Would the transaction be allowed under U.S. and EU anti-trust laws?
On its face, this would have a hard time passing anti-trust. The combined entity would control over 60% of ETF assets under management, and that is generally not something lawmakers look favorably on. Of course, Vanguard is the "Great Disrupter," and even in this endeavor, its track record of consistently enhancing the investor experience would work in its favor. The other providers will not be happy about this, and we would expect a political dogfight.
How could a merger impact ETF investors?
From an ETF user's perspective, the potential merger of these two groups is mixed, mostly depending on how you use ETFs. The biggest detraction would be that this could potentially stifle competition in the ETF space. We would go from three sizable providers (SPDRs, iShares, and Vanguard) down to two. Countering that concern is the fact that Vanguard has a history of reducing costs for investors and enhancing the investor experience in every market that it has entered. If Vanguard were to lower the fees on some of iShares' more liquid products or merge them with Vanguard's lower-cost vehicles, then we would see a tremendous benefit for long-term ETF investors.
Full Story: http://news.morningstar.com/articlenet/article.aspx?id=293582 What a Vanguard-iShares Combination Would Mean for ETFs
Would the transaction be allowed under U.S. and EU anti-trust laws?
On its face, this would have a hard time passing anti-trust. The combined entity would control over 60% of ETF assets under management, and that is generally not something lawmakers look favorably on. Of course, Vanguard is the "Great Disrupter," and even in this endeavor, its track record of consistently enhancing the investor experience would work in its favor. The other providers will not be happy about this, and we would expect a political dogfight.
How could a merger impact ETF investors?
From an ETF user's perspective, the potential merger of these two groups is mixed, mostly depending on how you use ETFs. The biggest detraction would be that this could potentially stifle competition in the ETF space. We would go from three sizable providers (SPDRs, iShares, and Vanguard) down to two. Countering that concern is the fact that Vanguard has a history of reducing costs for investors and enhancing the investor experience in every market that it has entered. If Vanguard were to lower the fees on some of iShares' more liquid products or merge them with Vanguard's lower-cost vehicles, then we would see a tremendous benefit for long-term ETF investors.
Full Story: http://news.morningstar.com/articlenet/article.aspx?id=293582 PIMCO Launches First ETF (TUZ); Files For Six More
Currently, the largest direct competitor for TUZ is theiShares Lehman 1-3 Year Treasury Bond ETF (NYSE Arca: SHY), which has $7billion in assets and charges management fees of 0.15%. If TUZ can attract sufficient liquidity tosupport low-cost trading, it will be a serious challenger to SHY.
In related news, PIMCO also filed papers with the Securitiesand Exchange Commission to launch six additional fixed-income ETFs:
• PIMCO 3-7 Year U.S. Treasury Index Fund
• PIMCO 7-15 Year U.S. Treasury Index Fund
• PIMCO 15+ Year U.S. Treasury Index Fund
• PIMCO Broad U.S. TIPS Index Fund
• PIMCO Short Maturity U.S. TIPS Index Fund
• PIMCO Long Maturity U.S. TIPS Index Fund
PIMCO ETF WEBSITE: http://www.pimcoetfs.com/
Full Story: http://www.indexuniverse.com/sections/newsinfocus/5930-pimco-launches-etf.html PIMCO Enters ETF Business With a Bang
After months of talk, one of the most exciting launches yet in the exchange traded fund (ETF) business is set to happen today: Pacific Investment Management Co. (PIMCO) is now an ETF provider.
PIMCO is the leader in fixed-income management, so it’s fitting that their first offering is the PIMCO 1-3 Year U.S. Treasury Index Fund (TUZ), which focuses on low-yielding short-term Treasuries. The launch is especially exciting, because it’s going to go head-to-head with the grandfather of Treasury ETFs, iShares Barclays 1-3 Year Treasury Bond (SHY).
PIMCO recognizes that competition is fierce, but they are also sensitive to the fact that current yields are close to historic lows. To lure those looking for a strong fixed-income brand name at a reasonable price, the fund will have a 0.09% expense ratio after waiving a portion of the fees for at least a year. That’s less than any other bond ETF tracked by Morningstar, notes Ian Salisbury for The Wall Street Journal. SHY’s expense ratio is 0.15%.
Full Story: http://www.etftrends.com/2009/06/pimco-enters-etf-business-bang.html Bank stocks slip as offers dilute some firms a bit
The KBW Bank ETF (KBE), which tracks the industry sector, fell 0.4%. Banks are rushing to raise capital without government assistance, because that is one of the preconditions for repayment of previous government investment that the Fed laid out late Monday.
Full Story: http://www.marketwatch.com/story/bank-stocks-slip-as-offers-dilute-some-firms-a-bit Stat of the Day: 1 Million Foreclosures Already in 2009 (XHB)
The Center for Responsible Lending estimates that there have now been 1,000,000 foreclosures filed so far in 2009. It also noted that the Mortgage Bankers Association’s most recent data shows some 12% of all mortgages are delinquent. It gets worse. The group expects this 2009 foreclosure number to more than double.
This is not likely to kill the SPDR S&P Homebuilders (NYSE: XHB) with its ETF shares still up 3% at $12.47, but it is also unlikely to give any great credit to the notion that housing is going to make a screaming return out of the blue. Imagine what this does to the phantom housing inventory when you include the properties which banks are holding off the market for months. High risk also brings potential for high reward, play this risk with ETFs
Our proprietary seasonality charts point to emerging markets as the most likely field from which to net profits in June.
True, other fields offer opportunities, from inflation-protected bonds where I like the iShares Barclays Tips Bond exchange-traded fund (TIP) , to continued strength among mid-and small-cap stocks both here and abroad.
