ETF Radar Magazine Issue July 2011 (North American Edition)

www.etf-radar.com

Issue No. 11ISSN 2150-9166

North American Edition

July 2011

Feature

What's Really Behind Your Product?Global Collateral Report

Rankings

ETF Landscape At A Glance

The Global

Magazine

PeopleJames R. KingRydex|SGI ETF

Index InvestorS&P 500Tactical Portfolio UpdateETF of the Month

Sector Map

THE HOTSPOTSAT A GLANCE

etfRadarSM etfRadarGlobal Investor Intelligence

SM

Inverse and leveraged products, synthetic replicated funds and optimised indices are just a few features one should understand.

The ETF business has become quite exotic.

Don’t get lost.

EXPLORE. UNDERSTAND. PROFIT.

www.etf-radar.com

PUT US

ON YOUR RADAR.

ETF Radar Magazine | Issue July 2011

ADVERTISING

http://www.etf-radar.com

www.etf-radar.com

Issue No. 11ISSN 2150-9166

North American Edition

July 2011

Feature

What's Really Behind Your Product?Global Collateral Report

Rankings

ETF Landscape At A Glance

The Global

Magazine

PeopleJames R. KingRydex|SGI ETF

Index InvestorS&P 500Tactical Portfolio UpdateETF of the Month

Sector Map

THE HOTSPOTSAT A GLANCE

etfRadarSM etfRadarGlobal Investor Intelligence

SM



Don’t get lost.


www.etf-radar.com

PUT US

ON YOUR RADAR.


ADVERTISING


NORTH [email protected] Naples (FL) +1 239 384 6090

EUROPE, MIDDLE EAST and [email protected] London +44 203 519 1179

ETF RADAR IS A PRIVATE AND INDEPENDENT INFORMATION PROVIDER.

NO STATEMENT IN THIS ISSUE IS TO BE CONSTRUED AS A RECOMMENDATION TO BUY OR SELL SECURITIES OR TO PROVIDE INVESTMENT ADVICE. PLEASE SEE OUR DISCLAIMER PAGE FOR FURTHER INFORMATION.

© 2009-2011 ETF Radar Global Investor Services. All rights reserved.

For all subscription enquiries, thoughts or general questions please contact us directly by email:

[email protected]> 3

Global Summary

ContentsIssue July 2011

3

Industry Highlights

Global Round-Up

Top20 Global Index Provider

Hot Product Debuts

Upcoming Events

Number CruncherAssets under Management

Change in ADV

Change in AuM

Best-

Worst-Performer

Performer

S&P 500 Sector Map

Tactical

ETF of the Month

Portfolio Update

IndexInvestor 6

Rankings 16

,

Rydex|SGI ETF

James R. King

People 13

Fast Lane

Get In Touch

Feature 8

Global Collateral Report

IndexCompanies and People


Dear Reader,

Despite the latest criticism raised by the FSB and IMF, ETFs are still very popular with investors. Blackrock research expects the global ETF industry to reach USD 2 trillion AUM by the end of 2012. Expecting such a big growth, it's time to take a closer look on different aspects of ETFs such as the transparency and security for investors.

In our cover story we are focussing on the often unattended collateralization. In our opinion the industry has to be more transparent as well as educate better about the involved risks. Regrettably for investors, some so called collaterals are not worth their name and should be rather classified as junk. There are big differences between the market participants. ETF Radar exclusively publishes the details in its Global Collateral Report 2011. The associated story you will find starting on page 8.

But don't become flustered now. ETFs are definitely more secure than mutual funds. In our exclusive interview, Ted Hood CEO of Source amongst others talks about this topic.

Enjoy reading and let us know your thoughts.

Silvan SchellingHead of Relationship Management

Global Summary

Industry Highlights

4

Global Round-Up

stnevE detceleS

mocr.adar-fte.www no noitces tneve eht tisiv esaelp sliated tneve lluf roF

BOSTON3rd Annual FundForum USA07–09 November 2011Westin Boston Waterfront

NEW YORK CTIYETF 360October 12, 2011The Metropolitan Club

benchmark aimed at investors seeking exposure to the well-known STOXX Europe 600 Index, while at the same time looking to reduce the risk of currency fluctuations.

AFRICA: VAN ECK PLANS NIGERIA ETFVan Eck’s ETF lineup already includes a number of products offering targeted exposure to frontier markets, like the Vietnam ETF or the recently proposed Mongolia ETF. The latest newcomer is the Market Vectors Nigeria ETF, which would focus on companies listed in or operating in one of Africa’s oil-rich economies. The proposed ETF would seek to replicate the Market Vectors Nigeria Index, a modified capitalization weighted, float adjusted index that includes companies that are domiciled and primarily listed on an exchange in Nigeria or that generate at least 50% of their revenues in Nigeria.

►

will be based in San Francisco and will work with retail and institutional Advisors and Wealth Managers within the Western region. Prior to joining ETFS, Dan was Regional Vice President at Guggenheim Funds

EUROPE: VANGUARD EXPANDS ETF LISTINGS Vanguard, one of the world’s biggest mutual-fund company, confirmed plans that they will roll out its range of ETFs in the U.K. market in Q4/2011. Market participants expect a set of global equity ETFs and some strategy ETFs. Also one cross-listing on a Pan-European exchange could happen soon after the launch at the London Stock Exchange.

EUROPE: STOXX600 WITH CURRENCY HEDGED VERSIONIndex provider STOXX has introduced the all-new STOXX Europe 600 Hedged EUR Index, a currency hedged strategy

►

►

►

►

US: 80% VOTE AGAINST COMMODITY ETFSA staggering number of Registered Investment Advisors will not recommend new commodity ETFs to their clients, according to a new study released by Rivermark Research. 80.6 % of advisors surveyed say new commodity ETFs are unnecessary, with most advisors listing “oversaturation” of the marketplace as the number one reason, followed by “product complexity” and “risk.”25.2 % of advisors surveyed also believe new ETF products – outside of commodity funds – will not serve a purpose in their clients’ portfolios.

US: ETFS EXPANDS ITS SALES TEAMAs part of its US business expansion plans and continued growth in the US physically backed ETP platform, ETF Securities, has appointed Dan Magnusson to the US Sales team. Dan

►

►

OVERALL MARKET ETF/ETPAccording to BlackRock‘s latest data report, the end of May 2011, the global ETF industry had 2,747 ETFs (+23%) with 6,079 listings (+38%) and assets of USD 1,446.6 Bn (+39%), from 142 providers (+8%) on 49 exchanges (+16%) around the world. This compares to 2,218 ETFs with 4,411 listings and assets of USD 1,044.1 Bn from 131 providers on 42 exchanges in May one year ago.

Additionally, there were 1,158 other ETPs with 1,794 listings and assets of USD 190.2 Bn from 58 providers on 23 exchanges. This compares to 792 ETPs with 1,122 listings and assets of USD 129.4 Bn from 45 providers on 18 exchanges, at the end of May 2010.

HEDGE FUNDS LOVE ETFSCredit Suisse Quantitative Equity Research recently put out a research paper that identified the ETFs with the highest hedge fund ownership and those that are most heavily shorted. According to Credit Suisse, alternativ asset managers love the SPDR S&P OIL & Gas ETF (30%) and SPDR S&P Retail ETF (19%). Interestingly, these ETFs also have the greatest percentage of shorts. Rounding out the top holders list among hedge funds and the percentage of the shares held by hedge funds: GDX Market Vectors Gold Miners (14%); IShares DJ US Real Estate (13%); SPDR KBW Regional Banking ETF (12%); and SPDR S&P Homebuilders ETF (12%).


Amundi ETF (pg. 10) Lyxor (pg. 11)

Barclays (pg. 10, 11) Morgan Stanley (pg. 12)

BlackRock (pg. 2) Natixis (pg. 10)

BoA/Merrill Lynch (pg. 9) Nomura (pg. 5)

Citigroup (pg. 9) Ossiam (pg. 11)

Commerzbank (pg. 11) Rabobank (pg. 9)

Deutsche Bank (pg. 4) Rivermark Research (pg. 4)

ETF Securities (pg. 4, 10) Rydex|SGI ETF (pg. 13)

First Trust (pg. 4) Arne Scheehl (pg. 11)

Ben Fulton (pg. 11, 12) Stoxx (pg. 4)

IndexIQ (pg. 5) UBS (pg. 4)

iShares (pg. 7) Van Eck (pg. 4)

Ivesco PowerShares (pg. 5, 12) Vanguard (pg. 4, 6)

NORTH [email protected] Naples (FL) +1 239 384 6090

EUROPE, MIDDLE EAST and [email protected] London +44 203 519 1179

ETF RADAR IS A PRIVATE AND INDEPENDENT INFORMATION PROVIDER.

NO STATEMENT IN THIS ISSUE IS TO BE CONSTRUED AS A RECOMMENDATION TO BUY OR SELL SECURITIES OR TO PROVIDE INVESTMENT ADVICE. PLEASE SEE OUR DISCLAIMER PAGE FOR FURTHER INFORMATION.

© 2009-2011 ETF Radar Global Investor Services. All rights reserved.

For all subscription enquiries, thoughts or general questions please contact us directly by email:

[email protected]> 3

Global Summary

ContentsIssue July 2011

3

Industry Highlights

Global Round-Up

Top20 Global Index Provider

Hot Product Debuts

Upcoming Events

Number CruncherAssets under Management

Change in ADV

Change in AuM

Best-

Worst-Performer

Performer

S&P 500 Sector Map

Tactical

ETF of the Month

Portfolio Update

IndexInvestor 6

Rankings 16

,

Rydex|SGI ETF

James R. King

People 13

Fast Lane

Get In Touch

Feature 8


IndexCompanies and People


Dear Reader,

Despite the latest criticism raised by the FSB and IMF, ETFs are still very popular with investors. Blackrock research expects the global ETF industry to reach USD 2 trillion AUM by the end of 2012. Expecting such a big growth, it's time to take a closer look on different aspects of ETFs such as the transparency and security for investors.

In our cover story we are focussing on the often unattended collateralization. In our opinion the industry has to be more transparent as well as educate better about the involved risks. Regrettably for investors, some so called collaterals are not worth their name and should be rather classified as junk. There are big differences between the market participants. ETF Radar exclusively publishes the details in its Global Collateral Report 2011. The associated story you will find starting on page 8.

But don't become flustered now. ETFs are definitely more secure than mutual funds. In our exclusive interview, Ted Hood CEO of Source amongst others talks about this topic.

Enjoy reading and let us know your thoughts.

Silvan SchellingHead of Relationship Management

Global Summary

Industry Highlights

4

Global Round-Up

stnevE detceleS

mocr.adar-fte.www no noitces tneve eht tisiv esaelp sliated tneve lluf roF

BOSTON3rd Annual FundForum USA07–09 November 2011Westin Boston Waterfront

NEW YORK CTIYETF 360October 12, 2011The Metropolitan Club

benchmark aimed at investors seeking exposure to the well-known STOXX Europe 600 Index, while at the same time looking to reduce the risk of currency fluctuations.

AFRICA: VAN ECK PLANS NIGERIA ETFVan Eck’s ETF lineup already includes a number of products offering targeted exposure to frontier markets, like the Vietnam ETF or the recently proposed Mongolia ETF. The latest newcomer is the Market Vectors Nigeria ETF, which would focus on companies listed in or operating in one of Africa’s oil-rich economies. The proposed ETF would seek to replicate the Market Vectors Nigeria Index, a modified capitalization weighted, float adjusted index that includes companies that are domiciled and primarily listed on an exchange in Nigeria or that generate at least 50% of their revenues in Nigeria.

►

will be based in San Francisco and will work with retail and institutional Advisors and Wealth Managers within the Western region. Prior to joining ETFS, Dan was Regional Vice President at Guggenheim Funds

EUROPE: VANGUARD EXPANDS ETF LISTINGS Vanguard, one of the world’s biggest mutual-fund company, confirmed plans that they will roll out its range of ETFs in the U.K. market in Q4/2011. Market participants expect a set of global equity ETFs and some strategy ETFs. Also one cross-listing on a Pan-European exchange could happen soon after the launch at the London Stock Exchange.

EUROPE: STOXX600 WITH CURRENCY HEDGED VERSIONIndex provider STOXX has introduced the all-new STOXX Europe 600 Hedged EUR Index, a currency hedged strategy

►

►

►

►

US: 80% VOTE AGAINST COMMODITY ETFSA staggering number of Registered Investment Advisors will not recommend new commodity ETFs to their clients, according to a new study released by Rivermark Research. 80.6 % of advisors surveyed say new commodity ETFs are unnecessary, with most advisors listing “oversaturation” of the marketplace as the number one reason, followed by “product complexity” and “risk.”25.2 % of advisors surveyed also believe new ETF products – outside of commodity funds – will not serve a purpose in their clients’ portfolios.

US: ETFS EXPANDS ITS SALES TEAMAs part of its US business expansion plans and continued growth in the US physically backed ETP platform, ETF Securities, has appointed Dan Magnusson to the US Sales team. Dan

►

►

OVERALL MARKET ETF/ETPAccording to BlackRock‘s latest data report, the end of May 2011, the global ETF industry had 2,747 ETFs (+23%) with 6,079 listings (+38%) and assets of USD 1,446.6 Bn (+39%), from 142 providers (+8%) on 49 exchanges (+16%) around the world. This compares to 2,218 ETFs with 4,411 listings and assets of USD 1,044.1 Bn from 131 providers on 42 exchanges in May one year ago.

Additionally, there were 1,158 other ETPs with 1,794 listings and assets of USD 190.2 Bn from 58 providers on 23 exchanges. This compares to 792 ETPs with 1,122 listings and assets of USD 129.4 Bn from 45 providers on 18 exchanges, at the end of May 2010.

HEDGE FUNDS LOVE ETFSCredit Suisse Quantitative Equity Research recently put out a research paper that identified the ETFs with the highest hedge fund ownership and those that are most heavily shorted. According to Credit Suisse, alternativ asset managers love the SPDR S&P OIL & Gas ETF (30%) and SPDR S&P Retail ETF (19%). Interestingly, these ETFs also have the greatest percentage of shorts. Rounding out the top holders list among hedge funds and the percentage of the shares held by hedge funds: GDX Market Vectors Gold Miners (14%); IShares DJ US Real Estate (13%); SPDR KBW Regional Banking ETF (12%); and SPDR S&P Homebuilders ETF (12%).


