ETF Radar Magazine Issue June 2011 (North American Edition)

www.etf-radar.com

Issue No. 10ISSN 2150-9166

North American Edition

June 2011

Feature

Covered Call Plays

Rankings

ETF Landscape At A Glance

The Global

Magazine

People

IndexIQAdam Patti

etfRadarSM

Index InvestorS&P 500 Sector MapTactical Portfolio UpdateETF of the Month

THE HOTSPOTSAT A GLANCE

ETF Radar Magazine | Issue June 2011

etfRadarGlobal Investor Intelligence

Inverse and leveraged products, synthetic replicated funds and optimised indices are just a few features one should understand.

The ETF business has become quite exotic.

Don’t get lost.

EXPLORE. UNDERSTAND. PROFIT.

www.etf-radar.com

PUT US

ON YOUR RADAR.

Spotlight

ETFs Continues to ClimbInstitutional Demand for

www.etf-radar.com

Issue No. 10ISSN 2150-9166

North American Edition

June 2011

Feature

Covered Call Plays

Rankings

ETF Landscape At A Glance

The Global

Magazine

People

IndexIQAdam Patti

etfRadarSM

Index InvestorS&P 500 Sector MapTactical Portfolio UpdateETF of the Month

THE HOTSPOTSAT A GLANCE

etfRadarGlobal Investor Intelligence

Inverse and leveraged products, synthetic replicated funds and optimised indices are just a few features one should understand.

The ETF business has become quite exotic.

Don’t get lost.

EXPLORE. UNDERSTAND. PROFIT.

www.etf-radar.com

PUT US

ON YOUR RADAR.

Spotlight

ETFs Continues to ClimbInstitutional Demand for

Global Summary

Industry Highlights

Global Round-Up

stnevE detceleS

CHICAGOMorningstar Investment Conference8-10 June 2011McCormick Place

mocr.adar-fte.www no noitces tneve eht tisiv esaelp sliated tneve lluf roF

TORONTOCanada Cup of Invest. Mgnt. 07–08 June 2011

InterContinental

OVERALL MARKETAt the end of Q1 2011, there were 549 ETFs/ETPs providingexposure to various emerging and frontier markets indices, with 1,119 listings and assets of US$246.4 Bn3 from 110 providers on 40 exchanges in 34 countries. The number of products increased by 7.0% YTD, from 513 at year end 2010 to 549 at the end of Q1 2011. Assets in ETFs/ETPs providing exposure to emerging markets indices decreased by 0.5% YTD to US$246.4 Bn, compared to a 1.7% rise in the MSCI Emerging Markets Index in US dollar terms over the same period.

HIGH YIELD INFLOWS SURGE, BLEEDING IN COMMODITY ETP DIDN‘T STOPHigh yield bond ETP inflows surge while yields sink to record lows. According to recent estimates, High yield fixed income ETPs gathered $3.5bn in new cash in the first five months of this year, running well ahead of 2010 when they attracted $6.5bn over the whole year (see also ETF Radar Magazine, Issue May 2010).

The bleeding in commodity-related exchange-traded products didn’t entirely stop last week, but it sure slowed down. Investors took out a relatively modest $280 million from said ETPs, dropping total assets to $161 billion. But assets are actually about $1 billion higher than last week, due to modest gains in most commodity prices.

NORTH [email protected] Naples (FL) +1 239 384 6090

EUROPE, MIDDLE EAST and [email protected] London +44 203 519 1179

ETF RADAR IS A PRIVATE AND INDEPENDENT INFORMATION PROVIDER.

NO STATEMENT IN THIS ISSUE IS TO BE CONSTRUED AS A RECOMMENDATION TO BUY OR SELL SECURITIES OR TO PROVIDE INVESTMENT ADVICE. PLEASE SEE OUR DISCLAIMER PAGE FOR FURTHER INFORMATION.

For all subscription enquiries, thoughts or general questions please contact us directly by email:

[email protected]> 3

Global Summary

ContentsIssue June 2011

Industry Highlights

Global Round-Up

Top20 Global Index Provider

Hot Product Debuts

Upcoming Events

Number Cruncher

Assets under Management

Change in ADV

Change in AuM

Worst-Performer

Performer

S&P 500 Sector Map

Tactical

ETF of the Month

Portfolio Update

IndexInvestor 6

Rankings 14

Adam Patti,

IndexIQ

People 12

Fast Lane

Get In Touch

Feature 8

Covered Call Plays

IndexCompanies and People

Institutional Demand for

ETFs Continues to Climb

Spotlight 10

Adam Patti (pg. 12) IndexIQ (pg. 4)

Amundi ETF (pg. 13) Ivesco PowerShares (pg. 3, 4)

Bank of Montreal (pg. 3) Invesco Trimark (pg. 3)

CBOE (pg. 8) Morgan Stanley (pg. 3)

CETFA (pg. 3) SSgA (pg. 4)

Claymore (pg. 3) Standard Chartered (pg. 3)

Commerzbank (pg. 4) Valérie Baudson (pg. 13)

Deutsche Bank (pg. 3) Van Eck (pg. 3)

ETF Securities (pg. 3)

Falcom FS (pg. 3)

First Asset Capital (pg. 3)

Greenwich Ass. (pg. 10)

Horizons (pg. 3)

Dear Reader,

The global ETF and ETP industry saw record net inflows totaling USD 25.3 Bn. in April. Little wonder, that worries and concerns have begun to multiply. As we reported in the last issue, three supranational bodies (FSB, IMF and BIS) warned over risk associated with ETFs. The main critic came on sec lending and swap-based products. Meanwhile the discussions instantiated by the “big three regulators” calmed down but a new aspect in trading ETFs appeared.

The latest discussions focus on shorting ETFs: Secondary trading activity of ETFs brings with it the possibility that market participants will short the ETFs themselves. There is no real limit to the short selling which is possible in an ETF in the same way that there is with stocks. In an ETF a short seller could mostly rely on the process of creating shares in the ETF to ensure he can deliver. This could lead to the possibility that a buyer of an ETF share is buying from a short seller and that no new share has yet been created. The short interest data captured in the US-listed securities reflects the exact number of shares that have yet to be repurchased to give back to lenders.

Currently, there are short-selling levels of up to 340% like in the SPDR S&P Retail ETF. Some of these funds show a significant short-ratio over a couple of months. Hence “short” means sometimes long. But this may lead to some problems and surprises – especially in choppy markets. As investors may face new fears in the near future (thanks to Greece, our feature story covers the pros and cons when using ETFs for covered call writing strategies. These strategies have advantages but also drawbacks – like shorting ETFs.

Enjoy reading and let us know your thoughts.

Silvan SchellingHead of Relationship Management

MIDDLE EAST: OMAN ETF STOPPEDFalcom Financial Services has postponed the launch of Oman's first ETF. The Saudi investment bank is yet to receive an approval from the Capital Market Authority regarding the launch. The firm cited unfavorable market conditions and the tense political environment in the region as the cause for the delay. Falcom launched its first ETF in Saudi Arabia last year.

ASIA-PACIFIC: INVESTORS HUNGRY FOR SECTOR ETFSInvestors in Asia need more sector-focused ETFs to facilitate tactical asset allocation in regional investments, said market strategists from Dt. Bank, Standard Chartered and Morgan Stanley at the Dynamic Asset Allocation conference in Hong Kong. Hopefully some issuers jump on the bandwagon – and gather assets in local sector ETFs.

CANADA: CETFA SEEKS NEW MEMBERSCanadian ETF Association (CETFA) is seeking to expand its membership. The newly launched lobby group currently has Bank of Montreal ETFs, Claymore Investment and Horizons ETF as members. First Asset Capital and Invesco Trimark are also expected to join CETFA. The group has extended an open invitation to iShares. CETFA is also considering discussing ETF classification by different classification services.

EUROPE: WORLD‘S FIRST RHODIUM ETC LAUNCHEDDeutsche Bank AG launched the world‘s first physical rhodium ETC. The product is 100% backed by physical rhodium and is designed to track the dollar spot price, minus fees (0.95% p.a.). The physical rhodium that backs the ETC will be kept with Johnson Matthey in the UK.

US: FIRST ETF LINKED TO MONGOLIAN STOCKSVan Eck Global is seeking to roll out a new Mongolia fund. The Market Vectors Mongolia ETF will hold at least 80% of its assets in companies either based in or listed in Mongolia, or based elsewhere but derive at least half their revenues from business activities in Mongolia. The Central-Asian country owns large amounts of commodities like coal, gold and copper.

US: NEW DOLLAR CURRENCY ETNS LAUNCHEDDeutsche Bank and Invesco PowerShares announced the launch of two new ETNs, which are designed to provide triple long and triple short exposure to futures contracts on the US Dollar Index, an index designed to reflect the value of the US dollar compared with six of the world's most traded currencies. Trading symobls are UUPT and UDNT.

Global Summary

Industry Highlights

Global Round-Up

stnevE detceleS

CHICAGOMorningstar Investment Conference8-10 June 2011McCormick Place

mocr.adar-fte.www no noitces tneve eht tisiv esaelp sliated tneve lluf roF

TORONTOCanada Cup of Invest. Mgnt. 07–08 June 2011

InterContinental

OVERALL MARKETAt the end of Q1 2011, there were 549 ETFs/ETPs providingexposure to various emerging and frontier markets indices, with 1,119 listings and assets of US$246.4 Bn3 from 110 providers on 40 exchanges in 34 countries. The number of products increased by 7.0% YTD, from 513 at year end 2010 to 549 at the end of Q1 2011. Assets in ETFs/ETPs providing exposure to emerging markets indices decreased by 0.5% YTD to US$246.4 Bn, compared to a 1.7% rise in the MSCI Emerging Markets Index in US dollar terms over the same period.

HIGH YIELD INFLOWS SURGE, BLEEDING IN COMMODITY ETP DIDN‘T STOPHigh yield bond ETP inflows surge while yields sink to record lows. According to recent estimates, High yield fixed income ETPs gathered $3.5bn in new cash in the first five months of this year, running well ahead of 2010 when they attracted $6.5bn over the whole year (see also ETF Radar Magazine, Issue May 2010).

The bleeding in commodity-related exchange-traded products didn’t entirely stop last week, but it sure slowed down. Investors took out a relatively modest $280 million from said ETPs, dropping total assets to $161 billion. But assets are actually about $1 billion higher than last week, due to modest gains in most commodity prices.

NORTH [email protected] Naples (FL) +1 239 384 6090

EUROPE, MIDDLE EAST and [email protected] London +44 203 519 1179

ETF RADAR IS A PRIVATE AND INDEPENDENT INFORMATION PROVIDER.

NO STATEMENT IN THIS ISSUE IS TO BE CONSTRUED AS A RECOMMENDATION TO BUY OR SELL SECURITIES OR TO PROVIDE INVESTMENT ADVICE. PLEASE SEE OUR DISCLAIMER PAGE FOR FURTHER INFORMATION.