But when I look at our sector specific charts, it's easy to see the standout: energy-related themes -- coal via the Market Vectors Coal ETF (KOL) and oil, best barreled in the United States 12-Month Oil Fund. (USL) From this view, I can point to another with my eyes closed: emerging markets. Travelers taking Citigroup’s spot in the Dow industrials
Another chapter in the continuing decline of Citigroup Inc., once the nation's largest bank, was written Monday as the company was ousted from the Dow Jones Industrial Average, to be replaced by insurer Travelers Cos. -- a company with which Citigroup entered an ill-fated marriage a decade ago.
Cisco Systems (CSCO) and Travelers (TRV) will replace General Motors Corp. (GM) and Citigroup on the Dow Jones Industrial Average, Dow Jones Indexes said. State Street to Rebalance Eight SPDR(R) Exchange Traded Funds In Accordance with New S&P Procedures
State Street Global Advisors (SSgA), the investment management arm of State Street Corporation (NYSE: STT), today announced it will rebalance the holdings of eight SPDR(R) exchange traded funds that seek to track S&P Select Industry Indices on June 19, 2009 in accordance with the new procedural changes implemented by Standard & Poor's.
Beginning with the June 2009 rebalancing of the S&P Select Industry Indices, Standard & Poor's will rebalance the indices to equal weights using closing prices on the second Friday of the rebalancing month (i.e. the stock price reference date is one week prior to the rebalancing date effective date). The rebalancing effective date will remain after the close of the third Friday of the month. Vanguard’s Bid For iShares Raises Questions
Reports surfaced Sunday in London that the biggest U.S.-based index mutual fund company is tossing its hat into the ring to purchase the leading sponsor of exchange-traded funds.
The Sunday Telegraph is reporting that the Vanguard Group, which virtually created the modern indexing marketplace for individual investors, has made a bid in the neighborhood of $5 billion to buy Barclays Global Investors' iShares business.
The combination would create an ETF industry juggernaut with some $311.9 billion in total assets. Such a figure is based on estimated ETF asset levels for both Vanguard and BGI's iShares lineup at the end of April. It would easily bolt Vanguard, now No. 3, past current No. 2 State Street Global Advisors. Mapping Indexes (ETF’S)
Index investing continues to grow in size and scope. The Morningstar Principia database shows that about 15% of distinct portfolios are index-based products. These funds are either open-end index funds or exchange-traded products (ETPs) that track indexes. Together, index-based funds represent more than 20% of the value of all funds in the database.
As this segment of the market grows, so does the complexity of the indexes. There are now hundreds of sophisticated indexes whose construction and purpose bears little resemblance to traditional benchmarks such as the Russell 3000. These new methods include quantitative security selection and alternative weighting strategies.
Today's advisors can best serve their clients with a working knowledge of the various index methodologies. Unfortunately, this is no easy task. There are simply too many indexes and strategies available. We need new tools to make the analysis of index-based products faster and easier. ETF Stats For May 2009
The month of May brought the largest monthly decline ever in the number of US-listed ETFs and ETNs. Active listings changed by -14 after averaging more than +17 new products per month during the past three calendar years. Additionally, the six-month moving average of net new listings turned negative for the first time in history.
There were five new ETFs introduced during the month and 19 closures. The total number of listed products at the end of May stands at 830 (745 ETFs and 85 ETNs), the lowest level since last October. The quantity is down 15 from the start of the year and down 29 from the peak level of 859 established in early February prior to the closure of the Northern Trust NETS family of ETFs. Is new book’s ETF-based timing system better than buy and hold?
When investors seek to limit damage from bear markets, their approach generally is based on a gut feeling or prediction. Such short-term moves are known as "market timing." But emotional responses are counterproductive and market forecasts are a dime a dozen. Which is about what they're worth.
So, if the market can't be timed - and if a buy-and-hold approach doesn't work, either - what's an investor to do? Which ETF Sectors Are All the Rage?
SINCE SEPTEMBER, DEBORAH FUHR has occupied one of the loftiest perches in the world of exchange-traded funds.
As managing director and global head of ETF research at Barclays Global Investors, one of the world's leading ETF shops, she is considered one of the top analysts in her field.
She talked with Barrons.com by phone recently about her industry and which ETFs are sparking investor interest these days.
Q: You joined Barclay's last September, around the time that the financial world as we know it changed. What has it been like in the industry during this period? ETFs Profit From Rising Treasury Bond Yields
Leveraged exchange-traded funds that short U.S. Treasury bonds got a nice pop last week from a jump in yields, and the ETFs could see further gains if investors lose their thirst for government-backed debt.
In a dramatic sell-off Wednesday in government bonds, yields on 10-year notes surged above 3.7% at one point to their highest levels since November. That upheaval in the bond markets, which some traders said was exacerbated by mortgage-related selling, ignited fears that inflation is on the horizon as a result of the government's efforts revive the ailing financial system. New Pimco Bond ETF Marks Shift In Sector
In a move that could shake up the clubby business of exchange-traded funds, bond giant Pacific Investment Management Co. is poised to launch its first ETF early this week.
The move by Pimco, a unit of Allianz SE co-founded by bond guru Bill Gross, marks the first time in years such a high-profile mutual-fund company has tried to muscle its way into the ETF business, long dominated by a handful of large-but-lesser-known asset managers that specialize in indexing, such as Barclays PLC and State Street Corp.
ETFs, baskets of stocks or bonds that trade on an exchange, have been rapidly gaining popularity with investors, and took in tens of billions of dollars in 2008. But many big-name mutual-fund companies have shrugged off ETFs because these offerings were traditionally just index funds with low management fees, which ensured that profit margins were measly. 
