Friday, August 23, 2013

ETFs Provide Price Discovery

We do not know if Eddie Snowden bought his way out of China with Nasdaq’s computer code but from what we have heard about the NSA, he probably had access to it.  We do know that during yesterday’s 3 hour trading halt, NYSE listed ETFs were providing price discovery on where the underlying equities would likely be trading when the connectivity issue was finally resolved.  Trading in the Vanguard Information Technology Fund (VGT) was choppy throughout the hiatus but did capture the upward bias that was developing into the close.  It is a constituent in the ETFG Quant Equity 12 Index which gained 1.6% on the day, almost double the S&P’s gain.  Its best performers were the emerging markets constituents which are scoring better today and the 2 China funds, GXC in 2nd place with 10 Green Diamonds and FXI in 3rd.

Published under the ticker ETFGQE12, the smart beta index represents monthly selections from our Quant model with liquidity constraints.  You can follow it under the Dynamic tab on our home page index screen and clicking on it will bring up its 12 constituent ETFs.  At the bottom of that screen we provide further information including a detailed fact sheet showing its performance exceeding the popular benchmark proxies SPY and ACWI over its first year.  The ETFG Quant Equity 10 Index (ETFGQE10) is similarly comprised but without the liquidity constraints and it performed even better.  We also publish the market performance ETFG Global 500 Index (ETFG500) representing the 500 largest ETFs, excluding leveraged and inverse.  It is the first benchmark to cross asset classes and regions providing performance discovery for managers who take full advantage of the exposures that ETFs provide.

Beyond those 3 published indices, we have several more that slice the markets by Asset Class, Geography, and Sectors.  Others not appearing include a market neutral index that gained more than 10% in its first year and custom ones designed to client specifications. You can get tracking data on the 500 free of charge and others on a contractual basis, please contact us to learn more.  By providing liquidity during the outage, ETFs further cemented their importance to the marketplace and ETF Global® is proud to be part of the burgeoning industry. Residing in old midtown office space we can sympathize with connectivity issues when it rains so our market participants can always call us at 212-223-ETFG. 

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