Amundi ETF (pg. 10) Lyxor (pg. 11)

Barclays (pg. 10, 11) Morgan Stanley (pg. 12)

BlackRock (pg. 2) Natixis (pg. 10)

BoA/Merrill Lynch (pg. 9) Nomura (pg. 5)

Citigroup (pg. 9) Ossiam (pg. 11)

Commerzbank (pg. 11) Rabobank (pg. 9)

Deutsche Bank (pg. 4) Rivermark Research (pg. 4)

ETF Securities (pg. 4, 10) Rydex|SGI ETF (pg. 13)

First Trust (pg. 4) Arne Scheehl (pg. 11)

Ben Fulton (pg. 11, 12) Stoxx (pg. 4)

IndexIQ (pg. 5) UBS (pg. 4)

iShares (pg. 7) Van Eck (pg. 4)

Ivesco PowerShares (pg. 5, 12) Vanguard (pg. 4, 6)

stnevE detceleS

Global Summary

5

Top10 Global Index Provider(Ranked by AuM)

Hot Product Debuts

► FIRST CLOUD ETF LAUNCHEDFirst Trust announced that the first ETF focused on the cloud computing industry is expected to launch on NASDAQ in early July 2011. The fund will be based on the ISE Cloud Computing Index. This index is a modified equal-dollar weighted index designed to provide a benchmark for investors interested in tracking companies involved in the cloud computing industry. The Index is owned and was developed by the ISE.

FRANKFURTCommodities Deutschland20-22 September 2011Le Meriden Parkhotel

Ticker/ISIN: SKYY TER: 0.60% p.a.CCY: USD

LONDONEuropean Cup of ETFs19–20 September 2011Great George Street Conference Hall

Sources: Event organizers, Reuters, BusinessWire, BlackRock, ETF Radar Global Research

► SMALL-CAP REIT ETF LAUNCHED IndexIQ released a new ETF dedicated to providing access to the small-cap US real estate sector. The fund will include exposure to a variety of small-cap Real Estate Investment Trusts (REITs). “Performance among all REITs took a big hit during the financial crisis, but since 2009, REITs have seen a rebound, with small-cap offerings faroutpacing the performance of their large-cap counterparts,” said Adam Patti, CEO of IndexIQ.

Ticker/ISIN: ROOFTER: 0.69% p.a.CCY: USD

↑

↑

↑

→→

→

→

► NEW GAS STRATEGY ETNUBS recently launched the ETRACS Natural Gas Futures Contango ETN on NYSE Arca. The unsecured note is designed to capitalize on natural gas markets in a state of contango, as evidenced by an upward sloping futures curve, while minimizing the exposure to absolute changes in futures prices. The ETN is linked to the ISE Natural Gas Futures Spread Index. An ETF wrapper would be an interesting option to sell this alpha strategy in Europe.

Ticker/ISIN: GASZTER: 0.85% p.a.CCY: USD

► NEW STYLE ETFSInvesco PowerShares has launched a suite of nine fundamental style exchange-traded funds. The fundamental ETFs are based on the RAFI Fundamental U.S. Style Index Series.The products include the Fundamental Pure Large Value Portfolio and the Fundamental Pure Large Growth Portfolio. Seven of the new funds are already existing Powershares funds that are being renamed and will follow new indexes.

Ticker/ISIN: PXLV, PXLGTER: 0.39% p.a.CCY: USD

MSCI 25.5%

S&P 22.6%

Barclays Capital 8.5%

STOXX 7.1%

Russell 5.9%

FTSE 4.2%

Dow Jones 3.9%

Markit 3.4%

NASDAQ OMX 2.5%

NYSE Euronext 1.2%

Other 15.1%↑

HONG KONGETF Index Investment Summit 201131 Aug. - 1 Sept. 2011JW Marriot Hotel

JAKARTAIndonesia Investment Summit 201120 - 22 July 2011Grand Hyatt Hotel


MSCI 25.6%

S&P 22.6%


STOXX 7.1%

Russell 5.9%

FTSE 4.2%

Dow Jones 3.9%

Markit 3.4%

NASDAQ OMX 2.5%

NYSE Euronext 1.2%

Other 15.1%

LONDONETF & Indexing Investments Europe17–19 October 2011Guoman Tower Hotel

First Trust

Number Cruncher

Total listings of Exchange Traded Funds in Germany as of July 6, 2011.

Percent rate of Americans who wiew homeownership as important part of the „American Dream“.

1'199 98%

Index Investor

In June the S&P 500 Index dropped -1.67% due to falling performance of -0.10% in June 2011 was the S&P 500 Utilities leading indicators and a weakening of the U.S. economy. Index. Due to its defensive stocks, the sector performance All sectors ended in the red in June. Having a look at the nearly remained unchanged in June. If you believe in an sector performances, the S&P 500 Financials was the ongoing trend, the would worst performing sector with a loss of -2.8% in June 2011. be your best pick. The financial sector continues to trend lower with the weak economy and lower real estate prices. If investors believe in a recovery of this sector, the contrarian pick with the would be the best choice. Best performing sector with a

Vanguard Utilities ETF (VPU)

Vanguard Financials ETF (VFH)

n

Like A Red Carpet: Losses In All S&P500 Sectorsby Sebastian Stahn

S&P 500 Sector Map

6


The Action PlanCONTRARIAN PICK BEST-TREND PICK

HIGH HIGH LOW LOWVFH VPU

Vanguard Financials ETF ISIN/Ticker: VFH USTER / AUM: 0.27% / 738 mn.1 Year Return: +15.53%Last Price/High/Low 52-Weeks: USD 32.11 | 27.32 | 35.24Replication: Full replication to sampling

Vanguard Utilities ETFISIN/TIcker: VPU USTER / AUM: 0.24% / 747 mn.1 Year Return: +24.90%Last Price/High/Low 52-Weeks: USD 71.99 | 59.13 | 73.59Replication: Full replication to sampling

RISK-REWARD-ANALYSISbased on an investment horizon of one month


Energy–1.87%

Materials–0.23%

Industrials–0.63%

HealthCare

–1.12%

TelecomServices–1.26%

InformationTechnology

–2.60%

Consumer Discretionary

–0.18% Utilities–0.10%

Financials–2.80% Consumer

Staples–2.43%

BESTPERFORMINGSECTORS

WORSTPERFORMING

SECTORS

Monthly Performance. As of June 30, 2011.

stnevE detceleS

Global Summary

5

Top10 Global Index Provider(Ranked by AuM)

Hot Product Debuts

► FIRST CLOUD ETF LAUNCHEDFirst Trust announced that the first ETF focused on the cloud computing industry is expected to launch on NASDAQ in early July 2011. The fund will be based on the ISE Cloud Computing Index. This index is a modified equal-dollar weighted index designed to provide a benchmark for investors interested in tracking companies involved in the cloud computing industry. The Index is owned and was developed by the ISE.

FRANKFURTCommodities Deutschland20-22 September 2011Le Meriden Parkhotel

Ticker/ISIN: SKYY TER: 0.60% p.a.CCY: USD

LONDONEuropean Cup of ETFs19–20 September 2011Great George Street Conference Hall

Sources: Event organizers, Reuters, BusinessWire, BlackRock, ETF Radar Global Research

► SMALL-CAP REIT ETF LAUNCHED IndexIQ released a new ETF dedicated to providing access to the small-cap US real estate sector. The fund will include exposure to a variety of small-cap Real Estate Investment Trusts (REITs). “Performance among all REITs took a big hit during the financial crisis, but since 2009, REITs have seen a rebound, with small-cap offerings faroutpacing the performance of their large-cap counterparts,” said Adam Patti, CEO of IndexIQ.

Ticker/ISIN: ROOFTER: 0.69% p.a.CCY: USD

↑

↑

↑

→→

→

→

► NEW GAS STRATEGY ETNUBS recently launched the ETRACS Natural Gas Futures Contango ETN on NYSE Arca. The unsecured note is designed to capitalize on natural gas markets in a state of contango, as evidenced by an upward sloping futures curve, while minimizing the exposure to absolute changes in futures prices. The ETN is linked to the ISE Natural Gas Futures Spread Index. An ETF wrapper would be an interesting option to sell this alpha strategy in Europe.

Ticker/ISIN: GASZTER: 0.85% p.a.CCY: USD

► NEW STYLE ETFSInvesco PowerShares has launched a suite of nine fundamental style exchange-traded funds. The fundamental ETFs are based on the RAFI Fundamental U.S. Style Index Series.The products include the Fundamental Pure Large Value Portfolio and the Fundamental Pure Large Growth Portfolio. Seven of the new funds are already existing Powershares funds that are being renamed and will follow new indexes.

Ticker/ISIN: PXLV, PXLGTER: 0.39% p.a.CCY: USD

MSCI 25.5%

S&P 22.6%


STOXX 7.1%

Russell 5.9%

FTSE 4.2%

Dow Jones 3.9%

Markit 3.4%

NASDAQ OMX 2.5%

NYSE Euronext 1.2%

Other 15.1%↑

HONG KONGETF Index Investment Summit 201131 Aug. - 1 Sept. 2011JW Marriot Hotel

JAKARTAIndonesia Investment Summit 201120 - 22 July 2011Grand Hyatt Hotel


MSCI 25.6%

S&P 22.6%


STOXX 7.1%

Russell 5.9%

FTSE 4.2%

Dow Jones 3.9%

Markit 3.4%

NASDAQ OMX 2.5%

NYSE Euronext 1.2%

Other 15.1%

LONDONETF & Indexing Investments Europe17–19 October 2011Guoman Tower Hotel

First Trust

Number Cruncher

Total listings of Exchange Traded Funds in Germany as of July 6, 2011.

Percent rate of Americans who wiew homeownership as important part of the „American Dream“.

1'199 98%

Index Investor

In June the S&P 500 Index dropped -1.67% due to falling performance of -0.10% in June 2011 was the S&P 500 Utilities leading indicators and a weakening of the U.S. economy. Index. Due to its defensive stocks, the sector performance All sectors ended in the red in June. Having a look at the nearly remained unchanged in June. If you believe in an sector performances, the S&P 500 Financials was the ongoing trend, the would worst performing sector with a loss of -2.8% in June 2011. be your best pick. The financial sector continues to trend lower with the weak economy and lower real estate prices. If investors believe in a recovery of this sector, the contrarian pick with the would be the best choice. Best performing sector with a

Vanguard Utilities ETF (VPU)

Vanguard Financials ETF (VFH)

n

Like A Red Carpet: Losses In All S&P500 Sectorsby Sebastian Stahn

S&P 500 Sector Map

6


The Action PlanCONTRARIAN PICK BEST-TREND PICK

HIGH HIGH LOW LOWVFH VPU

Vanguard Financials ETF ISIN/Ticker: VFH USTER / AUM: 0.27% / 738 mn.1 Year Return: +15.53%Last Price/High/Low 52-Weeks: USD 32.11 | 27.32 | 35.24Replication: Full replication to sampling

Vanguard Utilities ETFISIN/TIcker: VPU USTER / AUM: 0.24% / 747 mn.1 Year Return: +24.90%Last Price/High/Low 52-Weeks: USD 71.99 | 59.13 | 73.59Replication: Full replication to sampling



Energy–1.87%

Materials–0.23%

Industrials–0.63%

HealthCare

–1.12%

TelecomServices–1.26%

InformationTechnology

–2.60%

Consumer Discretionary

–0.18% Utilities–0.10%

Financials–2.80% Consumer

Staples–2.43%

BESTPERFORMINGSECTORS

WORSTPERFORMING

SECTORS

Monthly Performance. As of June 30, 2011.

QUICK FACTS . Health Care holdings of the Consumer Discretionary stocks

Aside from this past week, the S&P 500 index. It has an remain attractive.

markets in general were trading expense ratio of 0.20% and an Currently investors may overweight defensive stocks. in lower territory. When stocks average daily trading volume of

are in a lower trend, investors 9 million shares. The ETF Radar Tactical typically go for more defensive portfolio is a model portfolio positions such as health care that invests in five ETFs based stocks which are usually not as on a customized tactical ETF affected as other sectors. In rankings system. The portfolio addit ion, the Consumer trades at the end of each Discretionary sector has been led month. The holdings for July up by companies such as include McDonald's and Amazon.

