The Markets August 19, 2011

ETFs Flows Positive in July

Although ETFs remain $27.6 billion off their peak asset level from April 2011, they experienced two consecutive months of inflows in June and July ($10.0 billion and $17.3 billion, respectively), according to data from Cerulli.
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Recovering from a $13.9 billion dip in June, total ETF assets bumped up by 1.3% to finish July with $1.1 trillion. Cerulli data show that, similar to mutual funds, U.S. stock ETFs continue to shed the most assets, declining by $4.2 billion, or 0.8%, in July. The asset class’ share shrank from 47.7% in June to 46.7% in July. 

Commodities and international stock ETFs’ monthly asset growth returned to positive levels in July (11.5% and 0.4%, respectively) after two consecutive months of decline. Commodities funds attracted their highest flows in 2011 with $3.8 billion, however the category still remains in net redemptions year-to-date (-$1.5 billion). 

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With outflows of $21.2 million in July, balanced ETFs witnessed their first month of net redemptions in 2011. Leading outflows for the asset class was SPDR Barclays Capital Convertible Securities with $38.5 million, the ETFs’ largest month of redemptions since its inception (4/14/2009). 

As the debt limit debate continued, investors shifted assets from equities to safe havens such as gold. SPDR Gold Trust grew the most assets of the top-10 largest ETFs in July, with 13.1% ($7.7 billion). Holding on to sixth place, iShares S&P 500 Index lost the most assets of the top-10 largest ETFs with $348 million. 

With $5.6 billion, State Street Global Advisors moved into the top position for flows for the first time in 2011. Only two of the 10-largest sponsors lost assets in July, ProShares and Direxion Funds (-$839 million and -$550 million, respectively), according to Cerulli.
 

Products August 19, 2011

Vendor Value Index Targets Unwarranted Fee Arrangements

 Fiduciary advisor Roland|Criss has announces a new offering to help pension and foundation executives assess their vendors’ performance and fees.
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According to a press release, the Vendor Value Index contains a special feature that meets the Department of Labor’s new regulation 408(b)(2), which requires retirement plan sponsors to prove the reasonableness of the compensation paid to vendors. 

Roland|Criss says it created the Vendor Value Index in response to the “information disadvantage” that retirement plan sponsors and foundation executives face with their vendors, noting that “in the fiduciary market, vendors are specialists in the design of their products, services, and compensation arrangements”, and that “vendors have a critical information advantage over their clients”, which the firm said can lead to excessive fees going unnoticed. 

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By applying forensic analysis, Roland|Criss developed the Vendor Value Index in order to equip its clients to identify potential and unwarranted fee arrangements. According to the firm, its methodology applies to all service provider types in both the retirement plan and foundation communities. 

The Vendor Value Index provides a vendor rating of 1 to 5, based upon qualitative data gathered regarding the vendor’s services and fees. A rating of 1 indicates the vendor’s fees are reasonable as defined under ERISA and UPMIFA, while a rating of 5 indicates the vendor is charging excessive fees for their services provided, according to the firm. 

“The Vendor Value Index will redefine how executives measure vendor performance and ROI.  We have seen it to be especially effective for CFO’s, as they are often leading the charge in evaluating cost vs. value,” said Ronald E. Hagan, President and CEO of Roland|Criss.   

The Vendor Value Index, which the firm says is a key part of Roland|Criss’ Fiduciary Supply Chain Management System, may be viewed at http://rolandcriss.com/vi-description.htm. 

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