Although overall trading volumes in the exchange traded fund marketplace on Monday were nothing to write home about and well below average, we did see some noteworthy activity in Global S&P Index funds that typically fly under the radar of most managers.
IOO (iShares S&P Global 100 Index), IXG (iShares S&P Global Financials), IXJ (iShares S&P Global Healthcare), EXI (iShares S&P Global Industrials), IGF (iShares S&P Global Infrastructure), IXN (iShares S&P Global Technology), IXP (iShares S&P Global Telecom) and JXI (iShares S&P Global Utilities) all saw uncommonly higher trading volumes yesterday, and we believe that a manager or managers are systematically rotating out of U.S. domestic based equity funds that are based on similar sectors as those above, and making a tactical shift into global equities via these ETFs.
IOO for instance traded more than 500% of its typical average daily trading volume yesterday, with over 480,000 shares changing hands and IXG traded over 218,000 shares, which is more than 4 times its average daily volume. IOO is based on the S&P Global 100 Index which tracks the 100 companies that have major influence in the global markets.
Currently, U.S. based equities make up about 49.67% of the overall index with European based equities (41.89%), Japan (4.37%), Developed Asia (1.97%), and Australia (1.64%) rounding out the rest of the basket. Top holdings of IOO currently are XOM (5.59%), IBM (3.21%), CVX (2.95%), NESN (2.79%), and MSFT (2.73%).
Year to date, IOO has trailed the U.S. large cap benchmark, the S&P 500 (-4.32%) having lost 10.97% thus far in 2011. Over a five year time horizon, IOO is also trailing, losing 26.42% versus the S&P 500 down 15.47%.
The other ETFs mentioned above have similar make ups to IOO, and these are convenient tools for the investment manager who wants true global exposure in one fell swoop via one ETF product.
Trading volumes in these particular ETFs can be hit or miss on any given day, but due to the liquid nature of the underlying equities in these indexes which are screened in advance of the index being composed, it is reasonably easy to trade these products in significant size without having a meaningful impact on the price of the ETF, of course with the proper techniques and guidance from an ETF focused trading desk.
iShares S&P Global 100 Index
For more information on Street One ETF research and ETF trade execution/liquidity services, contact pweisbruch@streetonefinancial.com.