, , Based on the rankings

, is the ETF & of the month. It tracks the

►

►

iShares MSCI Japan (EWJ)

SPDR-Health Care (XLV) SPDR-Consumer Discretionary (XLY) SPDR- SPDR-Utilities (XLU) iShares S&P Health Care (XLV)MidCap 400 Growth (IJK)

n

Index Investor

Tactical Portfolio Update

by David Cohne

Health Care And Consumer Discretionary Are Most Attractive

ETF Radar Tactical Portfolio

Source: Cohne Investment Group, exclusively for ETF Radar / July 1, 2011 Ranking

7

ETF of the Month

SPDR Health Care ETF

52-Week Range $35.45 - $35.63 Market Cap $4.2 bn.Dividends 0.17TER 0.20% p.a.Last Volume 9'113'840 ETF Issuer SPDRReplication Full Replication

(XLV)

TICKER ETF NAME TER AUM WEIGHT


XLV SPDR-Health Care 0.20% $4.2 billion 20%

XLY SPDR-Consumer Discretionary 0.20% $2.8 billion 20%

XLU SPDR-Utilities 0.20% $4.7 billion 20%

IJK iShares S&P MidCap 400 Growth 0.25% $3.3 billion 20%

EWJ iShares MSCI Japan 0.54% $7.2 billion 20%

8

Feature

QUICK FACTS the clients money into the five stocks by buying them There are big differences between the issuers’ on the exchange or over-the-counter from a market

collateral management.participant. Hence the ETF's value behaves like the

A collateral with a volatility of 47% is questionable.performance of the five stocks. If an ETF wants to track

Investors should realize that also ETFs could be the performance of 20 or 200 stocks it may quickly associated with some hidden risks. become difficult and costly. Hence – especially in

Europe – the majority of ETF issuers prefer swap-As years go by more and more ETF providers are based (or synthetic) replication methods for their “born” trying to get on the gravy train. For example products. the latest newcomer in the European business is

Ossiam ETF, a subsidiary of Natixis, which is What will happen if one goes bust?affiliated to BPCE, France's second largest banking A synthetic ETF doesn't hold the exact underlying group. As the number of ETF issuers increase, each index constituents. Instead, it holds a (randomly filled) of them tries to minimize costs and maximize the basket of securities. These securities may be completely performance of their products. As ETF provider different to the index it is tracking – which is an you have the choice between physical replication important fact some investors often do not catch and synthetic replication. Let's consider an issuer correctly. The ETF asset manager typically will enter will launch a new ETF. The fund should track an

index covering the World's five largest publicly into a total return swap (TRS) contract in which he

listed stock companies. The ETF issuer could put gives away the performance of the collateral basket in

►

►

►


HIGH

Many investors may be strongly surprised if they get familiar with the potential risks associated with the constituents of their collateral baskets. Probably the ETF industry would be well advised to set new quality rules for collaterals – beyond UCITS.


by Sebastian Stahn and David Cohne

QUICK FACTS . Health Care holdings of the Consumer Discretionary stocks

Aside from this past week, the S&P 500 index. It has an remain attractive.

markets in general were trading expense ratio of 0.20% and an Currently investors may overweight defensive stocks. in lower territory. When stocks average daily trading volume of

are in a lower trend, investors 9 million shares. The ETF Radar Tactical typically go for more defensive portfolio is a model portfolio positions such as health care that invests in five ETFs based stocks which are usually not as on a customized tactical ETF affected as other sectors. In rankings system. The portfolio addit ion, the Consumer trades at the end of each Discretionary sector has been led month. The holdings for July up by companies such as include McDonald's and Amazon.

, , Based on the rankings

, is the ETF & of the month. It tracks the

►

►

iShares MSCI Japan (EWJ)

SPDR-Health Care (XLV) SPDR-Consumer Discretionary (XLY) SPDR- SPDR-Utilities (XLU) iShares S&P Health Care (XLV)MidCap 400 Growth (IJK)

n

Index Investor

Tactical Portfolio Update

by David Cohne

Health Care And Consumer Discretionary Are Most Attractive

ETF Radar Tactical Portfolio

Source: Cohne Investment Group, exclusively for ETF Radar / July 1, 2011 Ranking

7

ETF of the Month

SPDR Health Care ETF

52-Week Range $35.45 - $35.63 Market Cap $4.2 bn.Dividends 0.17TER 0.20% p.a.Last Volume 9'113'840 ETF Issuer SPDRReplication Full Replication

(XLV)

TICKER ETF NAME TER AUM WEIGHT


XLV SPDR-Health Care 0.20% $4.2 billion 20%

XLY SPDR-Consumer Discretionary 0.20% $2.8 billion 20%

XLU SPDR-Utilities 0.20% $4.7 billion 20%

IJK iShares S&P MidCap 400 Growth 0.25% $3.3 billion 20%

EWJ iShares MSCI Japan 0.54% $7.2 billion 20%

8

Feature

QUICK FACTS the clients money into the five stocks by buying them There are big differences between the issuers’ on the exchange or over-the-counter from a market

collateral management.participant. Hence the ETF's value behaves like the

A collateral with a volatility of 47% is questionable.performance of the five stocks. If an ETF wants to track

Investors should realize that also ETFs could be the performance of 20 or 200 stocks it may quickly associated with some hidden risks. become difficult and costly. Hence – especially in

Europe – the majority of ETF issuers prefer swap-As years go by more and more ETF providers are based (or synthetic) replication methods for their “born” trying to get on the gravy train. For example products. the latest newcomer in the European business is

Ossiam ETF, a subsidiary of Natixis, which is What will happen if one goes bust?affiliated to BPCE, France's second largest banking A synthetic ETF doesn't hold the exact underlying group. As the number of ETF issuers increase, each index constituents. Instead, it holds a (randomly filled) of them tries to minimize costs and maximize the basket of securities. These securities may be completely performance of their products. As ETF provider different to the index it is tracking – which is an you have the choice between physical replication important fact some investors often do not catch and synthetic replication. Let's consider an issuer correctly. The ETF asset manager typically will enter will launch a new ETF. The fund should track an

index covering the World's five largest publicly into a total return swap (TRS) contract in which he

listed stock companies. The ETF issuer could put gives away the performance of the collateral basket in

►

►

►


HIGH

Many investors may be strongly surprised if they get familiar with the potential risks associated with the constituents of their collateral baskets. Probably the ETF industry would be well advised to set new quality rules for collaterals – beyond UCITS.


by Sebastian Stahn and David Cohne

9

Feature

HIGH

return for the performance of the fund's reference more ETF providers made their collateral baskets index. Eventually, investors have the risk that the visible on their websites. The recent call of the swap counterpart fails to fulfill its obligations. As Financial Stability Board to give more details about illustrated above, the performance of the five stocks assets held in collateral baskets to improve would no longer be provided by the initial swap transparency for investors strengthened this claim. As partner. So what will happen, if the swap above already mentioned, all synthetic (swap based) counterpart goes bust? Under UCITS, Europe's ETFs show differences between the underlying ETF regulatory framework for the fund industry, the and the collateral basket portfolio. One issuer for collateral is used as security in such a case. The example collateralises all of its ETFs with a portfolio collateral basket is made up from stocks and bonds consisting of stocks out of the German blue-chip index from OECD countries. A collateral shall cover 90% DAX. If investors buy an European bond ETF it is in of the net asset value (NAV) of the ETF, so the fact collateralised with a portfolio of German stocks. counterparty risk is 10% of the ETF's NAV. It is Other issuers use a broadly diversified portfolio of prevalent that ETF issuers use their parent bank as stocks based on a quantitative optimisation method. swap counterparty. Due to the lower correlation of Japanese stocks with

other developed countries the outcome of the Full replication contains similar risks optimisation will contain a big part of Japanese Counterparty risk appears in both replication companies.methods – full and synthetic. Using full / physical replication counterparty exposure arises when Examples of collaterals by issuers: securities are lent out by the ETF. This is quite common in the fund industry no matter even if it is A look behind the curtain – ETF Securitiesan ETF wrapper or a classic mutual fund. Securities As a reaction on the call of the Financial Stability Board lending generates an extra portion of income. to give more details about assets held in collateral Usually the lending fee contributes up to 40 basis baskets to improve transparency for investors, points to a blue chip ETF like the iShares (ETFS) publishes since May 2011 a list of all EuroStoxx50. Each security lending transaction is collateral held as security for investors on its website. secured by a so-called collateral. Usually, these The issuer holds currently USD 28.2 billion AuM. First securities are sent to a separate entity – mainly a of all the process of collateralisation at ETFS has to be bank with a custody business – which take care of described. We just highlight the collateralisation of the position and separate the relevant securities by ETFs, which are UCITS compliant and don't focus on posting it into a special account. In both replication the ETPs. Regarding to ETFS' website they currently methods, collaterals are generally 102% of the value have four swap providers. Swaps with the partners of domestic shares and 105% of the value of foreign Citigroup and Bank of America Merrill Lynch are shares. The North American peers still favour on unfunded. Agreements with Barclays and Rabobank full replication. Full replicated ETFs in the U.S. are are fully-funded. regulated under the Investment Company Act of 1940. This act forbids certain transactions and limits the use of derivatives. Also the SEC has stopped approving synthetic ETFs in March of 2010 to study their affects.

Who looks at the available Excel-files on ETFS' website, Quality of collateral – a turning point which list the stocks used as collateral, will find some But do investors really know, what's behind their interesting stocks. The majority consists of small and ETF? Is it even collateralised? What kind of mid caps. Furthermore there are a lot of illiquid securities are in the collateral basket? A few years Japanese stocks used as collateral. Also interesting is ago it was very difficult to find out, how the the statement regarding the valuation of the collateral collateral basket looked like and by how much – if on ETF Securities' website, which says that the at all – it was properly (over-)collateralised. As “collateral is highly diversified and/or of high quality”. today's investors desire full transparency, more and Sure, Markowitz says that diversification is important,

ETF Securities

but if the world stock markets tumble, the collaterals should have been better banned from a correlation between the equity markets money-market ETF since the expression “PIIGS” has approximates one. Keep the last paragraph in mind become a common negative shortcut for the troubled while you read the following example: The Eurozone states. Second, in some ETFs appears a major collateral with the highest weighting for the “ collateral position called “UK Equity Holdings”.

” is the Spanish media company Obviously, this is a Lyxor AM associated fund vehicle. . Hence it could be fairly risky for an investor to accept a

Sure, it belongs to the EuroStoxx Consumer security as collateral issued and managed by the ETF Services Index, but is it a good stock as collateral? firm itself.Its price is EUR 1.38 with a market capitalisation of round about EUR 700 Mio. and a 52 week high of EUR 2.52 and a low of EUR 1.27. Thus the (nearly penny-) stock had a volatility of 47% over the last year (as of 24th June 2011). Some other collaterals used are small and more or less illiquid stocks from all over the world.

The cost-cutting approach of (AuM USD A positive aspect is that all of the ETFs are up to ten

9.9 bn) seems to be what investors like. “We decided to percent over-collateralised. In the example of the

implement a competitive pricing strategy. Cost is a key “ETFX DAX 2x Long” the fund is 9.14% over-

criteria when collateralised. But imagine the above mentioned case of a default of the swap partner in falling equity markets and no other counterparty can be found to enter into the swap. The first possibility to switch to physical replication is hardly possible because of the highly differing collateral basket components. Furthermore physical replication is not possible in short or leveraged ETFs. Thus the last possibility is to terminate the fund and liquidate the collateral basket. But what kind of securities are in my portfolio? Right, mostly small and mid caps with a high beta and lower liquidity. It won't be fun to liquidate this volatile portfolio in falling equity markets. So it is questionable if cushions of approximately 9% will be enough to sleep carefree.

French Connection – Lyxor, Amundi & OssiamThe French ETF issuer (Current AuM USD 55 bn.), uses its parent Societe Generale as swap partner. Other than ETF Securities, its ETFs are not that much over-collateralised. The very positive aspect comparing to Lyxor's competitor is that the securities in the collateral baskets are mostly large caps with a high market capitalisation. Furthermore Lyxor is very transparent regarding the collateralisation. Sometimes the transparency may lead to surprises. Investors should keep an eye on two things: First, the Lyxor ETF Euro Cash. Here one could clearly see the dominance of Spanish and Italian Government bonds. Perhaps, those

ETFX DAX 2x LongPromotora de Informacions S.A. (ES0171743117)

Amundi ETF

Ossiam

Lyxor

db x-trackers

Deutsche Bank

selecting an ETF; our TER is on average 25% lower than that of our competitors.” said Valérie Baudson, Managing Director of Amundi ETF in an interview with ETF Radar. The issuer is a joint-venture between Societe Generale and Credit Agricole. Regarding transparency and quality of collaterals the newcomer makes a good shape. Detailed information about the underlying baskets is daily updated available via Amundi's website – and no obscure securities (or strong overweight of French equities) appeared in three randomly selected samples. Amundi's custodian is CACEIS Bank.

, a brand new ETF issuer and affiliate of French banking-group Natixis, provides detailed and easy to find facts about the effective ETF holdings. Accordingly, one could quickly find detailed information about the specific securities. Obviously, Natixis wired some positions of their French equities portfolio to Ossiam because there is a clear dominance of major French stocks used as collateral. The French start-up uses State Street Bank Luxembourg S.A. as custodian.

Commendable Germans – Deutsche Bank and...Another issuer to highlight is , who offers currently 187 products and manages USD 52.6 billion. It uses its parents as swap partner. A very commendable aspect of db x-trackers ETFs is the transparency regarding its collaterals. For

ETF Radar Magazine | Issue July 2011ETF Radar Magazine | Issue July 2011

It won't be fun to liquidate this volatile portfolio in falling markets.

It could be fairly risky for an investor to accept a security as collateral issued and managed by the ETF firm itself.

Feature

10

9

Feature

HIGH

return for the performance of the fund's reference more ETF providers made their collateral baskets index. Eventually, investors have the risk that the visible on their websites. The recent call of the swap counterpart fails to fulfill its obligations. As Financial Stability Board to give more details about illustrated above, the performance of the five stocks assets held in collateral baskets to improve would no longer be provided by the initial swap transparency for investors strengthened this claim. As partner. So what will happen, if the swap above already mentioned, all synthetic (swap based) counterpart goes bust? Under UCITS, Europe's ETFs show differences between the underlying ETF regulatory framework for the fund industry, the and the collateral basket portfolio. One issuer for collateral is used as security in such a case. The example collateralises all of its ETFs with a portfolio collateral basket is made up from stocks and bonds consisting of stocks out of the German blue-chip index from OECD countries. A collateral shall cover 90% DAX. If investors buy an European bond ETF it is in of the net asset value (NAV) of the ETF, so the fact collateralised with a portfolio of German stocks. counterparty risk is 10% of the ETF's NAV. It is Other issuers use a broadly diversified portfolio of prevalent that ETF issuers use their parent bank as stocks based on a quantitative optimisation method. swap counterparty. Due to the lower correlation of Japanese stocks with

other developed countries the outcome of the Full replication contains similar risks optimisation will contain a big part of Japanese Counterparty risk appears in both replication companies.methods – full and synthetic. Using full / physical replication counterparty exposure arises when Examples of collaterals by issuers: securities are lent out by the ETF. This is quite common in the fund industry no matter even if it is A look behind the curtain – ETF Securitiesan ETF wrapper or a classic mutual fund. Securities As a reaction on the call of the Financial Stability Board lending generates an extra portion of income. to give more details about assets held in collateral Usually the lending fee contributes up to 40 basis baskets to improve transparency for investors, points to a blue chip ETF like the iShares (ETFS) publishes since May 2011 a list of all EuroStoxx50. Each security lending transaction is collateral held as security for investors on its website. secured by a so-called collateral. Usually, these The issuer holds currently USD 28.2 billion AuM. First securities are sent to a separate entity – mainly a of all the process of collateralisation at ETFS has to be bank with a custody business – which take care of described. We just highlight the collateralisation of the position and separate the relevant securities by ETFs, which are UCITS compliant and don't focus on posting it into a special account. In both replication the ETPs. Regarding to ETFS' website they currently methods, collaterals are generally 102% of the value have four swap providers. Swaps with the partners of domestic shares and 105% of the value of foreign Citigroup and Bank of America Merrill Lynch are shares. The North American peers still favour on unfunded. Agreements with Barclays and Rabobank full replication. Full replicated ETFs in the U.S. are are fully-funded. regulated under the Investment Company Act of 1940. This act forbids certain transactions and limits the use of derivatives. Also the SEC has stopped approving synthetic ETFs in March of 2010 to study their affects.