For all subscription enquiries, thoughts or general questions please contact us directly by email:

[email protected]> 3

Global Summary

ContentsIssue June 2011

Industry Highlights

Global Round-Up

Top20 Global Index Provider

Hot Product Debuts

Upcoming Events

Number Cruncher

Assets under Management

Change in ADV

Change in AuM

Worst-Performer

Performer

S&P 500 Sector Map

Tactical

ETF of the Month

Portfolio Update

IndexInvestor 6

Rankings 14

Adam Patti,

IndexIQ

People 12

Fast Lane

Get In Touch

Feature 8

Covered Call Plays

IndexCompanies and People

Institutional Demand for

ETFs Continues to Climb

Spotlight 10

Adam Patti (pg. 12) IndexIQ (pg. 4)

Amundi ETF (pg. 13) Ivesco PowerShares (pg. 3, 4)

Bank of Montreal (pg. 3) Invesco Trimark (pg. 3)

CBOE (pg. 8) Morgan Stanley (pg. 3)

CETFA (pg. 3) SSgA (pg. 4)

Claymore (pg. 3) Standard Chartered (pg. 3)

Commerzbank (pg. 4) Valérie Baudson (pg. 13)

Deutsche Bank (pg. 3) Van Eck (pg. 3)

ETF Securities (pg. 3)

Falcom FS (pg. 3)

First Asset Capital (pg. 3)

Greenwich Ass. (pg. 10)

Horizons (pg. 3)

Dear Reader,

The global ETF and ETP industry saw record net inflows totaling USD 25.3 Bn. in April. Little wonder, that worries and concerns have begun to multiply. As we reported in the last issue, three supranational bodies (FSB, IMF and BIS) warned over risk associated with ETFs. The main critic came on sec lending and swap-based products. Meanwhile the discussions instantiated by the “big three regulators” calmed down but a new aspect in trading ETFs appeared.

The latest discussions focus on shorting ETFs: Secondary trading activity of ETFs brings with it the possibility that market participants will short the ETFs themselves. There is no real limit to the short selling which is possible in an ETF in the same way that there is with stocks. In an ETF a short seller could mostly rely on the process of creating shares in the ETF to ensure he can deliver. This could lead to the possibility that a buyer of an ETF share is buying from a short seller and that no new share has yet been created. The short interest data captured in the US-listed securities reflects the exact number of shares that have yet to be repurchased to give back to lenders.

Currently, there are short-selling levels of up to 340% like in the SPDR S&P Retail ETF. Some of these funds show a significant short-ratio over a couple of months. Hence “short” means sometimes long. But this may lead to some problems and surprises – especially in choppy markets. As investors may face new fears in the near future (thanks to Greece, our feature story covers the pros and cons when using ETFs for covered call writing strategies. These strategies have advantages but also drawbacks – like shorting ETFs.

Enjoy reading and let us know your thoughts.

Silvan SchellingHead of Relationship Management

MIDDLE EAST: OMAN ETF STOPPEDFalcom Financial Services has postponed the launch of Oman's first ETF. The Saudi investment bank is yet to receive an approval from the Capital Market Authority regarding the launch. The firm cited unfavorable market conditions and the tense political environment in the region as the cause for the delay. Falcom launched its first ETF in Saudi Arabia last year.

ASIA-PACIFIC: INVESTORS HUNGRY FOR SECTOR ETFSInvestors in Asia need more sector-focused ETFs to facilitate tactical asset allocation in regional investments, said market strategists from Dt. Bank, Standard Chartered and Morgan Stanley at the Dynamic Asset Allocation conference in Hong Kong. Hopefully some issuers jump on the bandwagon – and gather assets in local sector ETFs.

CANADA: CETFA SEEKS NEW MEMBERSCanadian ETF Association (CETFA) is seeking to expand its membership. The newly launched lobby group currently has Bank of Montreal ETFs, Claymore Investment and Horizons ETF as members. First Asset Capital and Invesco Trimark are also expected to join CETFA. The group has extended an open invitation to iShares. CETFA is also considering discussing ETF classification by different classification services.

EUROPE: WORLD‘S FIRST RHODIUM ETC LAUNCHEDDeutsche Bank AG launched the world‘s first physical rhodium ETC. The product is 100% backed by physical rhodium and is designed to track the dollar spot price, minus fees (0.95% p.a.). The physical rhodium that backs the ETC will be kept with Johnson Matthey in the UK.

US: FIRST ETF LINKED TO MONGOLIAN STOCKSVan Eck Global is seeking to roll out a new Mongolia fund. The Market Vectors Mongolia ETF will hold at least 80% of its assets in companies either based in or listed in Mongolia, or based elsewhere but derive at least half their revenues from business activities in Mongolia. The Central-Asian country owns large amounts of commodities like coal, gold and copper.

US: NEW DOLLAR CURRENCY ETNS LAUNCHEDDeutsche Bank and Invesco PowerShares announced the launch of two new ETNs, which are designed to provide triple long and triple short exposure to futures contracts on the US Dollar Index, an index designed to reflect the value of the US dollar compared with six of the world's most traded currencies. Trading symobls are UUPT and UDNT.

Index Investor

In May the S&P 500 Index fell -2.17%. Is 2011 once again a 27th May 2011 the S&P 500 Energy Sector was the worst year that approves the phrase “Sell in May and go away”? performing one with -5.21%. If investors don't believe in a Having a look at the sector performances you can clearly reversal of the economical trend, the contrarian pick with the see a beginning sector rotation as market participants would be the best believe that the economy is moving from late expansion to choice. Best performing sector with a performance of +1.59% as early contraction. Usually energy stocks perform best in of 27th May 2011 was the S&P 500 Consumer Staples Index. If late expansion and consumer staple stocks best in early you believe in an ongoing trend, the contraction. Exactly this situation appeared in May. As of would be your best pick.

Energy Select Sector SPDR Fund (XLE)

Consumer Staples

Select Sector SPDR Fund (XLP) n

Market participants started sector rotationby Sebastian Stahn

The Action Plan

S&P 500 Sector Map

CONTRARIAN PICK BEST-TREND PICK

HIGH LOW LOWXLE XLP

Energy Select Sector SPDR FundISIN/Ticker: XLE USTER / AUM: 0.20% / 9.7 bn.1 Year Return: +43.60%Last Price/High/Low 52-Weeks: USD 76.34 / 48.56 / 80.97Replication: Full replication

Consumer Staples Select Sector SPDR FundISIN/TIcker: XLP USTER / AUM: 0.20% / 4.5 bn. 1 Year Return: +24.51%Last Price/High/Low 52-Weeks: USD 32.04 / 25.30 / 32.46Replication: Full replication

RISK-REWARD-ANALYSISbased on an investment horizon of one month

Industrials–3.69%

Health Care+1.21%

Consumer Discretionary

–0.95%Telecommunication

Services+0.93%

InformationTechnology

–3.14%

Utilities+1.45% Consumer

Staples+1.59%

Energy–5.21% Financials

–4.16% Materials–3.75%

BESTPERFORMINGSECTORS

WORSTPERFORMING

SECTORS

Monthly Performance. As of April 29, 2011.

stnevE detceleS

Global Summary

Top10 Global Index Provider(Ranked by AuM, May 2011)

Hot Product Debuts

► FIRST WAVE OF NEW SPDR ETFSState Street Global Advisorshas launched eight new ETFs at Deutsche Börse's Xetra platform. The portfolio includes seven equity-index ETFs and one bond-index ETF. The launch also includes five emerging markets equity ETFs, as well as the first local currency emerging market debt ETF to be listed in Europe. SSgA’s ETFs are intended as the first wave of a fresh assault on the European market.

FRANKFURTETF & Indexing Deutschland20-22 June 2011Radisson Blu Hotel

Ticker/ISIN: IE00B3YLTY66 TER: 0.55% - 0.65% p.a.CCY: USD

MADRIDETF & Indexing Espana15-16 Jun 2011Melia Ave. America Hotel

Sources: Event organizers, Reuters, BusinessWire, BlackRock, ETF Radar Global Research

Number Cruncher

Yield spread of crippled Greek vs. German 10-year bonds as of May, 27 2011.

► FIRST S-DAX ETF LAUNCHED Commerzbank, Germany's second largest bank, has launched an ETF linked to the country's S-DAX, making it the first product worldwide to replicate the small-cap index. The ComStage ETF SDAX TR replicates the performance of the SDAX, which comprises 50 German smallcaps stocks. ComStage, Commerzbank's ETF brand, has ca. USD 9.2 billion assets under management, making it Europe's seventh-largest ETF player.

Ticker/ISIN: LU0603942888TER: 0.70% p.a.CCY: EUR

► HK SMALL CAP ETF LAUNCHEDIndexIQ recently launched the first ETF dedicated to providing access to Hong Kong’s dynamic small-cap sector. HKK‘s expense ratio is fair priced compared to already available HK blue-chip ETFs. The fund has a strong exposure to Consumer Discretionary stocks and Financial companies. Investors should be aware of that this ETF trades small cap equities. Hence in volatile times increased spreads are possible.

Ticker/ISIN: HKKTER: 0.69% p.a.CCY: USD

Best 1 Month performance in May 2011, achieved by ProShares Ultra Silver ETF.

SINGAPOREIndexing&ETFAsia1 June 2011Amara Hotel

World Islamic Conference8-9 June 2011Pan Pacific Hotel

► NEW CONVERTIBLE ETFInvesco PowerShares is launching the PowerShares Convertible Securities ETF. The fund, which is likely to issue monthly distributions, will be linked to the BofA ML All U.S. Convertibles Index and will invest at least 80% of its assets in the component securities that comprise the convertibles index, which is designed to track the performance of USD-denominated investment grade and non-investment grade convertible.

Ticker/ISIN: CVRTTER: 0.35% p.a.CCY: USD

MSCI 25.5%

S&P 23%

Barclays Capital 8.1%

STOXX 7.2%

Russell 6%

FTSE 4.3%

Dow Jones 3.8%

Markit 3.3%

NASDAQ OMX 2.6%

NYSE Euronext 1.2%

Other 15.0%

HONG KONGETF Index Investment Summit 201131 Aug. - 1 Sept. 2011JW Marriot Hotel

1455 bps. 62.43%

Index Investor

In May the S&P 500 Index fell -2.17%. Is 2011 once again a 27th May 2011 the S&P 500 Energy Sector was the worst year that approves the phrase “Sell in May and go away”? performing one with -5.21%. If investors don't believe in a Having a look at the sector performances you can clearly reversal of the economical trend, the contrarian pick with the see a beginning sector rotation as market participants would be the best believe that the economy is moving from late expansion to choice. Best performing sector with a performance of +1.59% as early contraction. Usually energy stocks perform best in of 27th May 2011 was the S&P 500 Consumer Staples Index. If late expansion and consumer staple stocks best in early you believe in an ongoing trend, the contraction. Exactly this situation appeared in May. As of would be your best pick.

