The Qbasis Futures Fund may soon be available to investors in the UK. Currently, the ETF only trades on the Hamburg Stock Exchange, but Qbasis is considering seeking a listing on the London Stock Exchange. The ETF uses two separate Qbasis trading strategies, MF Trend and MF Plus, allowing the fund to seek to profit from both short and long-term trends as well as a sideways-trending market.
New Listings
Royal Bank of Scotland (RBS) listed three equity ETNs on the Deutsche Borse. The three ETNs track different international equity indices; the MSCI EFM Africa ex South Africa tracks the performance of 35 companies for a 1.35% annual total expense ratio (TER); the MSCI BRIC ADR Top 50 tracks the performance of the 50 largest companies in the BRIC (Brazil, Russia, India, China) economies by free-float market capitalisation for a 0.64% annual TER; and the MSCI EM Latin America with Brazil ADR which includes 85% of the market capitalisation of Latin America's equity markets.
db x-trackers launched two currency ETPs on the London Stock Exchange. Unlike most currency ETPs, which simply track the performance of one currency in relation to another, these ETPs track the DB Currency Returns index, which takes long and short positions in the G10 currencies according to a rules-based process. The two ETPs each charge TERs of 0.35% annually, with the only difference between the two being that one is hedged in US dollars (LSE Code: XCRD), and the other in pounds sterling (LSE Code: XCRG). The index equally weights three different strategies, including carry, momentum and valuation. According the Deutsche Bank, the return generated from this strategy is possible because of the existence of non-speculating participants in the market who pay a liquidity premium to take positions; for instance, corporations hedging their foreign exchange exposure. Essentially, the ETP earns its return by providing liquidity. DB's research shows a superior risk/return trade-off for this strategy as compared to bond or equity ownership, with low correlations to other asset classes. However, as we've seen with other back-tested strategies that touted similarly positive attributes--like long-only commodity futures strategies--investors need to take these claims with caution. The existence of an ETF based on the strategy could potentially change the market as more and more assets chase the same strategy, weighing on expected returns down and increasing correlations.
Best and Worst Performers for the week of August 2 - 6
Wheat ETPs again dominated the list of top performers as Russia announced that it would suspend wheat exports until the end of the year as a result of drought. The Norwegian stock market also surged as the price of oil hit a three-month high.
The worst performers for the week were primarily commodities. Sugar remained as volatile as it has been all year, as weather conditions eased causing prices to drop after a spike on potential supply disruptions the prior week. Natural gas prices were hurt by strong inventory numbers out of the U.S. The one non-commodity ETF that also had a very poor week was the Source VIX Futures ETP, as volatility continues to drift downwards.
