets and many emerging market currencies gained versus the dollar on news of the Fed’s decision. Also, some emerging markets have been posting impressive growth numbers as of late. Columbia’s 4.2% increase in second-quarter GDP, exceeded most estimates, while Peru’s growth for the quarter came in below expectations but was still a respectable 4.5%.
Sources:
*Indexes are from Reuters and Yahoo! Finance 4pm closing data
*Gold prices are from EcoWin and J.P. Morgan Asset Management
*Treasury rates are from Bloomberg.com
*Municipal and high yield rates are from Barclays Capital
Past performance is not indicative of future results.
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