Energy Select Sector SPDR Fund (XLE)

Consumer Staples

Select Sector SPDR Fund (XLP) n

Market participants started sector rotationby Sebastian Stahn

The Action Plan

S&P 500 Sector Map

CONTRARIAN PICK BEST-TREND PICK

HIGH LOW LOWXLE XLP

Energy Select Sector SPDR FundISIN/Ticker: XLE USTER / AUM: 0.20% / 9.7 bn.1 Year Return: +43.60%Last Price/High/Low 52-Weeks: USD 76.34 / 48.56 / 80.97Replication: Full replication

Consumer Staples Select Sector SPDR FundISIN/TIcker: XLP USTER / AUM: 0.20% / 4.5 bn. 1 Year Return: +24.51%Last Price/High/Low 52-Weeks: USD 32.04 / 25.30 / 32.46Replication: Full replication

RISK-REWARD-ANALYSISbased on an investment horizon of one month

Industrials–3.69%

Health Care+1.21%

Consumer Discretionary

–0.95%Telecommunication

Services+0.93%

InformationTechnology

–3.14%

Utilities+1.45% Consumer

Staples+1.59%

Energy–5.21% Financials

–4.16% Materials–3.75%

BESTPERFORMINGSECTORS

WORSTPERFORMING

SECTORS

Monthly Performance. As of April 29, 2011.

stnevE detceleS

Global Summary

Top10 Global Index Provider(Ranked by AuM, May 2011)

Hot Product Debuts

► FIRST WAVE OF NEW SPDR ETFSState Street Global Advisorshas launched eight new ETFs at Deutsche Börse's Xetra platform. The portfolio includes seven equity-index ETFs and one bond-index ETF. The launch also includes five emerging markets equity ETFs, as well as the first local currency emerging market debt ETF to be listed in Europe. SSgA’s ETFs are intended as the first wave of a fresh assault on the European market.

FRANKFURTETF & Indexing Deutschland20-22 June 2011Radisson Blu Hotel

Ticker/ISIN: IE00B3YLTY66 TER: 0.55% - 0.65% p.a.CCY: USD

MADRIDETF & Indexing Espana15-16 Jun 2011Melia Ave. America Hotel

Sources: Event organizers, Reuters, BusinessWire, BlackRock, ETF Radar Global Research

Number Cruncher

Yield spread of crippled Greek vs. German 10-year bonds as of May, 27 2011.

► FIRST S-DAX ETF LAUNCHED Commerzbank, Germany's second largest bank, has launched an ETF linked to the country's S-DAX, making it the first product worldwide to replicate the small-cap index. The ComStage ETF SDAX TR replicates the performance of the SDAX, which comprises 50 German smallcaps stocks. ComStage, Commerzbank's ETF brand, has ca. USD 9.2 billion assets under management, making it Europe's seventh-largest ETF player.

Ticker/ISIN: LU0603942888TER: 0.70% p.a.CCY: EUR

► HK SMALL CAP ETF LAUNCHEDIndexIQ recently launched the first ETF dedicated to providing access to Hong Kong’s dynamic small-cap sector. HKK‘s expense ratio is fair priced compared to already available HK blue-chip ETFs. The fund has a strong exposure to Consumer Discretionary stocks and Financial companies. Investors should be aware of that this ETF trades small cap equities. Hence in volatile times increased spreads are possible.

Ticker/ISIN: HKKTER: 0.69% p.a.CCY: USD

Best 1 Month performance in May 2011, achieved by ProShares Ultra Silver ETF.

SINGAPOREIndexing&ETFAsia1 June 2011Amara Hotel

World Islamic Conference8-9 June 2011Pan Pacific Hotel

► NEW CONVERTIBLE ETFInvesco PowerShares is launching the PowerShares Convertible Securities ETF. The fund, which is likely to issue monthly distributions, will be linked to the BofA ML All U.S. Convertibles Index and will invest at least 80% of its assets in the component securities that comprise the convertibles index, which is designed to track the performance of USD-denominated investment grade and non-investment grade convertible.

Ticker/ISIN: CVRTTER: 0.35% p.a.CCY: USD

MSCI 25.5%

S&P 23%

Barclays Capital 8.1%

STOXX 7.2%

Russell 6%

FTSE 4.3%

Dow Jones 3.8%

Markit 3.3%

NASDAQ OMX 2.6%

NYSE Euronext 1.2%

Other 15.0%

HONG KONGETF Index Investment Summit 201131 Aug. - 1 Sept. 2011JW Marriot Hotel

1455 bps. 62.43%

Feature

QUICK FACTS seven months, some economists argued. The market has Increasing fears among investors may lead to experienced a drawback in May due to these concerns. First

shaky markets in the near future. quarter U.S. GDP growth was weak at 1.8% and global Implementing covered call strategies would allow unemployment and housing concerns persist.

investors to hedge their portfolio partly against a

drop-down of the markets. New fears in the markets

One of the bigger issues is the European debt crisis. Chances As we come to the mid way point of the year, we can see are increasing that Greece will have to renegotiate debt. the market has essentially moved sideways with high Credit spreads of Greek government bonds soared. volatility. As of May 26th, the S&P 500 is up over 5% for European Central Bank Board member Lorenzo Bini the year. The CBOE VIX volatility index trades currently Smaghi said recently that talk about Greece reneging on at 15 points which is pretty close to all time low of 2007. debt commitments “has been very damaging” and The major question is “how will the market perform suggested “that investing in the euro area is unsafe.” Even for through the next quarter?” No one can say there isn't a a country that flouted eurozone fiscal rules for a decade, “a lot on the minds of the average investor. The pressing debt restructuring, or exiting the euro, would be like the questions are: Will gas prices stay at their current level death penalty – which we have abolished in the European or possibly increase? Will the U.S. and world economies Union,” he said. continue to grow? How will the unemployment

situation shake out through the remainder of the year? The ECB has already bought about 45 billion euros in Greek

Employers in the States probably hired fewer workers in government bonds in the past year but Bini Smaghi said the

May 2011 and factory orders grew at the slowest pace in impact of a default would fall largely on eurozone national >

by David Cohne

One way to add some protection to your portfolio is by employing a covered call strategy. ETFs offer an easy way to add buy-write insurance to a portfolio – espcially in a gradually rising or choppy market. But there are also drawbacks.

Covered Call Plays

QUICK FACTSIYZ were off about 0.7% on the day. readings on private-sector job growth Telecom Stocks with high upside The fund is dominated by three stocks and manufacturing activity prompted potential.which are AT&T Inc. (15,28%), Verizon Health Care still a high ranked increasing concerns about a slowing Comm. (10,96%) and CenturyLink sector. economy. It‘s expected that the (8,67%). The sector outlook is still markets remain very choppy. positive and may lead to future The ETF Radar Tactical portfolio is a Obviously the majority of portfolio

model portfolio that invests in five managers is getting nervous – some gains.ETFs based on an individual tactical expect a hard landing of the US ETF rankings system maintained by economy. We remain bullish but see Cohne Investment Group. The increasing levels of volatility over the portfolio trades at the end of each next weeks.month. The holdings for June i n c l u d e Based on the rankings

, is the , ETF of the month. Surprisingly, this , fund is seeing unusually high volume

and in afternoon trading on Wednesday, . North June 1st with over 1.1 million shares

American stocks kicked off June traded versus three month average with a sharp loss after disappointing volume of about 349,000. Shares of

i S h a r e s D J U. S . Telecommunications (IYZ) (IYZ)SPDR-Health Care (XLV) SPDR-Consumer Staples (XLP) SPDR-Utilities (XLU) iShares DJ U.S. Real Estate (IYR)

iShares DJ U.S. Telecommunications

Index Investor

Tactical Portfolio Update

by David Cohne

Still bullish for Telecomand Health Care

ETF Radar Tactical Portfolio

ETF of the Month

52-Week Range $18.36-$25.89 Market Cap $793 millionDividends -TER 0.48% p.a.Last Volume $ 1760912 ETF Issuer iSharesReplication Full Replication

TICKER ETF NAME TER AUM WEIGHT

IYZ iShares DJ U.S. Telecommunications 0.48% $793 million 20%

XLV SPDR-Health Care 0.20% $3.8 billion 20%

XLP SPDR-Consumer Staples 0.20% $4.5 billion 20%

XLU SPDR-Utilities 0.20% $4.4 billion 20%

IYR iShares DJ U.S. Real Estate 0.47% $3.7 billion 20%

Source: Cohne Investment Group, exclusively for ETF Radar / June 1, 2011 Ranking

Feature

QUICK FACTS seven months, some economists argued. The market has Increasing fears among investors may lead to experienced a drawback in May due to these concerns. First

shaky markets in the near future. quarter U.S. GDP growth was weak at 1.8% and global Implementing covered call strategies would allow unemployment and housing concerns persist.

investors to hedge their portfolio partly against a

drop-down of the markets. New fears in the markets

One of the bigger issues is the European debt crisis. Chances As we come to the mid way point of the year, we can see are increasing that Greece will have to renegotiate debt. the market has essentially moved sideways with high Credit spreads of Greek government bonds soared. volatility. As of May 26th, the S&P 500 is up over 5% for European Central Bank Board member Lorenzo Bini the year. The CBOE VIX volatility index trades currently Smaghi said recently that talk about Greece reneging on at 15 points which is pretty close to all time low of 2007. debt commitments “has been very damaging” and The major question is “how will the market perform suggested “that investing in the euro area is unsafe.” Even for through the next quarter?” No one can say there isn't a a country that flouted eurozone fiscal rules for a decade, “a lot on the minds of the average investor. The pressing debt restructuring, or exiting the euro, would be like the questions are: Will gas prices stay at their current level death penalty – which we have abolished in the European or possibly increase? Will the U.S. and world economies Union,” he said. continue to grow? How will the unemployment

situation shake out through the remainder of the year? The ECB has already bought about 45 billion euros in Greek

Employers in the States probably hired fewer workers in government bonds in the past year but Bini Smaghi said the

May 2011 and factory orders grew at the slowest pace in impact of a default would fall largely on eurozone national >

by David Cohne

One way to add some protection to your portfolio is by employing a covered call strategy. ETFs offer an easy way to add buy-write insurance to a portfolio – espcially in a gradually rising or choppy market. But there are also drawbacks.