Who looks at the available Excel-files on ETFS' website, Quality of collateral – a turning point which list the stocks used as collateral, will find some But do investors really know, what's behind their interesting stocks. The majority consists of small and ETF? Is it even collateralised? What kind of mid caps. Furthermore there are a lot of illiquid securities are in the collateral basket? A few years Japanese stocks used as collateral. Also interesting is ago it was very difficult to find out, how the the statement regarding the valuation of the collateral collateral basket looked like and by how much – if on ETF Securities' website, which says that the at all – it was properly (over-)collateralised. As “collateral is highly diversified and/or of high quality”. today's investors desire full transparency, more and Sure, Markowitz says that diversification is important,

ETF Securities

but if the world stock markets tumble, the collaterals should have been better banned from a correlation between the equity markets money-market ETF since the expression “PIIGS” has approximates one. Keep the last paragraph in mind become a common negative shortcut for the troubled while you read the following example: The Eurozone states. Second, in some ETFs appears a major collateral with the highest weighting for the “ collateral position called “UK Equity Holdings”.

” is the Spanish media company Obviously, this is a Lyxor AM associated fund vehicle. . Hence it could be fairly risky for an investor to accept a

Sure, it belongs to the EuroStoxx Consumer security as collateral issued and managed by the ETF Services Index, but is it a good stock as collateral? firm itself.Its price is EUR 1.38 with a market capitalisation of round about EUR 700 Mio. and a 52 week high of EUR 2.52 and a low of EUR 1.27. Thus the (nearly penny-) stock had a volatility of 47% over the last year (as of 24th June 2011). Some other collaterals used are small and more or less illiquid stocks from all over the world.

The cost-cutting approach of (AuM USD A positive aspect is that all of the ETFs are up to ten

9.9 bn) seems to be what investors like. “We decided to percent over-collateralised. In the example of the

implement a competitive pricing strategy. Cost is a key “ETFX DAX 2x Long” the fund is 9.14% over-

criteria when collateralised. But imagine the above mentioned case of a default of the swap partner in falling equity markets and no other counterparty can be found to enter into the swap. The first possibility to switch to physical replication is hardly possible because of the highly differing collateral basket components. Furthermore physical replication is not possible in short or leveraged ETFs. Thus the last possibility is to terminate the fund and liquidate the collateral basket. But what kind of securities are in my portfolio? Right, mostly small and mid caps with a high beta and lower liquidity. It won't be fun to liquidate this volatile portfolio in falling equity markets. So it is questionable if cushions of approximately 9% will be enough to sleep carefree.

French Connection – Lyxor, Amundi & OssiamThe French ETF issuer (Current AuM USD 55 bn.), uses its parent Societe Generale as swap partner. Other than ETF Securities, its ETFs are not that much over-collateralised. The very positive aspect comparing to Lyxor's competitor is that the securities in the collateral baskets are mostly large caps with a high market capitalisation. Furthermore Lyxor is very transparent regarding the collateralisation. Sometimes the transparency may lead to surprises. Investors should keep an eye on two things: First, the Lyxor ETF Euro Cash. Here one could clearly see the dominance of Spanish and Italian Government bonds. Perhaps, those

ETFX DAX 2x LongPromotora de Informacions S.A. (ES0171743117)

Amundi ETF

Ossiam

Lyxor

db x-trackers

Deutsche Bank

selecting an ETF; our TER is on average 25% lower than that of our competitors.” said Valérie Baudson, Managing Director of Amundi ETF in an interview with ETF Radar. The issuer is a joint-venture between Societe Generale and Credit Agricole. Regarding transparency and quality of collaterals the newcomer makes a good shape. Detailed information about the underlying baskets is daily updated available via Amundi's website – and no obscure securities (or strong overweight of French equities) appeared in three randomly selected samples. Amundi's custodian is CACEIS Bank.

, a brand new ETF issuer and affiliate of French banking-group Natixis, provides detailed and easy to find facts about the effective ETF holdings. Accordingly, one could quickly find detailed information about the specific securities. Obviously, Natixis wired some positions of their French equities portfolio to Ossiam because there is a clear dominance of major French stocks used as collateral. The French start-up uses State Street Bank Luxembourg S.A. as custodian.

Commendable Germans – Deutsche Bank and...Another issuer to highlight is , who offers currently 187 products and manages USD 52.6 billion. It uses its parents as swap partner. A very commendable aspect of db x-trackers ETFs is the transparency regarding its collaterals. For

ETF Radar Magazine | Issue July 2011ETF Radar Magazine | Issue July 2011

It won't be fun to liquidate this volatile portfolio in falling markets.

It could be fairly risky for an investor to accept a security as collateral issued and managed by the ETF firm itself.

Feature

10

11

Feature


each ETF you can see detailed information of the are at risk vs. the swap counterparty. This means if the collateral basket like the allocation of the asset swap counterpart (here: Commerzbank) would come class, country, sector, currency, rating, etc. Of into serious trouble, the swap collateral should be course you can also download the list of the whole 107.5% or more in order to prevent a potenial loss. securities used as collateral on a daily basis. The „Investors don‘t have to worry. We adjust all collaterals ETFs are UCITS compliant and the collateral exists on a daily basis.“ adds Arne Scheehl.of high quality securities. The used stocks are in most instances blue chips. Unfortunately the ETFs „Tricky Brits“ – Barclays and its ETNsare just – if at all – little over-collateralised. A prominent player in the global ETN business is Sometimes they are even under-collateralised. Let's with its subsidiary. Its main assume the case that the counterparty in the swap rivals in the ETN business are Morgan Stanley and agreement (Deutsche Bank) defaults on the UBS. Unlike ETFs, ETNs are senior, unsecured, example of the . This unsubordinated debt securities. In case of iPath ETNs, ETF is backed by a collateral value of 99.46% as of these securities are issued by Barclays Bank Plc. One of June 21, 2011. Thus the fund is under-collateralised. their best-known products is the series When looking into its country and currency – linked to selected S&P500 VIX Futures. Investors weightings, the US clearly dominates with nearly buying these ETNs are more or less entering into a kind 29% of the holdings, followed by Japan (22%) and of simple bet: Barclays will promise to pay the specific Germany (20%). About 38% of the collateral are performance (i.e. index return of the S&P500 VIX denominated in Euro, 28% in USD and another Futures) and will promise to pay back the individual 22% in JPY. 13% account in CHF. market value when investors are selling the ETN. An

important detail: The investor's money is not posted So in the (more or less) unlikely case of a default of into a pledge account or a separated collateralized the counterparty Deutsche Bank AG, investors may securities account. Barclays main concern is delivering receive the value of the stocks that are used as the benchmark performance. They do this either collateral rather than the value of the index. through swaps or investing directly in futures. It Although they invested in the German Stock depends on which asset classes they are investing in. Exchange Index the collateral portfolio would Unlike the leveraged ETFs, these ETNs are not covered consist of only 38% Euro investments. This by the Investment Act of 1940. Instead they are covered situation appears not just at db x-trackers. Many by the Investment Act of 1933 so they are free to use ETF providers use this method of portfolio derivatives. According to Barclays, they only do their optimisation in their collateral basket. swaps „with investment banks and other financial

institutions with very high ratings“. In addition, their ...Commerzbank obligations come from their bank itself, which has a A similar picture at , one of the emerging double AA rating, not from a sub-entity.ETF brands in Europe. 's subsidiary has 94 products available which account totally to an AuM of USD 9.5 billion. According to Arne Scheehl, Sales Institutional Clients, the Frankfurt-based ETF issuer uses the swap desk of Commerzbank for all their products. The swap is overcollateralised at a minimum of 105%. The collateral baskets contain strictly German government bonds which are in custody of „American Idol“ – Invesco PowerSharesClearstream Banking Frankfurt. “Both the carrier There are also some risks luring across the Atlantic basket and the collateral are published on our ocean. The synthetic issues that are of some concern in website.” he explained. One of the largest NAV the U.S. are leveraged ETFs and Exchange Traded difference has the comstage ShortDAX ETF Notes (ETNs). There are a few issuers in the U.S. that do (LU0603940916). Its basket NAV is 92.53% in offer synthetic ETFs. , , & favour of the fund – or in other words, roughly 7.5% offer leveraged and/or inverse ETFs.

Barclays Bank iPath

DAX ETF (LU0274211480)

iPath VIX ETN

comstageCommerzbank

ProShares Direxion RydexPowerShares

An important detail: The investor's money is not posted into a pledge account or a separated collateralized securities account.

Feature

12


PowerShares also offers commodity ETFs of which many use 3-month U.S. treasuries as collateral. “Regarding the use of swap based or collateralized ETFs, our preference has always been to fully replicate a portfolio where possible,” said Ben Fulton, Invesco PowerShares managing director of global ETFs in an recent interview with ETF Radar. „In the U.S. market, PowerShares ETFs are either fully replicated or use a representative sampling methodology.“ he added. The PowerShares DB currency & commodity suite of 11 ETFs managed by Deutsche Bank, hold futures contracts as opposed to swaps. They also markets the PowerShares DB line of 28 ETNs which are unsecured debt obligations of Deutsche Bank AG, London Branch. In Europe, PowerShares ETFs are all UCITS compliant and we use specific replication investment methodology for 15 of the 19 funds, and one fund uses representative sampling.

Investors should ask the right questionsOne issue that regulators are concerned with is that securities lending has the ability to cause more counterparty risk and more collateral risk for the investor. The counterparty risk appears if the borrower cannot give it back. The collateral risk comes into play if the collateral that the borrower used is worth less than the security. In the U.S., investors are partially protected by the Investment Company Act of 1940 which only allows one third of the fund to be lent. One firm of note is iShares which posted securities lending income on their recent annual report.

All in all, investors – in North America, Europe and elsewhere in the world – should realize that also ETFs could be associated with some hidden risks. But nevertheless an ETF is nowadays one of the most transparent, liquid and cost-efficient vehicle one could have in its portfolio. So we recommend every investor to have a closer look at the collateralisation of swap-based ETFs due to big differences between the competing providers. Probably the simple conclusion one should bear in mind is: Even with ETFs and ETPs – Don't let yourself be fooled. n

The main question is: Why do we analyse the collateral and the processes behind collateralisation? Everything will be alright…and nobody cares about the details. But what happens if markets tumble for example caused by another financial crisis and banks default or go bankrupt and one of these banks served as swap partner in an ETF you owned?

There are three options to ETF providers if their swap partner defaults:

A) The first is to look for another swap partner who enters into your swap agreement as counterparty. It is questionable if banks will do so in times of a crisis.

B) The second option is to switch the replication method and go ahead with physical replication. This could be very challenging and costly, because as mentioned the collateral baskets differ highly from the underlying index components. C) If both methods don't work the ETF provider has to terminate the ETF and liquidate the collateral portfolio. Due to the default of the counterparty the loss of the swap agreements will be up to 10%. Further losses can arise from the liquidation of the collateral basket. Thus there are two aspects essential - the quality of the used collateral and the level of over-collateralisation.

It appears in many collateral agreements that there is either lower-quality or less liquid collateral. Also many ETFs are not over-collateralised. The rule you should keep in mind is:The less liquid and the lower the quality of the collateral basket, the higher the over- collateralisation should be. Hopefully some issuers keep this rule of thumb also in mind.

A Practical Overview About Swap Defaults

ETF RadarGlobal Collateral Report

Download the full data-set directly:www.etf-radar.com/collateralreport.pdf

Even with ETFs and ETPs – Don't let yourself be fooled.

