Credit deflation and the reflation cycle to come (part 9)

[Errol]

1 hour ago, leonardratso said:

bad news here;

https://www.etfstream.com/articles/hsbc-am-to-close-four-emerging-market-etfs

Good contrarian indicator.

[leonardratso]

6 minutes ago, Errol said:

Good contrarian indicator.

How do they make money on these MSCI funds? is it just the management fee + any other fees they can muster?

[Axeman123]

A blubbering idiot writes:

The Bank of England might cut interest rates before the Fed — here's why

Don't even bother with the article. It seems like it is just boilerplate to justify a headline.

https://uk.finance.yahoo.com/news/bank-england-could-cut-interest-095024596.html

[Axeman123]

4 minutes ago, leonardratso said:

How do they make money on these MSCI funds? is it just the management fee + any other fees they can muster?

AIUI purely the fee, as you say. Any ETF with sub £100M AUM is hanging by a thread just because of the profitability tipping point.

[Harley]

35 minutes ago, Axeman123 said:

AIUI purely the fee, as you say. Any ETF with sub £100M AUM is hanging by a thread just because of the profitability tipping point.

They also make on securities lending, although not all do on some etfs.  You allegedly get a share via a lower TER but how many people look at the counterparty risk?  JustETF detail the status for each etf. 

Some loan to collateral ratios look very low (e.g. 105%, even at 115%).  Then there's the issue of who the securities are lent to.  You have to dig to find the data, if indeed it's provided on a timely basis.

We always only look at ETFs over £100m (a filter available in JustETF) and higher the better as another consideration is for is good liquidity (AUM is a proxy although we look at various trading volume averages).

Edited April 18 by Harley

[invalid]

1 hour ago, leonardratso said:

bad news here;

https://www.etfstream.com/articles/hsbc-am-to-close-four-emerging-market-etfs

 

That's a shame, I have some of those, luckily not a lot.

What happens when they close? Do they just sell all their holdings and then buyback all the shares of the ETF?

 

[leonardratso]

6 minutes ago, invalid said:

 

That's a shame, I have some of those, luckily not a lot.

What happens when they close? Do they just sell all their holdings and then buyback all the shares of the ETF?

 

Hmm dunno, theres a corporate event on aj bell, ill copy it here in a bit, explains a bit more.

[leonardratso]

Notes

HSBC ETFs plc has advised that the HSBC MSCI Turkey UCITS ETF will close with effect from 10 May 2024. Any units held at the closure date will be sold by the fund manager and the proceeds from the sale will be applied to your account. In accordance with the prospectus, the Directors have the discretion to redeem all of the shares and terminate the fund if the total net asset value of the fund falls below USD50 million. The fund has now fallen below this threshold and the Directors have made the decision to compulsorily redeem the shares and close the fund. For further information, please copy and paste the below link into your web browser: https://www.assetmanagement.hsbc.co.uk/-/media/files/attachments/common/etf/hsbc-etfs-plc-termination-notice-to-shareholders-en-latam.pdf If you wish to sell your holding prior to the fund closure, please ensure the request is completed via the normal procedure by 8 May 2024. The shares will be delisted from the London Stock Exchange on 15 May 2024. Any remaining shares at the closure date will be compulsorily redeemed, and your account will be credited with the proceeds on or around 24 May 2024. Please be advised in some circumstances there may be delays in the proceeds being credited to us from our custodian. Please allow 10 working days for your account to be updated. Please copy and paste the below FAQ link into your web browser for more information on corporate actions: https://www.ajbell.co.uk/sites/ajbell.co.uk/files/AJB_Corporate_action_FAQs.pdf IMPORTANT NOTE - If you have any questions or queries regarding this event, please send us a secure message and ensure you quote the following in the ??Subject?? field: CORPORATE ACTION - HSBC MSCI Turkey UCITS ETF - 9846520 Updated: 18/04/24

[BurntBread]

1 hour ago, Mandalorian said:

If BATS stagnated for years and chucked back your own capital at a 10% yield per annum, then BATS would decline in value by 10% per annum (plus or minus market movements) so they'd be forced to cut the dividend.

You seem to be ignoring the possibility that a company can make a profit from its ongoing operations (after depreciation of assets). If BATS makes 10% of its market cap each year in profits and hands this back to shareholders, then it can go on doing so indefinitely without the market cap falling, long-term.