Covered Call Plays

QUICK FACTSIYZ were off about 0.7% on the day. disappointing readings on private- Telecom Stocks with high upside The fund is dominated by three stocks sector job growth and manufacturing potential.which are AT&T Inc. (15,28%), Verizon Health Care still a high ranked act iv i ty prompted increas ing Comm. (10,96%) and CenturyLink sector. concerns about a slowing economy. It‘s (8,67%). The sector outlook is still expected that the markets remain very positive and may lead to future The ETF Radar Tactical portfolio is a choppy. Obviously the majority of

model portfolio that invests in five portfolio managers is getting nervous gains.ETFs based on an individual tactical – some expect a hard landing of the US ETF rankings system maintained by economy. We remain bullish but see Cohne Investment Group. The increasing levels of volatility over the portfolio trades at the end of each next weeks.month. The holdings for June i n c l u d e Based on the rankings

, is the , ETF of the month. Surprisingly, this

fund is seeing unusually high volume , and in afternoon trading on Wednesday,

. June 1st with over 1.1 million shares North American stocks kicked off traded versus three month average June with a sharp loss after volume of about 349,000. Shares of

i S h a r e s D J U. S . Telecommunications (IYZ) (IYZ)S PDR -Heal th Care ( X LV )S h PD R - Co n s u m e r S t a p l e s (XLP) SPDR-Utilities (XLU)iShares DJ U.S. Real Estate (IYR)

Index Investor

Tactical Portfolio Update

by David Cohne

Still bullish for Telecomand Health Care

ETF Radar Tactical Portfolio

ETF of the Month

52-Week Range $18.36-$25.89 Market Cap $793 millionDividends -TER 0.48% p.a.Last Volume $ 1760912 ETF Issuer iSharesReplication Full Replication

TICKER ETF NAME TER AUM WEIGHT

IYZ iShares DJ U.S. Telecommunications 0.48% $793 million 20%

XLV SPDR-Health Care 0.20% $3.8 billion 20%

XLP SPDR-Consumer Staples 0.20% $4.5 billion 20%

XLU SPDR-Utilities 0.20% $4.4 billion 20%

IYR iShares DJ U.S. Real Estate 0.47% $3.7 billion 20%

Source: Cohne Investment Group, exclusively for ETF Radar / June 1, 2011 Ranking

Spotlight

A recent investment study, Institutionals bullish on ETFs Multiple Usageperformed by Stamford-based Nearly 50% of asset management firms More specifically, institutions use Greenwich Associates, reveals that interviewed expect to increase ETFs for several critical functions. institutionals are increasingly bullish portfolio allocations to ETFs between 75% of the asset managers and half of on using Exchange-Traded Funds in now and the year 2013. Of those, the institutional funds use ETFs for their portfolios. Nearly one-half of slightly more than half expect to cash equitization or interim beta. the asset management firms and one- increase ETF allocations by 5% or Approximately 45% of participating third of the institutional funds taking more. More important: Not a single institutional funds and 40% of asset part in the study of current asset manager plans to cut ETF managers use ETFs as part of their institutional ETF users, plan to allocations in the coming two years. regular rebalancing procedures. increase the share of portfolio assets About 60% of asset managers said, they Roughly 45% of participating they invest in ETFs over the next two use ETFs to add alpha through tactical institutional funds and 40% of asset years. applications. managers use ETFs to make tactical

adjustments to their portfolios. The research paper‘s outcome is based on interviews conducted Perfect heding instrumentbetween February and April of 2011 In addition to the largely tactical uses, with 45 institutionals, including study respondents also note using corporate pensions, public pensions, ETFs for more strategic purposes, endowments and foundations, as such as hedging. In particular, 30% of well as 25 large asset management participating asset managers and firms in the United States. about 1 in 10 institutional funds use

by Tom Benson

ETFs are playing an increasingly important role in the portfolios of U.S. institutional investors. More and more institutional investors are adopting ETFs as a flexible, multi-purpose tool. The perception of ETFs as a retail product seems clearly out of date.

Institutional Demand for ETFs Continues to Climb

“ “

Nearly 50% of the asset managers expect to increase their current allocations to ETFs within the next years.

Feature

central banks, rather than the ECB, and ultimately on taxpayers. “We care about taxpayers’ money and this is What is a buy-write index?why we warn against restructuring. We seem to be the Implementing this strategy can be difficult in a retail only ones,” he said. On Wednesday, Moodys account since the need for a margin account setup. This is downgraded Greece's local and foreign currency bond solved by investing directly in a covered call ETF. Currently ratings deeper into junk status, citing heightened risk you can track the S&P 500 Index with two exchange traded that the country will fail to stabilise its debt position products linked to the CBOE S&P 500 BuyWrite Index, without a debt restructuring. commonly known as the BXM Index. This is a benchmark

index designed to track the performance of a hypothetical buy-write strategy on the S&P 500 Index. The BXM is a passive total return index based on buying an S&P 500 stock index portfolio, and "writing" (or selling) the near-term S&P 500 Index "covered" call option, generally on the third Friday of each month. The SPX call written will have about one month remaining to expiration, with an exercise price just above the prevailing index level (i.e., slightly out of the

Portfolio insurance – for sideway markets money). The SPX call is held until expiration and cash Many of these factors could lead to a drop in the markets settled, at which time a new one-month, near-the-money or markets could trade sideways. One way to add some call is written. First ETF we analyzed is the protection to your portfolio is by employing a covered and second is the call strategy. This works well in sideways markets. A . The ETN has a 30-covered call or buy-write is a strategy when you go long year maturity and is a senior, unsecured, unsubordinated on a security or index and sell call options on that same debt security issued by Barclays Bank. PowerShares had security or index. This provides some insurance for your also launched an ETF that tracked the NASDAQ 100, but portfolio by reducing volatility and increasing income. has since liquidated it.One word of caution: Your returns will be less on the upside and that this won't provide you a full hedge. It's a ETFs to Watchstrategy that can be used in conjunction with other The hedges such stop losses, inverse ETFs and cash. tracks the CBOE S&P 500 BuyWrite Index. It was launched

on 12/20/2007. PBP has an expense ratio of 0.75% p.a. and $118 Million under management. Top holdings include Exxon Mobil Corp. (XOM), Apple Inc. (AAPL), Chevron Corp. (CVX), General Electric Co. (GE) and International Business Machines Corp (IBM). Technology and financials are the largest sectors of the portfolio which is up 2.9% for the year through May 26th. Investors morely exposed to the European markets should think aobut

has an expense ratio of 0.45% p.a. – much lower than its peer linked to the BXM. The basic idea behind this index is mostly the same.

The preceding funds offer an easy way to add buy-write insurance to your portfolio. Nevertheless you should remind that hedging has drawbacks. As mentioned above, both ETFs work best in a gradually rising or choppy market. Indeed, both products will probably underperform when the volatility is low and investor sentiment is high.

PowerShares S&P 500 Buy/Write ETF (PBP) iPath CBOE S&P 500 BuyWrite ETN (BWV)

PowerShares S&P 500 BuyWrite Portfolio (PBP)

Lyxor‘s ETF DAXplus Covered Call (DE000A0C4BY2). This fund tracks the performance of the DAXplus Covered Call strategy index. The ETF is listed on Frankfurt stock exchange and

Performance (USD)

Source: Teledata as of May 30, 2011

BETTER BUT NOT BESTPerformance Comparison Of Selected Buy-Write ETFs vs. S&P500

2007 2011

2009 2010

S&P500

“”

This strategy provides insurance for your portfolio by reducing volatility and increasing income.

Spotlight

A recent investment study, Institutionals bullish on ETFs Multiple Usageperformed by Stamford-based Nearly 50% of asset management firms More specifically, institutions use Greenwich Associates, reveals that interviewed expect to increase ETFs for several critical functions. institutionals are increasingly bullish portfolio allocations to ETFs between 75% of the asset managers and half of on using Exchange-Traded Funds in now and the year 2013. Of those, the institutional funds use ETFs for their portfolios. Nearly one-half of slightly more than half expect to cash equitization or interim beta. the asset management firms and one- increase ETF allocations by 5% or Approximately 45% of participating third of the institutional funds taking more. More important: Not a single institutional funds and 40% of asset part in the study of current asset manager plans to cut ETF managers use ETFs as part of their institutional ETF users, plan to allocations in the coming two years. regular rebalancing procedures. increase the share of portfolio assets About 60% of asset managers said, they Roughly 45% of participating they invest in ETFs over the next two use ETFs to add alpha through tactical institutional funds and 40% of asset years. applications. managers use ETFs to make tactical

adjustments to their portfolios. The research paper‘s outcome is based on interviews conducted Perfect heding instrumentbetween February and April of 2011 In addition to the largely tactical uses, with 45 institutionals, including study respondents also note using corporate pensions, public pensions, ETFs for more strategic purposes, endowments and foundations, as such as hedging. In particular, 30% of well as 25 large asset management participating asset managers and firms in the United States. about 1 in 10 institutional funds use

by Tom Benson

ETFs are playing an increasingly important role in the portfolios of U.S. institutional investors. More and more institutional investors are adopting ETFs as a flexible, multi-purpose tool. The perception of ETFs as a retail product seems clearly out of date.

Institutional Demand for ETFs Continues to Climb

“ “

Nearly 50% of the asset managers expect to increase their current allocations to ETFs within the next years.

Feature

central banks, rather than the ECB, and ultimately on taxpayers. “We care about taxpayers’ money and this is What is a buy-write index?why we warn against restructuring. We seem to be the Implementing this strategy can be difficult in a retail only ones,” he said. On Wednesday, Moodys account since the need for a margin account setup. This is downgraded Greece's local and foreign currency bond solved by investing directly in a covered call ETF. Currently ratings deeper into junk status, citing heightened risk you can track the S&P 500 Index with two exchange traded that the country will fail to stabilise its debt position products linked to the CBOE S&P 500 BuyWrite Index, without a debt restructuring. commonly known as the BXM Index. This is a benchmark

index designed to track the performance of a hypothetical buy-write strategy on the S&P 500 Index. The BXM is a passive total return index based on buying an S&P 500 stock index portfolio, and "writing" (or selling) the near-term S&P 500 Index "covered" call option, generally on the third Friday of each month. The SPX call written will have about one month remaining to expiration, with an exercise price just above the prevailing index level (i.e., slightly out of the

Portfolio insurance – for sideway markets money). The SPX call is held until expiration and cash Many of these factors could lead to a drop in the markets settled, at which time a new one-month, near-the-money or markets could trade sideways. One way to add some call is written. First ETF we analyzed is the protection to your portfolio is by employing a covered and second is the call strategy. This works well in sideways markets. A . The ETN has a 30-covered call or buy-write is a strategy when you go long year maturity and is a senior, unsecured, unsubordinated on a security or index and sell call options on that same debt security issued by Barclays Bank. PowerShares had security or index. This provides some insurance for your also launched an ETF that tracked the NASDAQ 100, but portfolio by reducing volatility and increasing income. has since liquidated it.One word of caution: Your returns will be less on the upside and that this won't provide you a full hedge. It's a ETFs to Watchstrategy that can be used in conjunction with other The hedges such stop losses, inverse ETFs and cash. tracks the CBOE S&P 500 BuyWrite Index. It was launched

on 12/20/2007. PBP has an expense ratio of 0.75% p.a. and $118 Million under management. Top holdings include Exxon Mobil Corp. (XOM), Apple Inc. (AAPL), Chevron Corp. (CVX), General Electric Co. (GE) and International Business Machines Corp (IBM). Technology and financials are the largest sectors of the portfolio which is up 2.9% for the year through May 26th. Investors morely exposed to the European markets should think aobut

has an expense ratio of 0.45% p.a. – much lower than its peer linked to the BXM. The basic idea behind this index is mostly the same.

The preceding funds offer an easy way to add buy-write insurance to your portfolio. Nevertheless you should remind that hedging has drawbacks. As mentioned above, both ETFs work best in a gradually rising or choppy market. Indeed, both products will probably underperform when the volatility is low and investor sentiment is high.