DirectDownload

http://www.etf-radar.com/collateralreport.pdf

11

Feature


each ETF you can see detailed information of the are at risk vs. the swap counterparty. This means if the collateral basket like the allocation of the asset swap counterpart (here: Commerzbank) would come class, country, sector, currency, rating, etc. Of into serious trouble, the swap collateral should be course you can also download the list of the whole 107.5% or more in order to prevent a potenial loss. securities used as collateral on a daily basis. The „Investors don‘t have to worry. We adjust all collaterals ETFs are UCITS compliant and the collateral exists on a daily basis.“ adds Arne Scheehl.of high quality securities. The used stocks are in most instances blue chips. Unfortunately the ETFs „Tricky Brits“ – Barclays and its ETNsare just – if at all – little over-collateralised. A prominent player in the global ETN business is Sometimes they are even under-collateralised. Let's with its subsidiary. Its main assume the case that the counterparty in the swap rivals in the ETN business are Morgan Stanley and agreement (Deutsche Bank) defaults on the UBS. Unlike ETFs, ETNs are senior, unsecured, example of the . This unsubordinated debt securities. In case of iPath ETNs, ETF is backed by a collateral value of 99.46% as of these securities are issued by Barclays Bank Plc. One of June 21, 2011. Thus the fund is under-collateralised. their best-known products is the series When looking into its country and currency – linked to selected S&P500 VIX Futures. Investors weightings, the US clearly dominates with nearly buying these ETNs are more or less entering into a kind 29% of the holdings, followed by Japan (22%) and of simple bet: Barclays will promise to pay the specific Germany (20%). About 38% of the collateral are performance (i.e. index return of the S&P500 VIX denominated in Euro, 28% in USD and another Futures) and will promise to pay back the individual 22% in JPY. 13% account in CHF. market value when investors are selling the ETN. An

important detail: The investor's money is not posted So in the (more or less) unlikely case of a default of into a pledge account or a separated collateralized the counterparty Deutsche Bank AG, investors may securities account. Barclays main concern is delivering receive the value of the stocks that are used as the benchmark performance. They do this either collateral rather than the value of the index. through swaps or investing directly in futures. It Although they invested in the German Stock depends on which asset classes they are investing in. Exchange Index the collateral portfolio would Unlike the leveraged ETFs, these ETNs are not covered consist of only 38% Euro investments. This by the Investment Act of 1940. Instead they are covered situation appears not just at db x-trackers. Many by the Investment Act of 1933 so they are free to use ETF providers use this method of portfolio derivatives. According to Barclays, they only do their optimisation in their collateral basket. swaps „with investment banks and other financial

institutions with very high ratings“. In addition, their ...Commerzbank obligations come from their bank itself, which has a A similar picture at , one of the emerging double AA rating, not from a sub-entity.ETF brands in Europe. 's subsidiary has 94 products available which account totally to an AuM of USD 9.5 billion. According to Arne Scheehl, Sales Institutional Clients, the Frankfurt-based ETF issuer uses the swap desk of Commerzbank for all their products. The swap is overcollateralised at a minimum of 105%. The collateral baskets contain strictly German government bonds which are in custody of „American Idol“ – Invesco PowerSharesClearstream Banking Frankfurt. “Both the carrier There are also some risks luring across the Atlantic basket and the collateral are published on our ocean. The synthetic issues that are of some concern in website.” he explained. One of the largest NAV the U.S. are leveraged ETFs and Exchange Traded difference has the comstage ShortDAX ETF Notes (ETNs). There are a few issuers in the U.S. that do (LU0603940916). Its basket NAV is 92.53% in offer synthetic ETFs. , , & favour of the fund – or in other words, roughly 7.5% offer leveraged and/or inverse ETFs.

Barclays Bank iPath

DAX ETF (LU0274211480)

iPath VIX ETN

comstageCommerzbank

ProShares Direxion RydexPowerShares

An important detail: The investor's money is not posted into a pledge account or a separated collateralized securities account.

Feature

12


PowerShares also offers commodity ETFs of which many use 3-month U.S. treasuries as collateral. “Regarding the use of swap based or collateralized ETFs, our preference has always been to fully replicate a portfolio where possible,” said Ben Fulton, Invesco PowerShares managing director of global ETFs in an recent interview with ETF Radar. „In the U.S. market, PowerShares ETFs are either fully replicated or use a representative sampling methodology.“ he added. The PowerShares DB currency & commodity suite of 11 ETFs managed by Deutsche Bank, hold futures contracts as opposed to swaps. They also markets the PowerShares DB line of 28 ETNs which are unsecured debt obligations of Deutsche Bank AG, London Branch. In Europe, PowerShares ETFs are all UCITS compliant and we use specific replication investment methodology for 15 of the 19 funds, and one fund uses representative sampling.

Investors should ask the right questionsOne issue that regulators are concerned with is that securities lending has the ability to cause more counterparty risk and more collateral risk for the investor. The counterparty risk appears if the borrower cannot give it back. The collateral risk comes into play if the collateral that the borrower used is worth less than the security. In the U.S., investors are partially protected by the Investment Company Act of 1940 which only allows one third of the fund to be lent. One firm of note is iShares which posted securities lending income on their recent annual report.

All in all, investors – in North America, Europe and elsewhere in the world – should realize that also ETFs could be associated with some hidden risks. But nevertheless an ETF is nowadays one of the most transparent, liquid and cost-efficient vehicle one could have in its portfolio. So we recommend every investor to have a closer look at the collateralisation of swap-based ETFs due to big differences between the competing providers. Probably the simple conclusion one should bear in mind is: Even with ETFs and ETPs – Don't let yourself be fooled. n

The main question is: Why do we analyse the collateral and the processes behind collateralisation? Everything will be alright…and nobody cares about the details. But what happens if markets tumble for example caused by another financial crisis and banks default or go bankrupt and one of these banks served as swap partner in an ETF you owned?

There are three options to ETF providers if their swap partner defaults:

A) The first is to look for another swap partner who enters into your swap agreement as counterparty. It is questionable if banks will do so in times of a crisis.

B) The second option is to switch the replication method and go ahead with physical replication. This could be very challenging and costly, because as mentioned the collateral baskets differ highly from the underlying index components. C) If both methods don't work the ETF provider has to terminate the ETF and liquidate the collateral portfolio. Due to the default of the counterparty the loss of the swap agreements will be up to 10%. Further losses can arise from the liquidation of the collateral basket. Thus there are two aspects essential - the quality of the used collateral and the level of over-collateralisation.

It appears in many collateral agreements that there is either lower-quality or less liquid collateral. Also many ETFs are not over-collateralised. The rule you should keep in mind is:The less liquid and the lower the quality of the collateral basket, the higher the over- collateralisation should be. Hopefully some issuers keep this rule of thumb also in mind.

A Practical Overview About Swap Defaults

ETF RadarGlobal Collateral Report

Download the full data-set directly:www.etf-radar.com/collateralreport.pdf

Even with ETFs and ETPs – Don't let yourself be fooled.

DirectDownload

http://www.etf-radar.com/collateralreport.pdf

13

People


Expert Talk with

VITA

►►►

► ►

Born: 1972Lives in: Maryland

James R. King is Portfolio Manager ETFs at Rydex|SGI. Jim rejoined Rydex|SGI in 2011 as a portfolio manager responsible for managing ETFs. He was with the firm from 1996 to 2008, in roles ranging from shareholder services representative to portfolio manager to director of portfolio management.He holds a bachelor's degree in finance from the University of Maryland and is CFA charterholder. Jim has been quoted in publications such as USAToday, Reuters and BusinessWeek. Jim is also a frequent speaker on various panel discussions and conferences.

My first ETF, I bought was RSP.My favourite investments is real estate.

Career:

James R. King

Jim, how would you describe outpacing the rest of the

your company Rydex|SGI in market for several months now.

one sentence? Not counting the inverse S&P

Rydex|SGI manages $25 billion fund, which is down quite a bit,

in assets, including nearly $9 the worst performer is Rydex

billion in exchange traded S&P Small Cap Value (RZV)

product assets, and offers with a loss of nearly 2.5%

institutional investors and

financial intermediaries a broad

spectrum of traditional and

non-traditional investment

options. The options span four

investment disciplines:

fundamental alpha, alternative

strategies, target beta strategies Currently, you have $8.9

and ETFs. billion in ETF/ETPs under

Management. Which

You offer several products have the largest

sophisticated strategies. contributions – and AuM?

Which strategy/portfolio The largest single ETF product

model performed in the last by far is our flagship Rydex

6 months best - which one Equal Weight S&P ETF (RSP) at

worst? around $3 billion in assets.

Rydex S&P Equal Weight Much of the recent asset growth

Health Care (RYH) is the best has been in our CurrencyShares

performer among our ETF's products. Our Canadian Dollar

over the last six months with a and Australian Dollar products

gain of nearly 12%. While have become very popular as

sectors like Energy and ways to gain exposure to

Financials get all the press, commodity-based economies

traditionally defensive sectors while also picking up some

like Health Care and Consumer yield. Our CurrencyShares

Staples have quietly been Swiss Franc product has also

by Silvan Schelling

Portfolio Manager ETFs, Rydex|SGI ETF

The largest single ETF by far is our flagship Equal Weight S&P ataround $3 billion.

“Tto enter the equity market on pullbacks.”

his volatility is an opportunity

14

People


seen large inflows as investors are Rydex invented the first leveraged tomorrow's winners, while cap-

flocking to this traditional "safe and inverse mutual funds back in weighting buys yesterday's

haven" in a time of uncertainty for 1993 and 1994, and we currently winners.

the US dollar and the Euro. The manage over $3 billion in leveraged

suite of 9 CurrencyShares products mutual funds and variable annuity The Rydex|SGI Pure Style ETFs

contributes a total of $3.7 billion in products, so we've got plenty of now have 5-year track records.

assets. experience in that space. That Can you comment on style

said, after a thorough assessment investing and specifically

What are your product plans for of the market, we decided to focus Purestyles?

the Exchange traded business? our ETF development efforts in The construction of pure style

While we do not discuss products in other directions. indexes more clearly delineates the

registration, I can confirm that we different style universes, with less

have plans to expand our ETF What is your market view and overlap and potentially lower

product line-up this year. outlook for the next 6 months? transaction costs. Also, the

Where one should invest? enhanced discipline of this

Short-term forecasting is a approach is the potential impact

dangerous game, especially during on performance – it may help

the summer months when investors better capture the spread

volumes tend to be light and news in performance across style factors

events can have a major impact. – compared to traditional style

Alright, and which kind of Regardless of market direction, I approaches which can cloud the

investors usually are your think we can expect to see distinction between growth and

clients? volatility pick up in light of the value. The Pure Syle ETFs are

The largest group of clients in our ongoing Greek debt crisis, and our benchmarked to the S&P Pure

mutual fund lineup has always been own debt ceiling debate at home. I Style Indexes that focus on

RIA's. In the exchange-traded space, also think the possibility of a companies that exhibit either

it's much tougher to pinpoint double-dip recession at home is strong growth or value

exactly where the activity is coming remote, and would see this characteristics. Overall, the three

from. We know we have a large volatility as an opportunity to main benefits: 1) performance-

base of RIA clients and institutions enter the equity market on opportunity set of returns is

that use our ETP's, but the products pullbacks. proven; 2) purer play vs traditional

also seem to be catching on with style investing and 3) tactical

retail brokerage customers, too. What are the benefits of equal trading-a more logical trading

weight strategies? vehicle.

Let's talk about the visible costs. The main benefit of an equal

What is the average TER of your weight methodology is

products? diversification, although there are

While there are a few outliers, potential performance benefits, as

almost all of the products are in the well. Traditional cap-weighted

35 to 40 bps range. strategies tend to be heavily

concentrated in just a few stocks.

You also offer a leveraged ETF By pushing some of the weight

and an inverse ETF on the down into the smaller companies,

S&P500. Both products saw large a portfolio becomes more

outflows during the last 2 years. diversified, but also gains more

What is your experience with exposure to stocks which may have

these advanced investment greater opportunity for growth. I

instruments? like to think we're buying

Thank you! n

We have plans to expand our ETF product line-up this year.

Across the Atlantic:

People

Interview withTed Hood, Source ETFin the Magazine’sEuropean Edition.www.etf-radar.com

13

People


Expert Talk with

VITA

►►►

► ►

Born: 1972Lives in: Maryland

James R. King is Portfolio Manager ETFs at Rydex|SGI. Jim rejoined Rydex|SGI in 2011 as a portfolio manager responsible for managing ETFs. He was with the firm from 1996 to 2008, in roles ranging from shareholder services representative to portfolio manager to director of portfolio management.He holds a bachelor's degree in finance from the University of Maryland and is CFA charterholder. Jim has been quoted in publications such as USAToday, Reuters and BusinessWeek. Jim is also a frequent speaker on various panel discussions and conferences.

My first ETF, I bought was RSP.My favourite investments is real estate.

Career:

James R. King

Jim, how would you describe outpacing the rest of the

your company Rydex|SGI in market for several months now.

one sentence? Not counting the inverse S&P

Rydex|SGI manages $25 billion fund, which is down quite a bit,

in assets, including nearly $9 the worst performer is Rydex

billion in exchange traded S&P Small Cap Value (RZV)

product assets, and offers with a loss of nearly 2.5%

institutional investors and

financial intermediaries a broad

spectrum of traditional and

non-traditional investment

options. The options span four

investment disciplines:

fundamental alpha, alternative

strategies, target beta strategies Currently, you have $8.9

and ETFs. billion in ETF/ETPs under

Management. Which

You offer several products have the largest

sophisticated strategies. contributions – and AuM?

Which strategy/portfolio The largest single ETF product

model performed in the last by far is our flagship Rydex

6 months best - which one Equal Weight S&P ETF (RSP) at

worst? around $3 billion in assets.

Rydex S&P Equal Weight Much of the recent asset growth

Health Care (RYH) is the best has been in our CurrencyShares

performer among our ETF's products. Our Canadian Dollar

over the last six months with a and Australian Dollar products

gain of nearly 12%. While have become very popular as

sectors like Energy and ways to gain exposure to

Financials get all the press, commodity-based economies

traditionally defensive sectors while also picking up some

like Health Care and Consumer yield. Our CurrencyShares

Staples have quietly been Swiss Franc product has also

by Silvan Schelling

Portfolio Manager ETFs, Rydex|SGI ETF

The largest single ETF by far is our flagship Equal Weight S&P ataround $3 billion.

“Tto enter the equity market on pullbacks.”

his volatility is an opportunity

14

People


seen large inflows as investors are Rydex invented the first leveraged tomorrow's winners, while cap-

flocking to this traditional "safe and inverse mutual funds back in weighting buys yesterday's

haven" in a time of uncertainty for 1993 and 1994, and we currently winners.

the US dollar and the Euro. The manage over $3 billion in leveraged

suite of 9 CurrencyShares products mutual funds and variable annuity The Rydex|SGI Pure Style ETFs

contributes a total of $3.7 billion in products, so we've got plenty of now have 5-year track records.

assets. experience in that space. That Can you comment on style

said, after a thorough assessment investing and specifically

What are your product plans for of the market, we decided to focus Purestyles?

the Exchange traded business? our ETF development efforts in The construction of pure style

While we do not discuss products in other directions. indexes more clearly delineates the

registration, I can confirm that we different style universes, with less

have plans to expand our ETF What is your market view and overlap and potentially lower

product line-up this year. outlook for the next 6 months? transaction costs. Also, the

Where one should invest? enhanced discipline of this

Short-term forecasting is a approach is the potential impact

dangerous game, especially during on performance – it may help

the summer months when investors better capture the spread

volumes tend to be light and news in performance across style factors

events can have a major impact. – compared to traditional style

Alright, and which kind of Regardless of market direction, I approaches which can cloud the

investors usually are your think we can expect to see distinction between growth and

clients? volatility pick up in light of the value. The Pure Syle ETFs are

The largest group of clients in our ongoing Greek debt crisis, and our benchmarked to the S&P Pure

mutual fund lineup has always been own debt ceiling debate at home. I Style Indexes that focus on

RIA's. In the exchange-traded space, also think the possibility of a companies that exhibit either

it's much tougher to pinpoint double-dip recession at home is strong growth or value

exactly where the activity is coming remote, and would see this characteristics. Overall, the three

from. We know we have a large volatility as an opportunity to main benefits: 1) performance-

base of RIA clients and institutions enter the equity market on opportunity set of returns is

that use our ETP's, but the products pullbacks. proven; 2) purer play vs traditional

also seem to be catching on with style investing and 3) tactical

retail brokerage customers, too. What are the benefits of equal trading-a more logical trading

weight strategies? vehicle.