If it never makes a profit -- say it was a cash ETF, rather than a company -- then sure, it's value will fall 10% each time it pays out 10% of its market capitalisation, and its value won't (on average) increase again before the next payout.

[honkydonkey]

2 hours ago, leonardratso said:

bad news here;

https://www.etfstream.com/articles/hsbc-am-to-close-four-emerging-market-etfs

Thanks. I literally bought HBRL today the clucking funts.

[Bobthebuilder]

19 minutes ago, BurntBread said:

If BATS makes 10% of its market cap each year in profits and hands this back to shareholders

I would like to see a graph of say the SP500 next to bats over a 5 year period with the divis reinvested, rather than get your capital back every quarter just add to the pot as a tracker does.

[Mandalorian]

49 minutes ago, BurntBread said:

You seem to be ignoring the possibility that a company can make a profit from its ongoing operations (after depreciation of assets). If BATS makes 10% of its market cap each year in profits and hands this back to shareholders, then it can go on doing so indefinitely without the market cap falling, long-term.

If it never makes a profit -- say it was a cash ETF, rather than a company -- then sure, it's value will fall 10% each time it pays out 10% of its market capitalisation, and its value won't (on average) increase again before the next payout.

We said, for the purposes of this discussion, the market was stagnant.  I.e  The assumption the market movement of the share price is sideways.  Though I do take your point.

27 minutes ago, Bobthebuilder said:

I would like to see a graph of say the SP500 next to bats over a 5 year period with the divis reinvested, rather than get your capital back every quarter just add to the pot as a tracker does.

The graphs I post are total return, so they include dividends.

Depends what kind of tracker you have.  Distributing (dividends paid) or accumulating (dividends retained).

Edited April 18 by Mandalorian

[Pip321]

52 minutes ago, Harley said:

They also make on securities lending, although not all do on some etfs.  You allegedly get a share via a lower TER but how many people look at the counterparty risk?  JustETF detail the status for each etf. 

Some loan to collateral ratios look very low (e.g. 105%, even at 115%).  Then there's the issue of who the securities are lent to.  You have to dig to find the data, if indeed it's provided on a timely basis.

We always only look at ETFs over £100m (a filter available in JustETF) and higher the better as another consideration is for is good liquidity (AUM is a proxy although we look at various trading volume averages).

That’s interesting that you look at fund size, something I hadn’t really considered.

I hold Blackrock Gold and that’s £800m…no problemo.

However I was looking to add Abdn Latin America when it ladders down a bit first. That fund is £85m. I will factor this in….maybe reduce my intended holding. 

https://www.fundslibrary.co.uk/FundsLibrary.BrandedTools/Pru/DataOnline/HtmlFactsheet/9bb44328-81e5-4f21-a4d6-0c510c0f9428?displayThirdPartyFactsheetLink=True&fundType=retirement_account.pru#portfolio-analysis

 

Edited April 18 by Pip321

[Mandalorian]

2 minutes ago, Mandalorian said:

 

The graphs I post are total return, so they include dividends.

This graph is share prices alone.  Colour code changed on here.

[honkydonkey]

47 minutes ago, Bobthebuilder said:

I would like to see a graph of say the SP500 next to bats over a 5 year period with the divis reinvested, rather than get your capital back every quarter just add to the pot as a tracker does.

Looks like this. sp500 is orange line and that is a BATS chart dividend adjusted

BATS has been an awful trade for 8 years. But that's not necessarily how it's going to be going forward.

Edited April 18 by honkydonkey

[Castlevania]

3 hours ago, DurhamBorn said:

 

I have never had any interest in tracking an index.Its just not for me.

 

This is the thing. I couldn’t invest in a tracker because as a company goes up in value you buy more. I then look at the constituents and you’re buying stuff which I really wouldn’t want to touch. You’re literally buying more as a percentage when they’re expensive with no thought. I don’t like that. I like an element of control. 

[Calcutta]

The s&p is a growth index, the big companies are growth companies, they don't pay that much in dividends as they don't pay out their profits they invest it in growth.

If that counts for the whole index I don't know, don't care, buying an s&p tracker or qqq is betting that tech companies will continue to grow successfully.

Buying shares in a large tobacco company is betting the vaping will take off some more.

Buying shares in Vodafone is betting the company will sort their debts out and governments will force tech companies to contribute to the costs of using their networks.