PowerShares S&P 500 Buy/Write ETF (PBP) iPath CBOE S&P 500 BuyWrite ETN (BWV)

PowerShares S&P 500 BuyWrite Portfolio (PBP)

Lyxor‘s ETF DAXplus Covered Call (DE000A0C4BY2). This fund tracks the performance of the DAXplus Covered Call strategy index. The ETF is listed on Frankfurt stock exchange and

Performance (USD)

Source: Teledata as of May 30, 2011

BETTER BUT NOT BESTPerformance Comparison Of Selected Buy-Write ETFs vs. S&P500

2007 2011

2009 2010

S&P500

“”

This strategy provides insurance for your portfolio by reducing volatility and increasing income.

People

Expert Talk with

►►►

► ►

Born: 1970 Lives in: Great Neck (NY)

My first ETF, I bought in the year: 2000My favourite investments: Of course,

IndexIQ ETFs like QAI, MCRO, GRES, MNA, CROP or HKK)

Career: Adam is CEO and Founder of IndexIQ. Prior to founding IndexIQ, he led Fortune Indexes, a pioneer in the ETF industry, having launched two ETFs back in 2000 in partnership with SSgA. Under Adam's leadership, the Fortune Indexes business unit of Time Inc. grew to become a leading indexing operation and important participant in what was then the early days of a burgeoning ETF industry. During his tenure at Time Inc., Adam was Associate Publisher of the Business & Finance Network, as well as CNNMoney.com. Prior to this role, he was Executive Director, Marketing Strategy & Brand Development for Fortune Magazine, and Group Director of New Business Ventures for the Fortune/Money Group. Adam previously was President and Founder of ThreadeXchange, Force Industries Communications and Target Market. Adam holds an MBA from the Kellogg School of Management with a triple major in Finance, Marketing and Entrepreneurship & Innovation, and a B.S. in Finance from University at Albany.

Adam S. Patti

Your company offers ETFs And how about the demand and Indexes. Which of these for IndexIQ products?two businesses perform In terms of demand for our better currently and how is investment products; I would the overall demand for characterize it as stellar. We are IndexIQ products at present? well ahead of our growth plans, While the heart of IndexIQ lies and we are aggressively staffing in research, and applying that up our team to handle our AUM research to develop world-class growth and roll-out of new i n d e x - b a s e d i nve s t m e n t investment solutions. strategies, our primary focus is to use those indexes as the basis And which type of investors o f o u r ow n p ro p r i e t a r y do you mainly serve with your investment products, primarily alternative ETFs (more ETFs. We have licensed our institutionals? or retail indexes on a limited basis; clients?)?however that is not our strategic Our distribution model is now focus. That said we do promote focused on the Financial our IQ Hedge brand of hedge Advisor, RIA and Family Office fund replication/alternative market. However we have been beta indexes as the standard in fortunate to land a number of the industry. institutional mandates. That

segment of the business holds How long is the track-record significant opportunities for us, of your indexes? and we will be looking to serve These indexes have the longest those clients more actively over track-record in the industry – the next 12 months.over 4 years of live performance –, and are the only complete family of such indexes available. We have received quite a bit of interest from institutions and advisors around the world to gain access to the data for these indexes to benchmark their hedge fund allocations.

The index veteran talks about his growth plans, insights about the index creation process, pure oil ETFs and the new things that are coming along in the product pipeline.

by Silvan Schelling

CEO and Founder,IndexIQ

“”

We will be looking to serve instiutional clients more actively over the next 12 months.

Spotlight

ETFs as part of hedging programs. A 78% of participating institutional funds almost match liquidity in terms of quoted study participant from a $450 purchasing iShares ETFs. Among asset importance when selecting an ETF million cultural endowment explains managers, 55% of participants use provider or a specific ETF product. the role ETFs play in his fund's SPDRs (State Street Global Advisors), Almost 60% of institutional funds hedging strategies. The fund views its 45% use Vanguard, and 35% use include expense ratios in their list of $20 million investment in a gold ETF BLDRs/Powershares. Among insti- the three most important factors as long-term investment and a core tutional funds, 44% use SPDRs, 29% considered when assessing ETF part of its overall hedging program. use ETFs of Vanguard, and 7% use providers. Ranked a close third in

BLDRs/Powershares. importance in picking an ETF provider is tracking error, which is

Three factors in focus cited as an important selection Asset managers focus on three criterion.additional factors when assessing potential ETF providers: tracking error (cited by 63% of asset managers), expense ratios (cited by 58%), and the benchmarks used by the provider in individual funds (cited by 47%). Rounding out the top five factors considered by asset managers when selecting an ETF provider is the overall strength of the fund company and management behind the funds.

Short holding periodsIn keeping with the tactical applications favored by asset managers, 40% of participating professionals said they typically hold ETF investments for 1–6 months and 40% say their typical holding periods are shorter than one month. In contrast, about a quarter of participating institutional funds report average holding periods of 1–6 months, a quarter typically hold ETF Finally, the perception of ETFs as a investments for 7–12 months, and retail dominated product is (more or slightly more than one-third report less) clearly out of date. ETFs have average holding periods of a year or slowly but steadily gained acceptance more. as an important multi-purpose tool in

institutional portfolios – but not only Top ETF Providers to U.S. in the US. The survey shows that Institutional Investors institutionals with experience using Given the importance of scale and ETFs in their portfolios will increase trading volume in the ETF business, their level of investment and activity a few very large providers dominate in ETFs in the next few years. Hence the institutional market. The boss the ETF industry should be well among them is iShares/BlackRock, prepared for more, good questions with approximately 85% of and requests from increasingly participating asset managers and For institutional funds, expense ratios sophisticated product users. n

BEYOND OLD SCHOOL ASSET MANAGEMENTETF Applications in Institutional Portfolios

Transitions

Asset ManagersInstitutional Funds

Cash equitization

Rebalancing

Tactical adjustments

Core/Satellite

Portfolio completion

Hedging

ETF overlay/Liquidity

0% 20% 40% 60% 80%

Source: Greenwich Associates as of May, 2011

MOSTLY A SHORT TIME INVESTMENTTypical ETF Holding Period

Asset Managers

Up to 1 month

Institutional Funds

1 – 6 months 7 – 12 months 1 year and longer

0% 25% 50% 75% 100%

Liquidity/trading volume

Expense ratio of fund

Tracking Error

Fund company and management behind funds

Track record of fund

Benchmark used

Servicing by sponsoring company

Breadth of ETF offerings

THE KEY FACTORS FOR INSTITUTONLASMost Important Selection Criteria

People

Expert Talk with

►►►

► ►

Born: 1970 Lives in: Great Neck (NY)

My first ETF, I bought in the year: 2000My favourite investments: Of course,

IndexIQ ETFs like QAI, MCRO, GRES, MNA, CROP or HKK)

Career: Adam is CEO and Founder of IndexIQ. Prior to founding IndexIQ, he led Fortune Indexes, a pioneer in the ETF industry, having launched two ETFs back in 2000 in partnership with SSgA. Under Adam's leadership, the Fortune Indexes business unit of Time Inc. grew to become a leading indexing operation and important participant in what was then the early days of a burgeoning ETF industry. During his tenure at Time Inc., Adam was Associate Publisher of the Business & Finance Network, as well as CNNMoney.com. Prior to this role, he was Executive Director, Marketing Strategy & Brand Development for Fortune Magazine, and Group Director of New Business Ventures for the Fortune/Money Group. Adam previously was President and Founder of ThreadeXchange, Force Industries Communications and Target Market. Adam holds an MBA from the Kellogg School of Management with a triple major in Finance, Marketing and Entrepreneurship & Innovation, and a B.S. in Finance from University at Albany.

Adam S. Patti

Your company offers ETFs And how about the demand and Indexes. Which of these for IndexIQ products?two businesses perform In terms of demand for our better currently and how is investment products; I would the overall demand for characterize it as stellar. We are IndexIQ products at present? well ahead of our growth plans, While the heart of IndexIQ lies and we are aggressively staffing in research, and applying that up our team to handle our AUM research to develop world-class growth and roll-out of new i n d e x - b a s e d i nve s t m e n t investment solutions. strategies, our primary focus is to use those indexes as the basis And which type of investors o f o u r ow n p ro p r i e t a r y do you mainly serve with your investment products, primarily alternative ETFs (more ETFs. We have licensed our institutionals? or retail indexes on a limited basis; clients?)?however that is not our strategic Our distribution model is now focus. That said we do promote focused on the Financial our IQ Hedge brand of hedge Advisor, RIA and Family Office fund replication/alternative market. However we have been beta indexes as the standard in fortunate to land a number of the industry. institutional mandates. That

segment of the business holds How long is the track-record significant opportunities for us, of your indexes? and we will be looking to serve These indexes have the longest those clients more actively over track-record in the industry – the next 12 months.over 4 years of live performance –, and are the only complete family of such indexes available. We have received quite a bit of interest from institutions and advisors around the world to gain access to the data for these indexes to benchmark their hedge fund allocations.

The index veteran talks about his growth plans, insights about the index creation process, pure oil ETFs and the new things that are coming along in the product pipeline.

by Silvan Schelling

CEO and Founder,IndexIQ

“”

We will be looking to serve instiutional clients more actively over the next 12 months.

Spotlight

ETFs as part of hedging programs. A 78% of participating institutional funds almost match liquidity in terms of quoted study participant from a $450 purchasing iShares ETFs. Among asset importance when selecting an ETF million cultural endowment explains managers, 55% of participants use provider or a specific ETF product. the role ETFs play in his fund's SPDRs (State Street Global Advisors), Almost 60% of institutional funds hedging strategies. The fund views its 45% use Vanguard, and 35% use include expense ratios in their list of $20 million investment in a gold ETF BLDRs/Powershares. Among insti- the three most important factors as long-term investment and a core tutional funds, 44% use SPDRs, 29% considered when assessing ETF part of its overall hedging program. use ETFs of Vanguard, and 7% use providers. Ranked a close third in

BLDRs/Powershares. importance in picking an ETF provider is tracking error, which is

Three factors in focus cited as an important selection Asset managers focus on three criterion.additional factors when assessing potential ETF providers: tracking error (cited by 63% of asset managers), expense ratios (cited by 58%), and the benchmarks used by the provider in individual funds (cited by 47%). Rounding out the top five factors considered by asset managers when selecting an ETF provider is the overall strength of the fund company and management behind the funds.