Let's talk about the visible costs. The main benefit of an equal

What is the average TER of your weight methodology is

products? diversification, although there are

While there are a few outliers, potential performance benefits, as

almost all of the products are in the well. Traditional cap-weighted

35 to 40 bps range. strategies tend to be heavily

concentrated in just a few stocks.

You also offer a leveraged ETF By pushing some of the weight

and an inverse ETF on the down into the smaller companies,

S&P500. Both products saw large a portfolio becomes more

outflows during the last 2 years. diversified, but also gains more

What is your experience with exposure to stocks which may have

these advanced investment greater opportunity for growth. I

instruments? like to think we're buying

Thank you! n

We have plans to expand our ETF product line-up this year.

Across the Atlantic:

People

Interview withTed Hood, Source ETFin the Magazine’sEuropean Edition.www.etf-radar.com

etfRadarGlobal Investor Intelligence

SM

Not only when exchange traded products come into play, ETF Radar offers independent risk assessments (cross-asset) for investors. Let’s avoid emergency calls caused by your portfolio or investment strategy.

Even in wealth managementit is better not to needcertain numbers.


www.etf-radar.com

PUT US

ON YOUR RADAR.


Harriman House is one of the UK's leading independent publishersof finance, trading and investment books.

There’s Never Been A Better Time To Learn More About The ETF Industry.

Hh Harriman HouseOn Sale Now:

www.harriman-house.com/etfradarGet 30% off the regular price!

Rankings

Top 25 ETF providers around the world ranked by Assets under ManagementAs at end May 2011

WORLDWIDE

In association with

Source: BlackRock Global ETF Research and Implementation Strategy Team

16


Provider # ETFs

AUM

(US$ Bn) % total

ADV

(US$ Bn)

#

planned # ETFs % ETFs

AUM

(US$ Bn) % AUM

% market

share

iShares 470 $628.5 43.5% $17.9 15 -3 -0.6% $49.9 8.6% -0.7%

State Street Global Advisors 134 $203.4 14.1% $27.8 39 21 18.6% $12.7 6.7% -0.5%

Vanguard 69 $177.6 12.3% $1.7 1 4 6.2% $29.1 19.6% 1.0%

Lyxor Asset Management 163 $54.5 3.8% $0.9 1 7 4.5% $1.2 2.3% -0.3%

db x-trackers 187 $52.6 3.6% $0.5 16 8 4.5% $3.5 7.2% -0.1%

PowerShares 134 $47.9 3.3% $2.8 49 4 3.1% $5.1 11.8% 0.0%

Van Eck Associates Corp 34 $23.1 1.6% $1.2 37 5 17.2% $3.1 15.6% 0.1%

ProShares 107 $22.6 1.6% $2.9 93 7 7.0% $1.1 4.9% -0.1%

Credit Suisse Asset Management 58 $18.2 1.3% $0.1 0 4 7.4% $2.5 16.2% 0.1%

Nomura Asset Management 34 $15.2 1.1% $0.1 0 2 6.3% -$1.2 -7.3% -0.2%

Zurich Cantonal Bank 7 $13.2 0.9% $0.1 0 0 0.0% $1.4 12.2% 0.0%

WisdomTree Investments 46 $12.3 0.9% $0.2 71 2 4.5% $2.4 24.1% 0.1%

Bank of New York 1 $11.3 0.8% $0.4 0 0 0.0% -$1.0 -7.9% -0.2%

UBS Global Asset Management 45 $10.3 0.7% $0.0 0 16 55.2% $3.7 56.9% 0.2%

Amundi ETF 99 $9.9 0.7% $0.1 0 7 7.6% $2.7 38.3% 0.1%

Commerzbank 94 $9.5 0.7% $0.0 0 4 4.4% $0.9 10.8% 0.0%

HSBC/Hang Seng 31 $8.5 0.6% $0.1 4 14 82.4% $1.1 15.0% 0.0%

First Trust Advisors 59 $8.2 0.6% $0.1 3 16 37.2% $2.8 51.0% 0.2%

Source Markets 62 $7.1 0.5% $0.5 15 6 10.7% $2.1 42.9% 0.1%

Nikko Asset Management 20 $6.7 0.5% $0.0 0 3 17.6% $0.1 2.3% 0.0%

Direxion Shares 46 $6.5 0.5% $2.5 180 7 17.9% -$0.1 -0.9% -0.1%

Claymore Investments 30 $6.5 0.4% $0.0 5 1 3.4% $1.0 17.5% 0.0%

EasyETF 48 $6.2 0.4% $0.0 1 -1 -2.0% $0.6 11.3% 0.0%

Rydex SGI 25 $5.7 0.4% $0.1 97 1 4.2% $0.8 15.3% 0.0%

Daiwa Asset Management 23 $5.7 0.4% $0.0 1 0 0.0% -$1.2 -17.7% -0.1%

YTD changeMay 2011


http://www.harriman-house.com/etfradar


SM

Not only when exchange traded products come into play, ETF Radar offers independent risk assessments (cross-asset) for investors. Let’s avoid emergency calls caused by your portfolio or investment strategy.

Even in wealth managementit is better not to needcertain numbers.


www.etf-radar.com

PUT US

ON YOUR RADAR.


Harriman House is one of the UK's leading independent publishersof finance, trading and investment books.

There’s Never Been A Better Time To Learn More About The ETF Industry.

Hh Harriman HouseOn Sale Now:

www.harriman-house.com/etfradarGet 30% off the regular price!

Rankings

Top 25 ETF providers around the world ranked by Assets under ManagementAs at end May 2011

WORLDWIDE

In association with


16


Provider # ETFs

AUM

(US$ Bn) % total

ADV

(US$ Bn)

#

planned # ETFs % ETFs

AUM

(US$ Bn) % AUM

% market

share

iShares 470 $628.5 43.5% $17.9 15 -3 -0.6% $49.9 8.6% -0.7%

State Street Global Advisors 134 $203.4 14.1% $27.8 39 21 18.6% $12.7 6.7% -0.5%

Vanguard 69 $177.6 12.3% $1.7 1 4 6.2% $29.1 19.6% 1.0%

Lyxor Asset Management 163 $54.5 3.8% $0.9 1 7 4.5% $1.2 2.3% -0.3%

db x-trackers 187 $52.6 3.6% $0.5 16 8 4.5% $3.5 7.2% -0.1%

PowerShares 134 $47.9 3.3% $2.8 49 4 3.1% $5.1 11.8% 0.0%

Van Eck Associates Corp 34 $23.1 1.6% $1.2 37 5 17.2% $3.1 15.6% 0.1%

ProShares 107 $22.6 1.6% $2.9 93 7 7.0% $1.1 4.9% -0.1%

Credit Suisse Asset Management 58 $18.2 1.3% $0.1 0 4 7.4% $2.5 16.2% 0.1%

Nomura Asset Management 34 $15.2 1.1% $0.1 0 2 6.3% -$1.2 -7.3% -0.2%

Zurich Cantonal Bank 7 $13.2 0.9% $0.1 0 0 0.0% $1.4 12.2% 0.0%

WisdomTree Investments 46 $12.3 0.9% $0.2 71 2 4.5% $2.4 24.1% 0.1%

Bank of New York 1 $11.3 0.8% $0.4 0 0 0.0% -$1.0 -7.9% -0.2%

UBS Global Asset Management 45 $10.3 0.7% $0.0 0 16 55.2% $3.7 56.9% 0.2%

Amundi ETF 99 $9.9 0.7% $0.1 0 7 7.6% $2.7 38.3% 0.1%

Commerzbank 94 $9.5 0.7% $0.0 0 4 4.4% $0.9 10.8% 0.0%

HSBC/Hang Seng 31 $8.5 0.6% $0.1 4 14 82.4% $1.1 15.0% 0.0%

First Trust Advisors 59 $8.2 0.6% $0.1 3 16 37.2% $2.8 51.0% 0.2%

Source Markets 62 $7.1 0.5% $0.5 15 6 10.7% $2.1 42.9% 0.1%

Nikko Asset Management 20 $6.7 0.5% $0.0 0 3 17.6% $0.1 2.3% 0.0%

Direxion Shares 46 $6.5 0.5% $2.5 180 7 17.9% -$0.1 -0.9% -0.1%

Claymore Investments 30 $6.5 0.4% $0.0 5 1 3.4% $1.0 17.5% 0.0%

EasyETF 48 $6.2 0.4% $0.0 1 -1 -2.0% $0.6 11.3% 0.0%

Rydex SGI 25 $5.7 0.4% $0.1 97 1 4.2% $0.8 15.3% 0.0%

Daiwa Asset Management 23 $5.7 0.4% $0.0 1 0 0.0% -$1.2 -17.7% -0.1%

YTD changeMay 2011


http://www.harriman-house.com/etfradar

Rankings

10

Top 10/Top 5 ETFs by Assets under ManagementAs at end May 2011

UNITED STATES

EUROPE

MIDDLE-EAST/AFRICA

ASIA-PACIFIC

JAPAN

17Source: BlackRock Global ETF Research and Implementation Strategy Team


ETF Bloomberg ticker

AUM

(US$ Mn)

ADV

('000 shares)

ADV

(US$ Mn)

SPDR S&P 500 SPY US $89,227.2 148,564 $19,913.5

Vanguard MSCI Emerging Markets ETF VWO US $48,702.2 19,791 $954.6

iShares MSCI EAFE Index Fund EFA US $40,810.7 17,529 $1,075.8

iShares MSCI Emerging Markets Index Fund EEM US $40,204.7 58,105 $2,777.4

iShares S&P 500 Index Fund IVV US $28,279.8 2,715 $365.0

PowerShares QQQ Trust QQQ US $24,368.2 45,740 $2,666.9

iShares Barclays TIPS Bond Fund TIP US $20,509.1 746 $82.6

Vanguard Total Stock Market ETF VTI US $20,338.2 1,297 $90.5

iShares Russell 2000 Index Fund IWM US $16,683.8 59,529 $4,976.4

iShares Russell 1000 Growth Index Fund IWF US $13,981.6 1,867 $115.2


AUM

(US$ Mn)

ADV

('000 shares)

ADV

(US$ Mn)

iShares DAX (DE) DAXEX GY $10,719.7 3,503 $343.0

iShares S&P 500 IUSA LN $9,573.8 7,530 $100.5

ZKB Gold ETF (CHF) ZGLD SW $8,445.9 12 $31.1

iShares MSCI Emerging Markets IEEM LN $7,060.0 1,187 $55.5

Lyxor ETF Euro STOXX 50 MSE FP $6,723.6 3,301 $140.5

db x-trackers DAX ETF XDAX GY $6,269.3 686 $72.2

iShares FTSE 100 ISF LN $6,003.2 10,024 $98.3

db x-trackers MSCI Emerging Market TRN Index ETF XMEM GY $5,568.2 900 $41.5

iShares EURO STOXX 50 (DE) SX5EEX GY $5,560.1 1,246 $53.0

iShares Markit iBoxx Euro Corporate Bond IBCS GY $4,614.0 116 $19.9


AUM

(US$ Mn)

ADV

('000 shares)

ADV

(US$ Mn)

SATRIX40 STX40 SJ $1,016.4 1,136 $4.9

STANLIB SWIX 40 Fund STANSX SJ $348.8 1 $0.0

Satrix Dividend Plus STXDIV SJ $156.7 730 $0.2

SATRIX Financials STXFIN SJ $124.6 85 $0.1

Bips Government Inflation Linked Bond Fund BIPINF SJ $123.9 51 $0.1


AUM

(US$ Mn)

ADV

('000 shares)

ADV

(US$ Mn)

NIKKEI 225 ETF 1321 JP $6,883.5 368 $44.7

TOPIX ETF 1306 JP $6,874.9 2,636 $28.0

Listed Index Fund 225 1330 JP $3,130.7 271 $33.0

Listed Index Fund TOPIX 1308 JP $3,095.8 249 $2.6

Daiwa ETF NIKKEI 225 1320 JP $2,691.1 72 $8.8


AUM

(US$ Mn)

ADV

('000 shares)

ADV

(US$ Mn)

iShares FTSE A50 China Index ETF* 2823 HK $7,849.4 65,926 $111.4

Tracker Fund of Hong Kong (TraHK) 2800 HK $7,532.7 19,653 $60.8

Hang Seng Index ETF 2833 HK $4,097.9 62 $1.9

China AMC SSE 50 510050 CH $3,141.8 263,678 $81.3

Hang Seng H-Share Index ETF 2828 HK $2,840.8 1,432 $24.6

E Fund SZSE 100 159901 CH $2,708.8 480,861 $56.0

ABF Pan Asia Bond Index Fund 2821 HK $2,450.1 2 $0.3

SPDR S&P/ASX 200 Fund STW AU $2,412.1 199 $9.5

Polaris Taiwan Top 50 Tracker 0050 TT $2,292.5 15,936 $34.5

Samsung Kodex200 ETF 069500 KS $2,267.7 1,445 $38.2

18

Rankings

Top 10 ETFs by Change in Average Daily VolumeAs at end May 2011

WORLDWIDE

Top 10 ETFs by Change in Assets under ManagementAs at end May 2011

WORLDWIDE




ADV

(US$ Mn)

ADV

('000 shares)

AUM

(US$ Mn)

SPDR S&P 500 SPY US $19,913.5 148,564 $89,227.2




Energy Select Sector SPDR Fund XLE US $1,830.3 24,335 $9,775.5


iShares MSCI Brazil Index Fund EWZ US $1,004.8 13,588 $12,919.0

Vanguard MSCI Emerging Markets ETF VWO US $954.6 19,791 $48,702.2

SPDR Dow Jones Industrial Average ETF DIA US $873.3 6,946 $9,919.9

Financial Select Sector SPDR Fund XLF US $850.8 53,481 $7,356.0


AUM

(US$ Mn)

May-11

AUM

(US$ Mn)

Dec-10

Change

(US$ Mn)

iShares MSCI Emerging Markets Index Fund EEM US $40,204.7 $47,551.5 -$7,346.8

iShares DAX (DE) DAXEX GY $10,719.7 $5,917.7 $4,802.0

Vanguard MSCI Emerging Markets ETF VWO US $48,702.2 $44,569.8 $4,132.5

iShares MSCI EAFE Index Fund EFA US $40,810.7 $36,923.1 $3,887.5

Market Vectors Agribusiness ETF MOO US $5,254.0 $2,631.5 $2,622.5

db x-trackers DAX ETF XDAX GY $6,269.3 $3,693.1 $2,576.3

iShares S&P MidCap 400 Index Fund IJH US $11,848.3 $9,332.0 $2,516.3

iShares S&P 500 Index Fund IVV US $28,279.8 $25,799.2 $2,480.6

iShares MSCI Japan Index Fund EWJ US $7,252.7 $4,883.3 $2,369.4

PowerShares QQQ Trust QQQ US $24,368.2 $22,069.9 $2,298.3

► NO GAME CHANGERWith in the ADV rankings no realremarkable change happend. lost a bit on daily volume, tookover rank two. keeps the red lantern in the table.

