It’s come to our attention that the precious metals investing community has been rendered a little “worried” by a sudden and sizable accumulation of inventory in the iShares physical Trust, the SLV for short. (H/T Kid Dynamite)
According to ZeroHedge, 572 tonnes were added to the trust in just one day. And while that does not represent a record for the fund, it is “the biggest one day addition of physical silver to SLV in ordinary course operations”. Or so, at least, ZeroHedge says (though we haven’t double checked the numbers ourselves at this point). Read more
Emma Dunkley at Citywire has stumbled across a bit of a mystery.
In April, the iShares Dax ETF experienced outflows of some $5bn. For a fund which held about $13bn under management at its peak, that’s a sizeable chunk of capital that just flew out: Read more
Back in October, iShares, the world’s leading exchange traded fund provider, decided to set an important transparency example for the ETF industry. The ETF provider began providing the market with details of its securities lending operations. Such operations are a key part of the of the business for iShares since most of its ETFs are done through “replication” where the cash instruments are held, rather than the exposures of the funds being created by derivatives, i.e. “synthetically”.
And some interesting themes have started to emerge with regards to the collateral it holds to support those loans. Read more
The world’s leading provider of ETFs has backed calls for tougher safeguards for the investment products to deflect the rising tide of regulatory concerns about the systemic risk posed by the fast-growing market, the FT reports. BlackRock, which manages more than $600bn ETFs around the world and about $100bn in Europe through its iShares division, has called for higher standards of disclosure and stronger, more uniform regulation. BlackRock is backing proposals by regulators to impose new curbs on a market that has grown from one fund launched in 1989 to mirror the S&P 500 index to nearly 4,000 exchange traded products managing $1,626bn in assets across the world. It is urging the industry to embrace higher hurdles on reporting and argues that all trades, including over-the-counter deals which are carried out outside exchanges and which make up about two-thirds of ETF transactions in Europe, should be printed and made public, ideally on a daily basis.
These are the silver lending rates for 2011 from the London Bullion Market Association, as derived from Libor minus the silver forward rate (Sifo):
….about 6.7 per cent per year, according to this 2010 paper by Ben R. Marshall and Nuttawat Visaltanachoti of Massey University, and Nhut H. Nguyen of The University of Auckland.
The academics arrive at the figure after investigating the arbitrage opportunities that appeared between two of the most liquid equity ETFs in the world: the SPDR (SPY) and the iShares S&P 500 ETF (IVV). Read more
When it comes to physically-replicated Exchange-Traded Funds (ETFs), the key criticism — if any — usually pertains to providers’ tendency to top-up management fees with stock lending revenue.
The theory is that the practice exposes investors to unnecessary counterparty risk, not always easily identified. The justification on the providers’ part, though, is that the funds sit on literally mountains of securities, which are otherwise not being used to their full potential. Read more
The industry’s response to Tuesday’s warning note on Exchange Traded Funds from the Financial Stability Board has begun predictably with a statement from iShares — the world’s largest provider of ETFs.
And it’s a well thought-out response — one which seemingly seizes on the old Chinese adage that crises can be opportunities too. Read more
Every time you switch on the financial TV networks all anyone is talking about is the EWJ exchange-traded fund.
As if it’s a perfect proxy for Japan. Read more
Here’s an about-turn for the books:
Well, tomorrow’s Nikkei surely can’t be any worse than today’s.
As FT Alphaville noted on Friday, the iShares MSCI Japan Index Fund (EWJ) is proving an interesting barometer for investor sentiment about where the Nikkei is heading the next day. Read more
Talk to the precious metal bugs, and you’ll soon come across the story that there is a growing disconnect between what’s happening in the futures market and the physical market.
This, they say, is particularly the case for silver, where rumours of retail shortages have been doing the rounds since about the start of the year. Read more
Blackrock, the world’s largest asset manager — with $3,450bn under management according to figures released on Wednesday — puts out a regular quarterly review of the ETF industry.
And as usual, it presents some interesting factoids on all matters exchange-traded fund — be they product, currency or commodity. Blackrock itself, of course, is a leading player in the ETF market through its ownership of iShares and currently — according to its own report — has some $534.6bn in ETF assets under management. Read more
Happy tenth anniversary, European exchange-traded funds. Prepare for a blow-out.
Blackrock’s ETF division iShares marked this week’s big birthday with the publication of its ETF landscape report, predicting a robust future for ETF asset growth in Europe. Read more
BC Partners, the private equity group, has stopped work on a potential $5bn counter-bid for iShares, the exchange-traded funds arm of Barclays, after the bank started talks to sell its entire asset management business, Barclays Global Investors. Barclays had been keen to attract counter-bids to improve on the $4.2bn sale of iShares agreed last month with buyout group CVC. But interest from potential counter-bidders has waned since money manager BlackRock approached Barclays about buying all of BGI, including iShares, in a deal likely to be worth more than $10bn.