Short holding periodsIn keeping with the tactical applications favored by asset managers, 40% of participating professionals said they typically hold ETF investments for 1–6 months and 40% say their typical holding periods are shorter than one month. In contrast, about a quarter of participating institutional funds report average holding periods of 1–6 months, a quarter typically hold ETF Finally, the perception of ETFs as a investments for 7–12 months, and retail dominated product is (more or slightly more than one-third report less) clearly out of date. ETFs have average holding periods of a year or slowly but steadily gained acceptance more. as an important multi-purpose tool in

institutional portfolios – but not only Top ETF Providers to U.S. in the US. The survey shows that Institutional Investors institutionals with experience using Given the importance of scale and ETFs in their portfolios will increase trading volume in the ETF business, their level of investment and activity a few very large providers dominate in ETFs in the next few years. Hence the institutional market. The boss the ETF industry should be well among them is iShares/BlackRock, prepared for more, good questions with approximately 85% of and requests from increasingly participating asset managers and For institutional funds, expense ratios sophisticated product users. n

BEYOND OLD SCHOOL ASSET MANAGEMENTETF Applications in Institutional Portfolios

Transitions

Cash equitization

Rebalancing

Tactical adjustments

Core/Satellite

Portfolio completion

Hedging

ETF overlay/Liquidity

0% 20% 40% 60% 80%

MOSTLY A SHORT TIME INVESTMENTTypical ETF Holding Period

Asset Managers

Up to 1 month

Institutional Funds

1 – 6 months 7 – 12 months 1 year and longer

0% 25% 50% 75% 100%

Liquidity/trading volume

Expense ratio of fund

Tracking Error

Fund company and management behind funds

Track record of fund

Benchmark used

Servicing by sponsoring company

Breadth of ETF offerings

THE KEY FACTORS FOR INSTITUTONLASMost Important Selection Criteria

Harriman House is one of the UK's leading independent publishersof finance, trading and investment books.

There’s Never Been A Better Time To Learn More About The ETF Industry.

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www.harriman-house.com/etfradarGet 30% off the regular price!

Rankings

Top 25 ETF providers around the world ranked by Assets under ManagementAs at end April 2011

WORLDWIDE

In association with

Source: BlackRock Global ETF Research and Implementation Strategy Team

Provider # ETFs

(US$ Bn) % total

(US$ Bn)

planned # ETFs % ETFs

(US$ Bn) % AUM

% market

iShares 467 $636.9 43.3% $16.1 19 -6 -1.3% $58.3 10.1% -0.8%

State Street Global Advisors 123 $210.2 14.3% $23.4 49 10 8.8% $19.5 10.2% -0.2%

Vanguard 66 $173.1 11.8% $1.5 1 1 1.5% $24.6 16.6% 0.5%

Lyxor Asset Management 159 $57.4 3.9% $0.8 1 3 1.9% $4.1 7.6% -0.2%

db x-trackers 187 $54.8 3.7% $0.7 18 8 4.5% $5.7 11.6% 0.0%

PowerShares 131 $50.7 3.5% $2.9 48 1 0.8% $7.9 18.5% 0.2%

Van Eck Associates Corp 33 $23.2 1.6% $0.9 36 4 13.8% $3.3 16.3% 0.1%

ProShares 107 $23.2 1.6% $2.6 93 7 7.0% $1.6 7.3% -0.1%

Credit Suisse Asset Management 58 $18.1 1.2% $0.1 0 4 7.4% $2.5 15.9% 0.0%

Nomura Asset Management 32 $15.2 1.0% $0.1 2 0 0.0% -$1.2 -7.6% -0.2%

Zurich Cantonal Bank 7 $14.2 1.0% $0.1 0 0 0.0% $2.4 20.5% 0.1%

WisdomTree Investments 46 $12.2 0.8% $0.2 71 2 4.5% $2.3 23.0% 0.1%

Bank of New York 1 $12.1 0.8% $0.5 0 0 0.0% -$0.1 -0.9% -0.1%

UBS Global Asset Management 42 $10.8 0.7% $0.0 3 13 44.8% $4.2 64.3% 0.2%

Amundi ETF 95 $9.9 0.7% $0.1 0 3 3.3% $2.7 38.1% 0.1%

Commerzbank 90 $9.8 0.7% $0.1 0 0 0.0% $1.2 13.5% 0.0%

HSBC/Hang Seng 31 $8.2 0.6% $0.1 3 14 82.4% $0.9 11.5% 0.0%

First Trust Advisors 57 $8.0 0.5% $0.1 4 14 32.6% $2.6 47.6% 0.1%

Source Markets 62 $7.8 0.5% $0.4 15 6 10.7% $2.9 57.9% 0.2%

ETFlab Investment 40 $7.4 0.5% $0.1 0 5 14.3% $0.7 9.8% 0.0%

Nikko Asset Management 20 $6.6 0.5% $0.1 0 3 17.6% $0.1 1.2% 0.0%

Claymore Investments 30 $6.5 0.4% $0.0 5 1 3.4% $1.0 18.5% 0.0%

Direxion Shares 42 $6.5 0.4% $2.0 174 3 7.7% -$0.1 -1.2% -0.1%

EasyETF 48 $6.4 0.4% $0.0 1 -1 -2.0% $0.9 16.1% 0.0%

Rydex SGI 25 $5.6 0.4% $0.1 95 1 4.2% $0.6 12.6% 0.0%

YTD changeApr 11

People

Across the Atlantic:

Do you create new indexes on under-represented in investor exposure, IOIL is the best option. request only (client-driven)? / portfolios, are purer plays on the IOIL is ideal for investors who What's the inital impulse behind theme and are potential acquisition want to express their view whether a new ETF or index? targets for larger multi-nationals bullish, where they would buy our Our research team is focused on seeking to enhance their global ETF, or bearish, where they would building indexes for our own footprint. Meanwhile, the short our ETF. Our index has proprietary investment solutions; fundamentals of the Oil market s h o w n t h i s p a t t e r n o f however we have built custom clearly favor small cap companies performance.benchmarks for clients and are for a variety of reasons: willing to do so depending upon the How about the imp lied client. We develop new ETFs based First of all, much of the growth in currency risk in this ETF solely on solving problems for the industry is occurring in because more than 50% of the advisors. Also, our market research is emerging markets due to increased stocks trade in Non-USD-focused on speaking with advisors to industrial activity and a greater currencies? / Wouldn't a determine what they need to serve number of consumers in those quanto feature make sense for their clients better, and what their nations driving cars. This increase such products?issues are with existing products in in demand means that these We wanted to provide the pure the market. countries need additional refining local exposure in these equities

and retail marketing facilities and cut back on any complexity which typically will be served by that a currency hedge would add small local companies. This trend to the product. favors small cap refining and marketing companies. What new things are coming

along in the IQ product It is forecast that there will be few if pipeline? any new large oil field discoveries The world’s first Small Cap Hong globally, which will leave the Kong ETF is coming soon, Ticker industry to rely on development of HKK. This is a perfect play on smaller fields to satiate increased China and one of the world’s top demand – these smaller fields are in centers of commerce. We also many cases controlled by the have some very interesting other

Once we hear a consistent theme smaller companies globally. This solutions coming soon.over time we will typically look to trend favors small cap exploration build a solution. Once the solution is and production companies. built we will run the strategy for a period of time to ensure that it works Finally, large producers will be as intended in different market focused on squeezing additional conditions. Only then will we capacity out of their existing large possibly seek to bring the product to production f ields by using market. For instance, the indexes advanced technology. As we know underlying our Liquid Alternative in any industry, technological ETFs typically have at least 3 year innovation is typically driven by track-records. We are focused on smaller companies. This trend quality rather than quantity. favors small cap equipment and

services companies. Recently, you launched the IQ Global Oil Small Cap ETF. What What is the performance of the its the advantage of small caps vs. Index?p o w e r f u l l a r g e c a p s l i k e We have found that small cap Schlumberger or Shell? energy equities track the spot price IQ Global Oil Small Cap ETF is the of oil better then oil futures and first pure oil ETF. We like small cap large cap equities. We have also equities for a variety of reasons, found that oil spot and natural gas particularly those in international spot prices perform very differently, markets. These equities are typically so if investors are looking for oil

Thank you! n

Ois focused on speaking with advisors to determine what they need to serve their clients better.

ur market research

People

Interview withValérie Baudson, Amundi ETFin the Magazine’sEuropean Edition.www.etf-radar.com

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Rankings

Top 25 ETF providers around the world ranked by Assets under ManagementAs at end April 2011

WORLDWIDE

In association with

Provider # ETFs

(US$ Bn) % total

(US$ Bn)

planned # ETFs % ETFs

(US$ Bn) % AUM

% market

iShares 467 $636.9 43.3% $16.1 19 -6 -1.3% $58.3 10.1% -0.8%

State Street Global Advisors 123 $210.2 14.3% $23.4 49 10 8.8% $19.5 10.2% -0.2%

Vanguard 66 $173.1 11.8% $1.5 1 1 1.5% $24.6 16.6% 0.5%

Lyxor Asset Management 159 $57.4 3.9% $0.8 1 3 1.9% $4.1 7.6% -0.2%

db x-trackers 187 $54.8 3.7% $0.7 18 8 4.5% $5.7 11.6% 0.0%

PowerShares 131 $50.7 3.5% $2.9 48 1 0.8% $7.9 18.5% 0.2%

Van Eck Associates Corp 33 $23.2 1.6% $0.9 36 4 13.8% $3.3 16.3% 0.1%

ProShares 107 $23.2 1.6% $2.6 93 7 7.0% $1.6 7.3% -0.1%

Credit Suisse Asset Management 58 $18.1 1.2% $0.1 0 4 7.4% $2.5 15.9% 0.0%

Nomura Asset Management 32 $15.2 1.0% $0.1 2 0 0.0% -$1.2 -7.6% -0.2%

Zurich Cantonal Bank 7 $14.2 1.0% $0.1 0 0 0.0% $2.4 20.5% 0.1%

WisdomTree Investments 46 $12.2 0.8% $0.2 71 2 4.5% $2.3 23.0% 0.1%

Bank of New York 1 $12.1 0.8% $0.5 0 0 0.0% -$0.1 -0.9% -0.1%

UBS Global Asset Management 42 $10.8 0.7% $0.0 3 13 44.8% $4.2 64.3% 0.2%

Amundi ETF 95 $9.9 0.7% $0.1 0 3 3.3% $2.7 38.1% 0.1%

Commerzbank 90 $9.8 0.7% $0.1 0 0 0.0% $1.2 13.5% 0.0%

HSBC/Hang Seng 31 $8.2 0.6% $0.1 3 14 82.4% $0.9 11.5% 0.0%

First Trust Advisors 57 $8.0 0.5% $0.1 4 14 32.6% $2.6 47.6% 0.1%

Source Markets 62 $7.8 0.5% $0.4 15 6 10.7% $2.9 57.9% 0.2%

ETFlab Investment 40 $7.4 0.5% $0.1 0 5 14.3% $0.7 9.8% 0.0%

Nikko Asset Management 20 $6.6 0.5% $0.1 0 3 17.6% $0.1 1.2% 0.0%

Claymore Investments 30 $6.5 0.4% $0.0 5 1 3.4% $1.0 18.5% 0.0%

Direxion Shares 42 $6.5 0.4% $2.0 174 3 7.7% -$0.1 -1.2% -0.1%

EasyETF 48 $6.4 0.4% $0.0 1 -1 -2.0% $0.9 16.1% 0.0%

Rydex SGI 25 $5.6 0.4% $0.1 95 1 4.2% $0.6 12.6% 0.0%

YTD changeApr 11

People

Across the Atlantic:

