All Exchange Traded Products Are NOT Created Equal

Exchange traded products have exploded in both popularity and size. While most of these investments are ETFs (or Exchange Traded Funds), a handful are ETNs (or Exchange Traded Notes). ETFs actually hold assets in the underlying index the fund is designed to track. ETNs, on the other hand, are debt securities issued by the provider, whose return is intended to track a particular index. Because it is a debt instrument, however, there are additional credit risks, and many providers have pulled back their support of such products, leaving some investors holding illiquid securities. See article here, WSJ.

Massive Futures Trade

On December 7, 2016, a single trader apparently took a position of $1.8 billion in S&P500 futures. This was the largest trade of the year, more than doubling the size of the next largest trade. There is speculation regarding the reason behind the trade, but the result was an increase in buying across other traders, driving the market to high levels. See article here, WSJ.

Under Armour Share Classes

Under Armour has three share classes. The B-class is held by the founding owner (Kevin Plank), giving him control of about 65% of the voting rights. The A-class and C-class shares are both publicly traded, with the C-class having no voting rights. While this should imply a lower valuation, the C-class shares are trading at a 25%+ discount, which is more than expected. So, some hedge funds are undertaking a long-short arbitrage, going long in the C-class and short in the A-class. See article here, WSJ.

Issuers Continue to Use Long Term Bonds

The government of Austria just issued a 70-year bond, locking in a low rate of 1.5%. Issuers are taking advantage of low borrowing costs, with some even going out 100 years (so-called century bonds). See article here, Bloomberg.

Passive Investing Continues to Gain Momentum

Actively managed mutual funds have lagged passively managed funds, particularly over longer investment periods. Much of this is likely due to the lower fees charged by passively managed funds. As investors have become more knowledgeable about this relationship, money has flowed at a faster rate into passively managed funds. See article here, WSJ.

What's in a Name? Does Ticker Symbol Matter?

A recent study reveals that companies with ticker symbols that are easier to pronounce (and remember) generally trade at higher values. See article here, WSJ.

Stock Splits Fade

In the past, most companies used stock splits to keep share prices within "acceptable" levels. This facilitated trading and made round lot transactions easier. However, with more efficient trading tools, such benefits no longer exist. Further, recognizing that splits are value neutral, many companies have shunned their use. See article here, WSJ.