Commodities run in cycles, commodity mining companies go up and down in value, they're a swing trade essentially. If you think a company or it's underlying commodity will go up in price then you can have a bet on that.

If you think fiat currency will collapse then perhaps some gold might be a good bet, but then you've got to find somewhere to hide it or sell it should shtf.

Dividends are profits. Companies exist to make money. Buy the items you want for whatever reasons you want and there ya go.

This is getting fucking boring now.

 

[Loki]

4 minutes ago, Calcutta said:

The s&p is a growth index, the big companies are growth companies, they don't pay that much in dividends as they don't pay out their profits they invest it in growth.

If that counts for the whole index I don't know, don't care, buying an s&p tracker or qqq is betting that tech companies will continue to grow successfully.

Buying shares in a large tobacco company is betting the vaping will take off some more.

Buying shares in Vodafone is betting the company will sort their debts out and governments will force tech companies to contribute to the costs of using their networks.

Commodities run in cycles, commodity mining companies go up and down in value, they're a swing trade essentially. If you think a company or it's underlying commodity will go up in price then you can have a bet on that.

If you think fiat currency will collapse then perhaps some gold might be a good bet, but then you've got to find somewhere to hide it or sell it should shtf.

Dividends are profits. Companies exist to make money. Buy the items you want for whatever reasons you want and there ya go.

This is getting fucking boring now.

 

My boring PMs are still sat there being boring and such

[Harley]

1 hour ago, Pip321 said:

That’s interesting that you look at fund size, something I hadn’t really considered.

I hold Blackrock Gold and that’s £800m…no problemo.

However I was looking to add Abdn Latin America when it ladders down a bit first. That fund is £85m. I will factor this in….maybe reduce my intended holding. 

https://www.fundslibrary.co.uk/FundsLibrary.BrandedTools/Pru/DataOnline/HtmlFactsheet/9bb44328-81e5-4f21-a4d6-0c510c0f9428?displayThirdPartyFactsheetLink=True&fundType=retirement_account.pru#portfolio-analysis

 

We look (filter for) at other factors too like whether its based on a full replication, sampling, or swaps.  Also the age (over 5 years) and hedging status and currency options.  I'm a broken record but JustETF really is the go to for ETFs, subbed or not.  So many questions, etc posted here have ready answers and so very much more.  The more time you spend with it the more you get out of it.  I'm still finding new things.  I'm happy to offer support.

PS:  There are only four LA ETFs and they are all classed as EM.  It's quite a narrow area and currency controls, market access, etc for the providers to deal with.  There are however 81 EM ETFs which include various weightings to LA.

Edited April 18 by Harley

[Castlevania]

 

3 hours ago, Mandalorian said:

But again.  That £3bn and £5bn a year belongs to shareholders and are already in the share price.  Each time that £5bn is paid out, the market cap would fall by £5bn in the stagnating market.

 

We agree that the UK market is dying.  Lots of fund managers/business leaders are agitating about it but they are pissing in the wind.  Under Labour, the British stock market will only get worse.  People like you and I are the enemy....

How is that different to Facebook or Google spending billions in buy backs to stop their share count increasing after employees cash in their stock options?

 

Edited April 18 by Castlevania

[Mandalorian]

1 hour ago, honkydonkey said:

Looks like this. sp500 is orange line and that is a BATS chart dividend adjusted

BATS has been an awful trade for 8 years. But that's not necessarily how it's going to be going forward.

That's nice.  What software/website did you use for the chart?  The HL one I use only goes back 5 years.

[Harley]

1 hour ago, Mandalorian said:

This graph is share prices alone.  Colour code changed on here.

QED!

[Castlevania]

28 minutes ago, Calcutta said:

The s&p is a growth index, the big companies are growth companies, they don't pay that much in dividends as they don't pay out their profits they invest it in growth.

 

 

Or on share buybacks.

[Harley]

1 hour ago, honkydonkey said:

Looks like this. sp500 is orange line and that is a BATS chart dividend adjusted

BATS has been an awful trade for 8 years. But that's not necessarily how it's going to be going forward.

That chart mixes the currencies.  Click top right and you can rebase all in GBP or whatever.

[Plan-b]

3 minutes ago, Mandalorian said:

That's nice.  What software/website did you use for the chart?  The HL one I use only goes back 5 years.

That's Trading View