Barclays is in talks about selling asset management arm Barclays Global Investors for about $10bn, with potential bidders including US money manager BlackRock. The talks follow an initial auction for iShares, BGI’s exchange-traded funds unit, which Barclays agreed to sell to buyout group CVC for $4.2bn last month. Under a “go-shop” provision of that sale, Barclays can seek alternative bidders for iShares until June 18. For BlackRock, buying BGI would massively boost its ETF business. BC Partners and Hellman & Friedman, meanwhile, are both considering a counter-bid for iShares.
Barclays has received at least two approaches from potential counter-bidders for iShares, the fast-growing asset management division it last month agreed to sell for $4.2bn to US buyout group CVC Capital Partners. The bank, which is selling iShares in efforts to avoid a UK government bail-out, asked potential counter-bidders to indicate by the end of last week whether they would make an offer. At least two groups have said they would make a bid before the June 18 deadline under the “go shop” provision that Barclays agreed with CVC, to seek a better offer for US-based iShares.
Barclays stepped up efforts to persuade investors that the UK bank is in robust health, saying it has benefited from the financial industry’s strong start to the year. In an interview with Bloomberg, president Bob Diamond expressed optimism for the industry as well as for Barclays’ prospects. The shares rose on the comments, adding to gains in the past week following its deal to sell its iShares ETF unit to CVC Capital Partners for $4.4bn.
Here’s the statement, fresh off the RNS. It’s much less than that £5bn initially punted, but more than some estimates.
Barclays announces sale of iShares for US$4.4 billion (£3.0 billion) Read more
Barclays has entered exclusive negotiations with UK buyout group CVC Capital Partners to sell the exchange traded funds business of its iShares subsidiary for about £3bn. The deal excludes iShares securities lending arm. CVC, which last year raised an €11bn ($14.6bn) fund, beat bids by two rival consortia. The deal would be 60-70% financed by a loan from Barclays, which will also receive warrants worth 20% of the equity in the buy-out.
…On the decision to shun the government’s toxic asset insurance scheme.
Alex Potter, Collins Stewart: Read more
Courtesy of the banks team at Nomura.
They see the decision to shun the government’s asset protection scheme as a negative for Barclays’ share price because the market will continue to worry about its portfolio of credit/structured assets. (emphasis ours). Read more
Barclays’ loan book is in the final stages of an extreme stress test by City regulators as it considers whether to meet the March 31 deadline to apply for the government’s insurance scheme, which ringfences toxic assets. The FSA watchdog will shortly conclude its trawl of Barclays’ books and has indicated the bank does not require fresh capital. But some analysts say it might need a large capital injection, even though it is close to the sale of iShares, its asset management business that could fetch up to $6.5bn.
Bob Diamond, the high-profile president of Barclays, is among key executives who stand to make millions of pounds if the bank sells iShares, its asset management business which is part of Barclays Global Investors, for as much as $6.5bn. Diamond and more than 200 other executives own 4.5% of BGI Holdings through a share-incentive scheme. Barclays is talking to Goldman Sachs and at least three other parties about bids for iShares, due Friday.
Goldman Sachs is working on a bid for iShares, the securities lending and exchange-traded funds business being auctioned by Barclays. Bids, due by Friday, could put a value ofup to $6.5bn on iShares. Goldman and at least three other parties have expressed interest in iShares including buy-out group Bain Capital and a consortium led by Hellman & Friedman. Fund manager Vanguard is also thought to be interested.
Hellman & Friedman is putting together a group of private-equity groups that may bid for Barclays’ iShares unit in a transaction valued at as much as $5bn, reports Bloomberg. Barclays has set a deadline for offers for the end of this week and, according to the WSJ, may finance as much as 80% of the purchase price of iShares. Bain Capital and rival buyout firms TPG and Apax Partners also are suitors for iShares, the WSJ added.
45 per cent.
That’s how much shares in Barclays have risen this week. Read more
Barclays shares soared nearly 23% on Monday on hopes that the bank will avoid UK government intervention by selling off part of its asset management arm. Barclays confirmed it was in talks to sell iShares, its exchange-traded funds business, driving up its shares and bringing its market value to £7.6bn. The bank also said it had enjoyed a “strong start” to the year, echoing upbeat trading statements from US banks such as Citigroup. See FT Alphaville on how Barclays is “spinning out of control”.
Could Barclays’ iShares division really fetch £5bn?
Following confirmation that several “parties” are interested in iShares , analysts have been crunching the numbers to come up with a value for the business. Read more
Barclays has approached potential buyers about the sale of iShares, its exchange-traded funds business, in attempts to raise £3bn-£5bn in capital and thus avoid joining the UK government’s insurance scheme for bank assets. Potential bidders could include US asset managers which are attracted to the comparatively low transactional costs of ETFs.