Do you create new indexes on under-represented in investor exposure, IOIL is the best option. request only (client-driven)? / portfolios, are purer plays on the IOIL is ideal for investors who What's the inital impulse behind theme and are potential acquisition want to express their view whether a new ETF or index? targets for larger multi-nationals bullish, where they would buy our Our research team is focused on seeking to enhance their global ETF, or bearish, where they would building indexes for our own footprint. Meanwhile, the short our ETF. Our index has proprietary investment solutions; fundamentals of the Oil market s h o w n t h i s p a t t e r n o f however we have built custom clearly favor small cap companies performance.benchmarks for clients and are for a variety of reasons: willing to do so depending upon the How about the imp lied client. We develop new ETFs based First of all, much of the growth in currency risk in this ETF solely on solving problems for the industry is occurring in because more than 50% of the advisors. Also, our market research is emerging markets due to increased stocks trade in Non-USD-focused on speaking with advisors to industrial activity and a greater currencies? / Wouldn't a determine what they need to serve number of consumers in those quanto feature make sense for their clients better, and what their nations driving cars. This increase such products?issues are with existing products in in demand means that these We wanted to provide the pure the market. countries need additional refining local exposure in these equities

and retail marketing facilities and cut back on any complexity which typically will be served by that a currency hedge would add small local companies. This trend to the product. favors small cap refining and marketing companies. What new things are coming

along in the IQ product It is forecast that there will be few if pipeline? any new large oil field discoveries The world’s first Small Cap Hong globally, which will leave the Kong ETF is coming soon, Ticker industry to rely on development of HKK. This is a perfect play on smaller fields to satiate increased China and one of the world’s top demand – these smaller fields are in centers of commerce. We also many cases controlled by the have some very interesting other

Once we hear a consistent theme smaller companies globally. This solutions coming soon.over time we will typically look to trend favors small cap exploration build a solution. Once the solution is and production companies. built we will run the strategy for a period of time to ensure that it works Finally, large producers will be as intended in different market focused on squeezing additional conditions. Only then will we capacity out of their existing large possibly seek to bring the product to production f ields by using market. For instance, the indexes advanced technology. As we know underlying our Liquid Alternative in any industry, technological ETFs typically have at least 3 year innovation is typically driven by track-records. We are focused on smaller companies. This trend quality rather than quantity. favors small cap equipment and

services companies. Recently, you launched the IQ Global Oil Small Cap ETF. What What is the performance of the its the advantage of small caps vs. Index?p o w e r f u l l a r g e c a p s l i k e We have found that small cap Schlumberger or Shell? energy equities track the spot price IQ Global Oil Small Cap ETF is the of oil better then oil futures and first pure oil ETF. We like small cap large cap equities. We have also equities for a variety of reasons, found that oil spot and natural gas particularly those in international spot prices perform very differently, markets. These equities are typically so if investors are looking for oil

Thank you! n

Ois focused on speaking with advisors to determine what they need to serve their clients better.

ur market research

People

Interview withValérie Baudson, Amundi ETFin the Magazine’sEuropean Edition.www.etf-radar.com

Rankings

Top 10 ETFs by Change in Average Daily VolumeAs at end April 2011

WORLDWIDE

Top 10 ETFs by Change in Assets under ManagementAs at end April 2011

WORLDWIDE

► DAX LOVERSA rTop10 AuM list is the DAX index. Obviously an increasing number ofbuyers is convinced by the strongness of the German economy and its bluechips. The „German Angst“ seemsto be a phrase of the past.

emarkable newcomer within the► SPY -30% ADVEven if it‘s still the number one inour ADV count, the lost nearly30% of its Average Daily Volume counted in USD. More stable was

EEM EWZ

Rankings

Top 10/Top 5 ETFs by Assets under ManagementAs at end April 2011

UNITED STATES

EUROPE

MIDDLE-EAST/AFRICA

ASIA-PACIFIC

15Source: BlackRock Global ETF Research and Implementation Strategy Team

ETF Bloomberg ticker

(US$ Mn)

('000 shares)

(US$ Mn)

SPDR S&P 500 SPY US $95,287.1 131,642 $17,532.1

Vanguard MSCI Emerging Markets ETF VWO US $49,449.5 15,088 $752.5

iShares MSCI Emerging Markets Index Fund EEM US $41,760.0 51,364 $2,536.2

iShares MSCI EAFE Index Fund EFA US $41,350.5 12,886 $791.2

iShares S&P 500 Index Fund IVV US $29,024.4 2,830 $384.5

PowerShares QQQ Trust QQQ US $27,244.7 47,605 $2,748.6

iShares Barclays TIPS Bond Fund TIP US $20,475.7 673 $73.9

Vanguard Total Stock Market ETF VTI US $20,237.9 1,292 $89.1

iShares Russell 2000 Index Fund IWM US $19,144.0 46,905 $3,946.7

iShares Russell 1000 Growth Index Fund IWF US $13,859.9 1,748 $106.2

(US$ Mn)

('000 shares)

(US$ Mn)

iShares S&P 500 IUSA LN $9,933.5 7,338 $96.8

ZKB Gold ETF (CHF) ZGLD SW $8,547.4 11 $25.9

iShares DAX (DE) DAXEX GY $8,316.5 2,886 $287.1

Lyxor ETF Euro STOXX 50 MSE FP $7,321.5 2,164 $95.4

iShares MSCI Emerging Markets IEEM LN $7,080.7 1,509 $72.6

db x-trackers DAX ETF XDAX GY $6,638.8 1,236 $131.8

iShares FTSE 100 ISF LN $6,306.9 7,416 $74.6

iShares EURO STOXX 50 (DE) SX5EEX GY $5,976.7 1,455 $63.8

db x-trackers MSCI Emerging Market TRN Index ETF XMEM GY $5,606.7 1,476 $67.2

iShares Markit iBoxx Euro Corporate Bond IBCS GY $4,849.0 134 $23.5

(US$ Mn)

('000 shares)

(US$ Mn)

NIKKEI 225 ETF 1321 JP $6,923.5 402 $49.7

TOPIX ETF 1306 JP $6,814.5 2,422 $26.0

Listed Index Fund 225 1330 JP $3,113.7 416 $51.6

Listed Index Fund TOPIX 1308 JP $3,036.8 501 $5.3

Daiwa ETF TOPIX 1305 JP $2,655.6 624 $6.7

(US$ Mn)

('000 shares)

(US$ Mn)

iShares FTSE A50 China Index ETF* 2823 HK $7,900.2 88,878 $151.5

Tracker Fund of Hong Kong (TraHK) 2800 HK $7,419.8 20,636 $63.6

Hang Seng Index ETF 2833 HK $3,996.9 48 $1.5

China AMC SSE 50 510050 CH $3,266.3 367,639 $119.4

Hang Seng H-Share Index ETF 2828 HK $2,726.3 1,834 $31.6

E Fund SZSE 100 159901 CH $2,679.7 489,427 $59.6

SPDR S&P/ASX 200 Fund STW AU $2,529.9 360 $18.1

ABF Pan Asia Bond Index Fund 2821 HK $2,434.8 4 $0.5

Samsung Kodex200 ETF 069500 KS $2,275.0 1,356 $36.9

Polaris Taiwan Top 50 Tracker 0050 TT $1,958.6 19,597 $42.6

(US$ Mn)

('000 shares)

(US$ Mn)

SATRIX40 STX40 SJ $1,014.8 1,338 $6.0

STANLIB SWIX 40 Fund STANSX SJ $369.0 84 $0.1

Satrix Dividend Plus STXDIV SJ $160.0 959 $0.2

SATRIX Financials STXFIN SJ $126.8 68 $0.1

Bips Government Inflation Linked Bond Fund BIPINF SJ $126.5 29 $0.1

(US$ Mn)

('000 shares)

(US$ Mn)

SPDR S&P 500 SPY US $17,532.1 131,642 $95,287.1

Energy Select Sector SPDR Fund XLE US $1,198.0 15,351 $10,448.1

iShares MSCI Brazil Index Fund EWZ US $893.0 11,481 $13,348.4

iShares MSCI EAFE Index Fund EFA US $791.2 12,886 $41,350.5

Vanguard MSCI Emerging Markets ETF VWO US $752.5 15,088 $49,449.5

SPDR Dow Jones Industrial Average ETF DIA US $736.6 5,928 $10,370.3

Financial Select Sector SPDR Fund XLF US $686.1 42,119 $7,965.5

(US$ Mn)

Apr-11

(US$ Mn)

Dec-10

Change

(US$ Mn)

iShares MSCI Emerging Markets Index Fund EEM US $41,760.0 47,551 -$5,791.5

SPDR S&P 500 SPY US $95,287.1 89,915 $5,371.8

Vanguard MSCI Emerging Markets ETF VWO US $49,449.5 44,570 $4,879.7

iShares MSCI EAFE Index Fund EFA US $41,350.5 36,923 $4,427.4

iShares S&P 500 Index Fund IVV US $29,024.4 25,799 $3,225.2

db x-trackers DAX ETF XDAX GY $6,638.8 3,693 $2,945.8

iShares MSCI Japan Index Fund EWJ US $7,625.8 4,883 $2,742.5

iShares S&P MidCap 400 Index Fund IJH US $12,019.8 9,332 $2,687.8

iShares DAX (DE) DAXEX GY $8,316.5 5,918 $2,398.8

Rankings

Top 10 ETFs by Change in Average Daily VolumeAs at end April 2011

WORLDWIDE

Top 10 ETFs by Change in Assets under ManagementAs at end April 2011

WORLDWIDE

► DAX LOVERSA rTop10 AuM list is the DAX index. Obviously an increasing number ofbuyers is convinced by the strongness of the German economy and its bluechips. The „German Angst“ seemsto be a phrase of the past.

emarkable newcomer within the► SPY -30% ADVEven if it‘s still the number one inour ADV count, the lost nearly30% of its Average Daily Volume counted in USD. More stable was

EEM EWZ

Rankings

Top 10/Top 5 ETFs by Assets under ManagementAs at end April 2011

UNITED STATES

EUROPE

MIDDLE-EAST/AFRICA

ASIA-PACIFIC

15Source: BlackRock Global ETF Research and Implementation Strategy Team

(US$ Mn)

('000 shares)

(US$ Mn)

SPDR S&P 500 SPY US $95,287.1 131,642 $17,532.1

Vanguard MSCI Emerging Markets ETF VWO US $49,449.5 15,088 $752.5

iShares MSCI EAFE Index Fund EFA US $41,350.5 12,886 $791.2

iShares S&P 500 Index Fund IVV US $29,024.4 2,830 $384.5

iShares Barclays TIPS Bond Fund TIP US $20,475.7 673 $73.9

Vanguard Total Stock Market ETF VTI US $20,237.9 1,292 $89.1

iShares Russell 1000 Growth Index Fund IWF US $13,859.9 1,748 $106.2

(US$ Mn)

('000 shares)