QQQEEM

XLF

► DAX AND AGRIBIZWith regards to change in AuM,two well-known DAX ETFs ( and ) saw strong gains. Newcomer is MOO, an ETF from VanEck focussed on tracking Argibuisness stocks.

DAXEXXDAX

Rankings

10

Top 10/Top 5 ETFs by Assets under ManagementAs at end May 2011

UNITED STATES

EUROPE

MIDDLE-EAST/AFRICA

ASIA-PACIFIC

JAPAN

17Source: BlackRock Global ETF Research and Implementation Strategy Team



AUM

(US$ Mn)

ADV

('000 shares)

ADV

(US$ Mn)

SPDR S&P 500 SPY US $89,227.2 148,564 $19,913.5

Vanguard MSCI Emerging Markets ETF VWO US $48,702.2 19,791 $954.6



iShares S&P 500 Index Fund IVV US $28,279.8 2,715 $365.0


iShares Barclays TIPS Bond Fund TIP US $20,509.1 746 $82.6

Vanguard Total Stock Market ETF VTI US $20,338.2 1,297 $90.5


iShares Russell 1000 Growth Index Fund IWF US $13,981.6 1,867 $115.2


AUM

(US$ Mn)

ADV

('000 shares)

ADV

(US$ Mn)

iShares DAX (DE) DAXEX GY $10,719.7 3,503 $343.0

iShares S&P 500 IUSA LN $9,573.8 7,530 $100.5

ZKB Gold ETF (CHF) ZGLD SW $8,445.9 12 $31.1

iShares MSCI Emerging Markets IEEM LN $7,060.0 1,187 $55.5

Lyxor ETF Euro STOXX 50 MSE FP $6,723.6 3,301 $140.5

db x-trackers DAX ETF XDAX GY $6,269.3 686 $72.2

iShares FTSE 100 ISF LN $6,003.2 10,024 $98.3

db x-trackers MSCI Emerging Market TRN Index ETF XMEM GY $5,568.2 900 $41.5

iShares EURO STOXX 50 (DE) SX5EEX GY $5,560.1 1,246 $53.0

iShares Markit iBoxx Euro Corporate Bond IBCS GY $4,614.0 116 $19.9


AUM

(US$ Mn)

ADV

('000 shares)

ADV

(US$ Mn)

SATRIX40 STX40 SJ $1,016.4 1,136 $4.9

STANLIB SWIX 40 Fund STANSX SJ $348.8 1 $0.0

Satrix Dividend Plus STXDIV SJ $156.7 730 $0.2

SATRIX Financials STXFIN SJ $124.6 85 $0.1

Bips Government Inflation Linked Bond Fund BIPINF SJ $123.9 51 $0.1


AUM

(US$ Mn)

ADV

('000 shares)

ADV

(US$ Mn)

NIKKEI 225 ETF 1321 JP $6,883.5 368 $44.7

TOPIX ETF 1306 JP $6,874.9 2,636 $28.0

Listed Index Fund 225 1330 JP $3,130.7 271 $33.0

Listed Index Fund TOPIX 1308 JP $3,095.8 249 $2.6

Daiwa ETF NIKKEI 225 1320 JP $2,691.1 72 $8.8


AUM

(US$ Mn)

ADV

('000 shares)

ADV

(US$ Mn)

iShares FTSE A50 China Index ETF* 2823 HK $7,849.4 65,926 $111.4

Tracker Fund of Hong Kong (TraHK) 2800 HK $7,532.7 19,653 $60.8

Hang Seng Index ETF 2833 HK $4,097.9 62 $1.9

China AMC SSE 50 510050 CH $3,141.8 263,678 $81.3

Hang Seng H-Share Index ETF 2828 HK $2,840.8 1,432 $24.6

E Fund SZSE 100 159901 CH $2,708.8 480,861 $56.0

ABF Pan Asia Bond Index Fund 2821 HK $2,450.1 2 $0.3

SPDR S&P/ASX 200 Fund STW AU $2,412.1 199 $9.5

Polaris Taiwan Top 50 Tracker 0050 TT $2,292.5 15,936 $34.5

Samsung Kodex200 ETF 069500 KS $2,267.7 1,445 $38.2

18

Rankings

Top 10 ETFs by Change in Average Daily VolumeAs at end May 2011

WORLDWIDE

Top 10 ETFs by Change in Assets under ManagementAs at end May 2011

WORLDWIDE




ADV

(US$ Mn)

ADV

('000 shares)

AUM

(US$ Mn)

SPDR S&P 500 SPY US $19,913.5 148,564 $89,227.2




Energy Select Sector SPDR Fund XLE US $1,830.3 24,335 $9,775.5


iShares MSCI Brazil Index Fund EWZ US $1,004.8 13,588 $12,919.0

Vanguard MSCI Emerging Markets ETF VWO US $954.6 19,791 $48,702.2

SPDR Dow Jones Industrial Average ETF DIA US $873.3 6,946 $9,919.9

Financial Select Sector SPDR Fund XLF US $850.8 53,481 $7,356.0


AUM

(US$ Mn)

May-11

AUM

(US$ Mn)

Dec-10

Change

(US$ Mn)

iShares MSCI Emerging Markets Index Fund EEM US $40,204.7 $47,551.5 -$7,346.8

iShares DAX (DE) DAXEX GY $10,719.7 $5,917.7 $4,802.0

Vanguard MSCI Emerging Markets ETF VWO US $48,702.2 $44,569.8 $4,132.5

iShares MSCI EAFE Index Fund EFA US $40,810.7 $36,923.1 $3,887.5

Market Vectors Agribusiness ETF MOO US $5,254.0 $2,631.5 $2,622.5

db x-trackers DAX ETF XDAX GY $6,269.3 $3,693.1 $2,576.3

iShares S&P MidCap 400 Index Fund IJH US $11,848.3 $9,332.0 $2,516.3

iShares S&P 500 Index Fund IVV US $28,279.8 $25,799.2 $2,480.6

iShares MSCI Japan Index Fund EWJ US $7,252.7 $4,883.3 $2,369.4

PowerShares QQQ Trust QQQ US $24,368.2 $22,069.9 $2,298.3

► NO GAME CHANGERWith in the ADV rankings no realremarkable change happend. lost a bit on daily volume, tookover rank two. keeps the red lantern in the table.

QQQEEM

XLF

► DAX AND AGRIBIZWith regards to change in AuM,two well-known DAX ETFs ( and ) saw strong gains. Newcomer is MOO, an ETF from VanEck focussed on tracking Argibuisness stocks.

DAXEXXDAX

Rankings

20

Top 30 Worst Performing ETPsAs at end of June 2011

WORLDWIDE

Source: GlobalFundData/Morningstar as of July 5, 2011

► THE B-SIDE: COTTON AND GAS The biggest loser in the last monthhave been (long) cotton, (short) sugar and (long) gas ETPs with losses up to 17%. Remarkable: Even if solar and alternative energy have become very trendy investment targets theGuggenheim Solar ETF declined nearly 15%.


ETF/ETP Listing Region 1 Mth 12 Mth Inception

Net assets

(USD)

ETFS Short Sugar (DE) ETC Europe -17.30% -65.73% -34.03% 9,247,651

ETFS Leveraged Agri DJ-UBSCI (DE) ETC Europe -16.98% 71.58% -6.32% 11,078,136

ETFS Cotton (DE) ETC Europe -16.70% 65.55% 5.52% 24,685,925

ETFS Short Sugar ETC Europe -16.60% -59.43% -25.06% 13,407,639

ETFS Leveraged Agri DJ-UBSCI ETC Europe -16.27% 103.08% -16.75% 16,061,555

ETFS Leveraged Crude Oil (DE) ETC Europe -16.18% -7.56% -57.89% 89,734,401

ETFS Cotton ETC Europe -15.99% 95.95% 8.29% 35,790,708

Source S&P GSCI Cotton TR T-ETC North America -15.99% 96.52% 55.94% 13,708,445

UBS E-TRACS CMCI Si lver TR ETN North America -15.67% 105.92% 27.80% -

ETFS Leveraged Crude Oil ETC Europe -15.46% 9.42% -52.17% 130,100,766

ETFS Leveraged Natural Gas (DE) ETC Europe -14.86% -63.44% -81.79% 249,645,820

Market Vectors Solar Energy ETF North America -14.77% 11.25% -33.95% -

iPath S&P GSCI Grains Index TR (DE) ETN North America -14.77% 36.24% 17.97% 335.117

Guggenheim Solar North America -14.73% 11.94% -32.61% -

Source S&P GSCI Grains TR T-ETC Europe -14.68% 36.15% 5.48% 5,260,902

iPath Pure Beta Cotton ETN North America -14.67% - -10.32% 5,836,250

ETFS Leveraged Tin (DE) ETC Europe -14.64% 70.79% 2.96% 828.151

ETFS Leveraged Natural Gas ETC Europe -14.13% -56.73% -77.88% 361,947,168

ETFS Leveraged Tin ETC Europe -13.91% 102.16% 5.14% 1,200,689

Direxion Daily Energy Bull 3X Shares North America -13.91% 168.91% 27.08% -

Kodex Securities ETF Asia-Pacific -13.84% 9.56% -6.97% 4,294,967,295

ETFS Leveraged Energy DJ-UBSCI (DE) ETC Europe -13.76% -18.31% -59.11% 907.694

EasyETF BNP Par Global Rnwble Energy USD Europe -13.66% -25.85% -18.15% 14,910,655

ETFS Leveraged Petrolm DJ-UBSCI (DE) ETC Europe -13.65% 8.07% -51.12% 658.597

ETFS Leveraged Corn (DE) ETC Europe -13.34% 131.39% -27.36% 3,594,656

ETFS Leveraged Soybean Oil (DE) ETC Europe -13.17% 58.63% -25.38% 667.162

iPath DJ-UBS Tin TR Sub-Idx ETN North America -13.12% 55.73% 9.57% -

ETFS Leveraged Energy DJ-UBSCI ETC Europe -13.02% -3.31% -52.78% 1,316,013

ETFS Leveraged Petrolm DJ-UBSCI ETC Europe -12.92% 27.91% -44.21% 954.862

ETFS Leveraged Platinum (DE) ETC Europe -12.89% -0.97% -19.35% 7,812,621

Top 30 Best Performing ETPsAs at end of June 2011

WORLDWIDE

Rankings

19


► AGROS: SWEET PERFOMERThe last 20 trading days, investorsin Sugar and Wheat enjoyed soaringprices. The relevant ETPs show impressive gains. Bearish motivatedinvestors got most rewarded inShort Silver and Short Crude ETPs –maybe this trend will end shortly.



