Products September 23, 2011

Invesco PowerShares List Chinese Bond ETF

Invesco PowerShares Capital Management announced the PowerShares Chinese Yuan Dim Sum Bond Portfolio is expected to begin trading on Sept. 23, 2011. 
Reported by

The Fund will provide access to Chinese yuan-denominated “Dim Sum” bonds issued and settled outside mainland China. DSUM will have an expense ratio of 0.45% and is expected to issue monthly distributions.

“The Dim Sum bond market offers attractive coupons, and the ability to participate in the appreciation potential of the yuan over time,” said Ben Fulton, Invesco PowerShares Managing Director of Global ETFs.

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The Dim Sum bond market was introduced in 2007 when the People’s Republic of China-incorporated financial institutions were first allowed to issue yuan-denominated bonds offshore. Since then, the market for Dim Sum bonds has seen significant growth, particularly since its deregulation in July 2010. Dim Sum bonds are generally issued in Hong Kong by governments, agencies, supranationals, and corporations.

The PowerShares Chinese Yuan Dim Sum Bond Portfolio is based on the Citigroup Dim Sum (Offshore CNY) Bond Index. The Fund will normally invest at least 90% of its total assets in Chinese yuan-denominated bonds that comprise the Index. The Index measures the performance of Chinese yuan-denominated “Dim Sum” bonds that are issued and settled outside of Mainland China. The Index includes fixed-rate securities issued by governments, agencies, supranationals and corporations that have a minimum maturity of one year and a minimum size outstanding of 1 billion yuan. The index is managed by Citigroup Index LLC and is reconstituted on a monthly basis.

The Markets September 23, 2011

Mutual Funds See Gains At Dramatically Slower Pace

Long-term funds took in $370 billion in cash contributions globally, according to Strategic Insight (SI).  
Reported by

“Year-to-date results through July are markedly lower than the same period in 2010, when flows reached $570 billion, yet much better than the $170 billion in net redemptions for the first seven months of 2008. SI estimates $90 billion in net outflows for August globally—compared to $270 billion in redemptions during October 2008,” said Daniel Enskat, Senior Managing Director and Head of Global Consulting for SI. “On a product level, selected fixed income and equity themes, multi-asset income, ETFs, real estate, commodity, and selected alternative products are continuing to attract new cash flows.”

Slightly positive flows in Asia partially offset redemptions from Europe in August, where greater market concerns over the sovereign debt crisis during the month resulted in $75 billion in net outflows. 

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“In the past, spikes in net redemptions in response to market volatility were typically short-lived and limited in scope,” said Enskat. “Strong outflows from long-term funds in both Europe and the U.S. in October and November 2008 were followed by a sharp rebound in flows in the first half of 2009. Until recently, three-month rolling flows have stayed at around $100 billion. 

“The fund industry has faced and weathered uncertain economic times at many points in the past, but the current market volatility seems structurally different from prior crises.”

For more information on this report visit http://www.sioline.com.

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