(US$ Mn)

iShares S&P 500 IUSA LN $9,933.5 7,338 $96.8

ZKB Gold ETF (CHF) ZGLD SW $8,547.4 11 $25.9

iShares DAX (DE) DAXEX GY $8,316.5 2,886 $287.1

Lyxor ETF Euro STOXX 50 MSE FP $7,321.5 2,164 $95.4

iShares MSCI Emerging Markets IEEM LN $7,080.7 1,509 $72.6

db x-trackers DAX ETF XDAX GY $6,638.8 1,236 $131.8

iShares FTSE 100 ISF LN $6,306.9 7,416 $74.6

iShares EURO STOXX 50 (DE) SX5EEX GY $5,976.7 1,455 $63.8

db x-trackers MSCI Emerging Market TRN Index ETF XMEM GY $5,606.7 1,476 $67.2

iShares Markit iBoxx Euro Corporate Bond IBCS GY $4,849.0 134 $23.5

(US$ Mn)

('000 shares)

(US$ Mn)

NIKKEI 225 ETF 1321 JP $6,923.5 402 $49.7

TOPIX ETF 1306 JP $6,814.5 2,422 $26.0

Listed Index Fund 225 1330 JP $3,113.7 416 $51.6

Listed Index Fund TOPIX 1308 JP $3,036.8 501 $5.3

Daiwa ETF TOPIX 1305 JP $2,655.6 624 $6.7

(US$ Mn)

('000 shares)

(US$ Mn)

iShares FTSE A50 China Index ETF* 2823 HK $7,900.2 88,878 $151.5

Tracker Fund of Hong Kong (TraHK) 2800 HK $7,419.8 20,636 $63.6

Hang Seng Index ETF 2833 HK $3,996.9 48 $1.5

China AMC SSE 50 510050 CH $3,266.3 367,639 $119.4

Hang Seng H-Share Index ETF 2828 HK $2,726.3 1,834 $31.6

E Fund SZSE 100 159901 CH $2,679.7 489,427 $59.6

SPDR S&P/ASX 200 Fund STW AU $2,529.9 360 $18.1

ABF Pan Asia Bond Index Fund 2821 HK $2,434.8 4 $0.5

Samsung Kodex200 ETF 069500 KS $2,275.0 1,356 $36.9

Polaris Taiwan Top 50 Tracker 0050 TT $1,958.6 19,597 $42.6

(US$ Mn)

('000 shares)

(US$ Mn)

SATRIX40 STX40 SJ $1,014.8 1,338 $6.0

STANLIB SWIX 40 Fund STANSX SJ $369.0 84 $0.1

Satrix Dividend Plus STXDIV SJ $160.0 959 $0.2

SATRIX Financials STXFIN SJ $126.8 68 $0.1

Bips Government Inflation Linked Bond Fund BIPINF SJ $126.5 29 $0.1

(US$ Mn)

('000 shares)

(US$ Mn)

SPDR S&P 500 SPY US $17,532.1 131,642 $95,287.1

Energy Select Sector SPDR Fund XLE US $1,198.0 15,351 $10,448.1

iShares MSCI Brazil Index Fund EWZ US $893.0 11,481 $13,348.4

iShares MSCI EAFE Index Fund EFA US $791.2 12,886 $41,350.5

Vanguard MSCI Emerging Markets ETF VWO US $752.5 15,088 $49,449.5

SPDR Dow Jones Industrial Average ETF DIA US $736.6 5,928 $10,370.3

Financial Select Sector SPDR Fund XLF US $686.1 42,119 $7,965.5

(US$ Mn)

Apr-11

(US$ Mn)

Dec-10

Change

(US$ Mn)

iShares MSCI Emerging Markets Index Fund EEM US $41,760.0 47,551 -$5,791.5

SPDR S&P 500 SPY US $95,287.1 89,915 $5,371.8

Vanguard MSCI Emerging Markets ETF VWO US $49,449.5 44,570 $4,879.7

iShares MSCI EAFE Index Fund EFA US $41,350.5 36,923 $4,427.4

iShares S&P 500 Index Fund IVV US $29,024.4 25,799 $3,225.2

db x-trackers DAX ETF XDAX GY $6,638.8 3,693 $2,945.8

iShares MSCI Japan Index Fund EWJ US $7,625.8 4,883 $2,742.5

iShares S&P MidCap 400 Index Fund IJH US $12,019.8 9,332 $2,687.8

iShares DAX (DE) DAXEX GY $8,316.5 5,918 $2,398.8

Rankings

Top 30 Worst Performing ETPsAs at end of May 2011

WORLDWIDE

Source: GlobalFundData/Morningstar as of May 30, 2011

► VOLA BETS UNDER FIREVolatility levels in North America and Europe decreased despite bad signals from Greece and Irelandin the last days which may leadto a new episode in the Europeandebt drama. Perhaps, now is thebest time to think about a vola shiftand positioning on the long side.

Top 30 Best Performing ETPsAs at end of May 2011

WORLDWIDE

Rankings

► SILVER: BACK IN THE RACE?After a hard hit silver is back in the race and one of the best performingunderlyings of the last month.Still opinions are largely dividedif prices will climb back above USD 45 and beyond.

ETF/ETP Listing Region 1 Mth 12 Mth Inception Net assets (USD)

ProShares Ultra Silver North America 62.43% 468.60% 205.73% 1,090,646,365

ETFS Leveraged Silver ETC Europe 62.39% 487.40% 42.40% 41,856,559

Horizons BetaPro COMEX Silver Bull North America 62.34% 476.65% 237.23% 113,962,424

ETFS Leveraged Silver (DE) ETC Europe 55.33% 426.44% 69.02% 31,479,481

ETFS Physical Silver Shares Europe 29.68% 160.65% 103.74% n/a

ETFS Leveraged PrecMtls DJ-UBSCI ETC Europe 28.77% 136.86% 30.64% 3,897,651

iShares Silver Trust North America 28.57% 160.38% 31.11% n/a

ETFS Physical Silver ETC Europe 28.55% 160.27% 35.65% 1,221,002,822

JB Physical Silver Fund A (USD) Europe 28.51% 158.90% 112.25% 626,476,652

JB Physical Silver Fund A (GBP) Europe 28.29% 155.81% 109.67% 375,597,812

PowerShares DB Silver North America 28.28% 157.87% 35.37% n/a

JB Physical Silver Fund A (EUR) Europe 28.25% 155.59% 109.03% 422,270,322

Horizons BetaPro COMEX Silver ETF North America 28.09% 154.10% 89.87% 26,164,112

ETFS Silver ETC Europe 28.08% 156.02% 34.49% 130,399,173

ZKB Silver ETF (USD) Europe 27.16% 155.60% 93.00% 832,245,652

ETFS Leveraged Cocoa ETC Europe 26.48% -9.93% -9.60% 7,451,663

ETFS Leveraged Corn ETC Europe 26.06% 182.53% -23.15% 7,008,196

UBS Bloomberg CMCI Silver EUR Hdgd ETC Europe 25.51% n/a n/a n/a

UBS Bloomberg CMCI Silver USD ETC Europe 25.48% n/a n/a n/a

ETFS Leveraged Coffee ETC Europe 25.08% 289.80% 14.83% 2,503,605

ETFS Leveraged PrecMtls DJ-UBSCI(DE) ETC Europe 23.17% 112.28% 48.51% 2,931,345

ETFS Physical Silver (DE) ETC Europe 22.96% 133.26% - 823,004,742

ETFS Silver (DE) ETC Europe 22.51% 129.45% 30.25% 87,894,259

ETFS Physical Silver (AU) ETC Asia-Pacific 21.78% 121.93% 55.07% n/a

ZKB Silver ETF (EUR) Europe 21.63% 129.07% 79.37% 615,062,827

ETFS Short Cotton ETC Europe 20.25% -60.49% -24.40% 42,950,870

UBS E-TRACS CMCI Silver TR ETN North America 19.75% 141.52% 35.99% n/a

ETFS Leveraged Gasoline ETC Europe 18.08% 70.94% -20.53% 918,041

Direxion Daily Real Estate Bull 3X Shrs North America 17.41% 47.48% 163.42% n/a

ProShares Ultra MSCI Europe North America 17.14% 50.20% 50.14% n/a

ProShares UltraShort Silver North America -42.41% -90.54% -83.36% 552,859,484.50

Horizons BetaPro COMEX Silver Bear North America -41.02% -88.98% -81.05% 18,381,447

ETFS Leveraged Cotton (DE) ETC Europe -37.42% 234.68% 35.33% 1,771,943

Barclays Short D Lvgd Inv S&P 500 TR ETN Europe -34.29% -73.73% -67.09% n/a

ETFS Leveraged Sugar ETC North America -27.09% 120.25% -10.46% 6,293,419

ETFS Short Silver ETC Europe -22.88% -65.72% -37.84% 5,098,477

iPath S&P 500 VIX Short-Term Futures ETN Europe -21.52% -72.64% -71.85% n/a

Source S&P 500 VIX Futures ETF Europe -20.02% n/a n/a 22,526,373

ETFS Leveraged Lean Hogs (DE) ETC Europe -19.97% -33.67% -37.73% 1,369,318

ETFS Cotton (DE) ETC Europe -18.82% 95.23% 9.17% 31,741,051

ETFS Sugar (DE) ETC Europe -18.00% 48.88% 1.98% 30,365,989

ETFS Leveraged Lvstck DJ-UBSCI (DE) ETC Europe -17.78% -13.75% -24.05% 783,238

ETFS Short Corn (DE) ETC Europe -17.03% -57.03% -8.73% 2,826,504

iPath VSTOXX Sh-Term Futures TR (DE) ETN Europe -16.80% -63.73% -62.35% n/a

ETFS Leveraged Live Cattle (DE) ETC Europe -16.31% 0.30% -15.97% 953,651

Direxion Daily Real Estate Bear 3X Shrs North America -16.28% -65.17% -83.26% n/a

ETFS Short Precious Mtl DJ-UBSCI(DE) ETC Europe -16.24% -46.28% -26.30% 548,094

PowerShares DB Gold Double Short ETN North America -16.20% -46.30% -34.89% n/a

Direxion Daily Dev Mkts Bear 3X Shrs North America -16.20% -59.73% -62.74% n/a

ProShares UltraShort MSCI Europe North America -16.11% -54.65% -51.90% n/a

ETFS Short Cocoa (DE) ETC Europe -15.80% -18.65% -12.92% 954,644

ETFS Short Coffee (DE) ETC Europe -15.53% -62.31% -24.64% 4,146,611

ETFS Leveraged Softs DJ-UBSCI (DE) ETC North America -15.51% 197.39% 42.46% 1,122,984

Source S&P GSCI Cotton TR T-ETC North America -15.47% 117.72% 75.65% 1,789,992

ETFS Leveraged Lead ETC North America -15.41% 3.06% -36.57% 3,015,180

iPath DJ-UBS Cotton TR Sub-Idx ETN North America -15.25% 120.18% 21.77% n/a

ETFS Cotton ETC North America -15.13% 117.84% 12.71% 47,090,753

UBS Bloomberg CMCI Cotton CHF Hdgd ETC Europe -14.86% n/a n/a n/a

Horizons BetaPro COMEX Gold Bullion Bear North America -14.83% -45.94% -37.46% 3,448,901

UBS Bloomberg CMCI Cotton USD ETC Europe -14.81% n/a n/a n/a