Net assets

(USD)

ETFS Leveraged Sugar ETC Europe 38.46% 208.14% 1.34% 8,849,032

ETFS Leveraged Sugar (DE) ETC Europe 37.29% 160.34% 33.80% 6,103,443

ProShares UltraShort Si lver North America 20.58% -88.19% -80.93% -

PowerShares DB Crude Oil Dble Short ETN North America 20.57% -40.95% 22.10% -

ETFS Short Wheat ETC Europe 20.44% -24.81% 13.03% 8,186,638

ETFS Short Wheat (DE) ETC Europe 19.43% -36.47% 7.87% 5,646,570

Source S&P GSCI Sugar TR T-ETC Europe 18.32% 95.72% 38.05% 4,168,473

ETFS Sugar ETC Europe 18.31% 95.73% 9.82% 62,472,778

Horizons BetaPro NYMEX Crude Oil Bear North America 18.11% -46.89% -15.20% 127,750,283

Direxion Daily Semicondct Bear 3X Shares North America 17.94% -65.01% -56.98% -

Horizons BetaPro COMEX Si lver Bear North America 17.50% -80.17% -71.63% 31,511,187

ProShares UltraShort DJ-UBS Crude Oil North America 17.41% -45.00% -34.96% -

ETFS Sugar (DE) ETC Europe 17.31% 65.36% 6.98% 43,089,349

iPath Short Extended Russell 2000 TR ETN North America 15.96% - -45.03% -

iPath Pure Beta Sugar ETN North America 13.20% - 11.19% 6,883,206

NEXT FUNDS TOPIX-17 Electric Power & Gas Asia-Pacific 13.07% -39.54% -16.99% -

Daiwa ETF TOPIX-17 Electric Power & Gas Asia-Pacific 12.96% -39.57% -18.19% -

ETFS Leveraged Lead ETC Europe 12.33% 105.82% -32.47% 4,147,102

ETFS Short Grains DJ-UBSCI ETC Europe 12.29% -35.80% -2.04% 1,132,639

Hyundai Hi Shares Insurance ETF Equity Asia-Pacific 12.11% 16.98% 11.06% 1,961,555,136

Direxion Daily Energy Bear 3X Shares North America 11.78% -76.51% -71.59% -

ETFS Short Cotton ETC Europe 11.77% -59.05% -21.24% 20,812,617

EasyETF Dow Jones Luxury EUR Europe 11.64% 58.83% 16.40% 10,132,985

Lyxor ETF Daily Double Short SMI A Europe 11.56% -13.35% 3.34% -

SPGS Si lver ETN Europe 11.45% - 107.49% -

ETFS Leveraged Lead (DE) ETC Europe 11.38% 73.89% -11.07% 2,860,381

ETFS Short Grains DJ-UBSCI (DE) ETC Europe 11.34% -45.76% -1.68% 781.215

Direxion Daily Gold Miners Bear 2X Shrs North America 11.10% - 9.01% -

ETFS Short Cotton (DE) ETC Europe 10.83% -65.41% -25.65% 14,355,086


Rankings

20

Top 30 Worst Performing ETPsAs at end of June 2011

WORLDWIDE


► THE B-SIDE: COTTON AND GAS The biggest loser in the last monthhave been (long) cotton, (short) sugar and (long) gas ETPs with losses up to 17%. Remarkable: Even if solar and alternative energy have become very trendy investment targets theGuggenheim Solar ETF declined nearly 15%.



Net assets

(USD)

ETFS Short Sugar (DE) ETC Europe -17.30% -65.73% -34.03% 9,247,651

ETFS Leveraged Agri DJ-UBSCI (DE) ETC Europe -16.98% 71.58% -6.32% 11,078,136

ETFS Cotton (DE) ETC Europe -16.70% 65.55% 5.52% 24,685,925

ETFS Short Sugar ETC Europe -16.60% -59.43% -25.06% 13,407,639

ETFS Leveraged Agri DJ-UBSCI ETC Europe -16.27% 103.08% -16.75% 16,061,555

ETFS Leveraged Crude Oil (DE) ETC Europe -16.18% -7.56% -57.89% 89,734,401

ETFS Cotton ETC Europe -15.99% 95.95% 8.29% 35,790,708

Source S&P GSCI Cotton TR T-ETC North America -15.99% 96.52% 55.94% 13,708,445

UBS E-TRACS CMCI Si lver TR ETN North America -15.67% 105.92% 27.80% -

ETFS Leveraged Crude Oil ETC Europe -15.46% 9.42% -52.17% 130,100,766

ETFS Leveraged Natural Gas (DE) ETC Europe -14.86% -63.44% -81.79% 249,645,820

Market Vectors Solar Energy ETF North America -14.77% 11.25% -33.95% -

iPath S&P GSCI Grains Index TR (DE) ETN North America -14.77% 36.24% 17.97% 335.117

Guggenheim Solar North America -14.73% 11.94% -32.61% -

Source S&P GSCI Grains TR T-ETC Europe -14.68% 36.15% 5.48% 5,260,902

iPath Pure Beta Cotton ETN North America -14.67% - -10.32% 5,836,250

ETFS Leveraged Tin (DE) ETC Europe -14.64% 70.79% 2.96% 828.151

ETFS Leveraged Natural Gas ETC Europe -14.13% -56.73% -77.88% 361,947,168

ETFS Leveraged Tin ETC Europe -13.91% 102.16% 5.14% 1,200,689

Direxion Daily Energy Bull 3X Shares North America -13.91% 168.91% 27.08% -

Kodex Securities ETF Asia-Pacific -13.84% 9.56% -6.97% 4,294,967,295

ETFS Leveraged Energy DJ-UBSCI (DE) ETC Europe -13.76% -18.31% -59.11% 907.694

EasyETF BNP Par Global Rnwble Energy USD Europe -13.66% -25.85% -18.15% 14,910,655

ETFS Leveraged Petrolm DJ-UBSCI (DE) ETC Europe -13.65% 8.07% -51.12% 658.597

ETFS Leveraged Corn (DE) ETC Europe -13.34% 131.39% -27.36% 3,594,656

ETFS Leveraged Soybean Oil (DE) ETC Europe -13.17% 58.63% -25.38% 667.162

iPath DJ-UBS Tin TR Sub-Idx ETN North America -13.12% 55.73% 9.57% -

ETFS Leveraged Energy DJ-UBSCI ETC Europe -13.02% -3.31% -52.78% 1,316,013

ETFS Leveraged Petrolm DJ-UBSCI ETC Europe -12.92% 27.91% -44.21% 954.862

ETFS Leveraged Platinum (DE) ETC Europe -12.89% -0.97% -19.35% 7,812,621

Top 30 Best Performing ETPsAs at end of June 2011

WORLDWIDE

Rankings

19


► AGROS: SWEET PERFOMERThe last 20 trading days, investorsin Sugar and Wheat enjoyed soaringprices. The relevant ETPs show impressive gains. Bearish motivatedinvestors got most rewarded inShort Silver and Short Crude ETPs –maybe this trend will end shortly.



Net assets

(USD)

ETFS Leveraged Sugar ETC Europe 38.46% 208.14% 1.34% 8,849,032

ETFS Leveraged Sugar (DE) ETC Europe 37.29% 160.34% 33.80% 6,103,443

ProShares UltraShort Si lver North America 20.58% -88.19% -80.93% -

PowerShares DB Crude Oil Dble Short ETN North America 20.57% -40.95% 22.10% -

ETFS Short Wheat ETC Europe 20.44% -24.81% 13.03% 8,186,638

ETFS Short Wheat (DE) ETC Europe 19.43% -36.47% 7.87% 5,646,570

Source S&P GSCI Sugar TR T-ETC Europe 18.32% 95.72% 38.05% 4,168,473

ETFS Sugar ETC Europe 18.31% 95.73% 9.82% 62,472,778

Horizons BetaPro NYMEX Crude Oil Bear North America 18.11% -46.89% -15.20% 127,750,283

Direxion Daily Semicondct Bear 3X Shares North America 17.94% -65.01% -56.98% -

Horizons BetaPro COMEX Si lver Bear North America 17.50% -80.17% -71.63% 31,511,187

ProShares UltraShort DJ-UBS Crude Oil North America 17.41% -45.00% -34.96% -

ETFS Sugar (DE) ETC Europe 17.31% 65.36% 6.98% 43,089,349


iPath Pure Beta Sugar ETN North America 13.20% - 11.19% 6,883,206

NEXT FUNDS TOPIX-17 Electric Power & Gas Asia-Pacific 13.07% -39.54% -16.99% -

Daiwa ETF TOPIX-17 Electric Power & Gas Asia-Pacific 12.96% -39.57% -18.19% -

ETFS Leveraged Lead ETC Europe 12.33% 105.82% -32.47% 4,147,102

ETFS Short Grains DJ-UBSCI ETC Europe 12.29% -35.80% -2.04% 1,132,639

Hyundai Hi Shares Insurance ETF Equity Asia-Pacific 12.11% 16.98% 11.06% 1,961,555,136

Direxion Daily Energy Bear 3X Shares North America 11.78% -76.51% -71.59% -

ETFS Short Cotton ETC Europe 11.77% -59.05% -21.24% 20,812,617

EasyETF Dow Jones Luxury EUR Europe 11.64% 58.83% 16.40% 10,132,985

Lyxor ETF Daily Double Short SMI A Europe 11.56% -13.35% 3.34% -

SPGS Si lver ETN Europe 11.45% - 107.49% -

ETFS Leveraged Lead (DE) ETC Europe 11.38% 73.89% -11.07% 2,860,381

ETFS Short Grains DJ-UBSCI (DE) ETC Europe 11.34% -45.76% -1.68% 781.215

Direxion Daily Gold Miners Bear 2X Shrs North America 11.10% - 9.01% -

ETFS Short Cotton (DE) ETC Europe 10.83% -65.41% -25.65% 14,355,086


General InformationThe views and expectations presented in the analyses, data and product presentations in this publication should not be viewed as investment recommendations of and by the ETF Radar Magazine or any of affiliates or associates. Investors should seek independent professional advice. Contributors of this publication and/or its affiliates may invest in or act as a market maker for the securities or indices or other products referred to in this publication for own account or the account of a third party. Editorial contributors may also have a business relationship with issuers of such securities or providers of such indices or products and may represent members of such issuers' or providers' decision-making bodies.

While the information in this publication has been obtained from sources believed to be reliable, neither the ETF Radar Magazine nor any contributor makes any representation as to accuracy or completeness. The ETF Radar Magazine does not act as an registered investment advisor or fiduciary for anyone unless otherwise agreed. Any evaluations in this publication reflect only the author's opinion at the time of the analysis. The opinions, forecasts, assumptions, estimates, derived valuations and target price(s) contained in this material are as of the date indicated and are subject to change at any time without prior notice. This publication is general and for information only and does not constitute any form of recommendation, an offer to sell or a solicitation to buy any security or other financial instrument.

Prospective investors should understand the risks associated with the products mentioned in this publication and should reach an investment decision on the basis of the information in the relevant offering circulars. Neither the staff of the ETF Radar Magazine nor any other person shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary loss or damages, including without limitation lost profits arising in any way from the information contained in the material. All designated trademarks and brands are the property of their respective owners.

Additional InformationAll figures are subject to market fluctuation and change. Investments that are concentrated in a specific sector or industry may be subject to a higher degree of market risk than investments that are more diversified. An index is not managed and is unavailable for direct investment. Total returns assume reinvestment of all distributions, including dividends and capital gains. Reinvestment does not assure a profit or protect against a loss in declining markets. Total returns do not include commissions, fees, other transaction variables or the effects of taxation. Past performance does not guarantee or predict future results. The investment discussed may not be suitable for all investors. Investors must make their own decisions based on their specific investment objectives and financial circumstances. This communication is not an offer to sell or solicitation of offers to buy any securities mentioned herein. This report is not a complete analysis of every material fact in respect to any fund or fund type. The opinions expressed here reflect the judgment of the author as of the date of the report and are subject to change without notice. Statistical information has been obtained from sources believed to be reliable but its accuracy is not guaranteed. The ETF Radar Magazine does not render legal, accounting or tax advice. Please consult your tax or legal advisors before taking any action that may have tax consequences.

The performance provided is past performance, which does not guarantee future results and current performance may be lower or higher than the performance data quoted. The investment return and principal value will fluctuate when sold and may be worth more or less than the original cost.

EXCHANGE TRADED FUNDS ARE SOLD BY PROSPECTUS. PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISK, CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE PROSPECTUS, WHICH CONTAINS THIS AND OTHER INFORMATION, CAN BE OBTAINED FROM THE ETF SPONSOR OR YOUR FINANCIAL ADVISOR. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.

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General InformationThe views and expectations presented in the analyses, data and product presentations in this publication should not be viewed as investment recommendations of and by the ETF Radar Magazine or any of affiliates or associates. Investors should seek independent professional advice. Contributors of this publication and/or its affiliates may invest in or act as a market maker for the securities or indices or other products referred to in this publication for own account or the account of a third party. Editorial contributors may also have a business relationship with issuers of such securities or providers of such indices or products and may represent members of such issuers' or providers' decision-making bodies.

While the information in this publication has been obtained from sources believed to be reliable, neither the ETF Radar Magazine nor any contributor makes any representation as to accuracy or completeness. The ETF Radar Magazine does not act as an registered investment advisor or fiduciary for anyone unless otherwise agreed. Any evaluations in this publication reflect only the author's opinion at the time of the analysis. The opinions, forecasts, assumptions, estimates, derived valuations and target price(s) contained in this material are as of the date indicated and are subject to change at any time without prior notice. This publication is general and for information only and does not constitute any form of recommendation, an offer to sell or a solicitation to buy any security or other financial instrument.

Prospective investors should understand the risks associated with the products mentioned in this publication and should reach an investment decision on the basis of the information in the relevant offering circulars. Neither the staff of the ETF Radar Magazine nor any other person shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary loss or damages, including without limitation lost profits arising in any way from the information contained in the material. All designated trademarks and brands are the property of their respective owners.

Additional InformationAll figures are subject to market fluctuation and change. Investments that are concentrated in a specific sector or industry may be subject to a higher degree of market risk than investments that are more diversified. An index is not managed and is unavailable for direct investment. Total returns assume reinvestment of all distributions, including dividends and capital gains. Reinvestment does not assure a profit or protect against a loss in declining markets. Total returns do not include commissions, fees, other transaction variables or the effects of taxation. Past performance does not guarantee or predict future results. The investment discussed may not be suitable for all investors. Investors must make their own decisions based on their specific investment objectives and financial circumstances. This communication is not an offer to sell or solicitation of offers to buy any securities mentioned herein. This report is not a complete analysis of every material fact in respect to any fund or fund type. The opinions expressed here reflect the judgment of the author as of the date of the report and are subject to change without notice. Statistical information has been obtained from sources believed to be reliable but its accuracy is not guaranteed. The ETF Radar Magazine does not render legal, accounting or tax advice. Please consult your tax or legal advisors before taking any action that may have tax consequences.

The performance provided is past performance, which does not guarantee future results and current performance may be lower or higher than the performance data quoted. The investment return and principal value will fluctuate when sold and may be worth more or less than the original cost.

EXCHANGE TRADED FUNDS ARE SOLD BY PROSPECTUS. PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISK, CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE PROSPECTUS, WHICH CONTAINS THIS AND OTHER INFORMATION, CAN BE OBTAINED FROM THE ETF SPONSOR OR YOUR FINANCIAL ADVISOR. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.

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Date post:	14-Mar-2016
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ETF Radar Magazine Issue July 2011 (North American Edition)

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