UBS Financial Services (UBS) and NextShares Solutions (NextShares Solutions), a wholly owned subsidiary of Eaton Vance, have reached an agreement through which the UBS brokerage platforms and UBS Strategic Advisor, a non-discretionary advisory program, will distribute NextShares exchange-traded managed funds (NextShares). UBS is the first full-service wealth manager to offer NextShares through its financial advisor network.

'Leading the introduction of NextShares, will enable UBS's financial advisors to take advantage of the benefits of active management and the latest advances in fund design, with the potential for lower expenses and the tax efficiencies of exchange-trading,' said Sam Descovich, head of capital markets solutions, UBS Wealth Management Americas.

NextShares provides actively managed strategies across fund asset classes aimed at delivering potential benchmark-beating returns by applying their manager's proprietary investment research. NextShares exchange-traded products are designed to offer cost and tax efficiencies that can enhance shareholder returns. The first NextShares funds began trading on the Nasdaq Stock Market in early 2016.

The partnership agreement between UBS Financial Services and NextShares Solutions to develop and launch UBS-sponsored NextShares funds was announced in the summer of 2016. UBS wealth management business is focused on managing portfolios of high net-worth and ultra-high net worth individuals with different underlying strategies and investment vehicles, including mutual funds, ETFs and individual securities such as structured notes.

UBS is the only foreign investment bank in the top five US issuer ranking for structured products with a 13% market share across US$8.6bn in sales, year to date, according to SRP data. The Swiss bank was the fourth most active provider in 2016 with a 11% market share and sales of US$5.3bn. Eaton Vance has been a marginal player in the US structured products market and has nine live open-ended call-overwriting structures in its holdings, according to SRP data.

Traders concerned with growth of passive investing

Eighty-eight percent of European traders have observed a shift from active towards passive investing and 72% expect the level of passive investing to rise further next year, according to the latest Trader Survey conducted by Six Swiss Exchange. More than 85% of traders said they expect a rise in passive investing could provoke change in global markets, but only 40% see this development as positive for their companies while regulation, such as the markets in financial instruments directive (Mifid 2), will be by far the biggest challenge in the next 12 months. Trading activity in 2018 will mainly be driven by the actions of the European Central Bank (ECB), while regulation is expected to have more influence than Brexit, according to the study.

A major issue identified by 74% of traders was the lack of liquidity in global markets. The fixed income sector stood out with 34% citing liquidity issues, followed by the equities sector (26%). According to the survey, unsurprisingly, given the rise of passive investment, only 3% saw a lack of liquidity in the ETF/ETP segments.

The biggest challenge facing traders in the next 12 months is regulation, highlighted by 73% of respondents, far higher than the 55% who named regulation as their top concern in the last survey of Six in April 2017. The actions of the ECB were named by 46% of traders as being the most important factor driving trading activity next year followed by 'Mifid 3' (24%), Trump (16%) and Brexit (11%).

'Our survey results show the rise of passive investment is set to continue, but there are concerns about what this may mean for global markets,' said Tony Shaw, director London office, Six Swiss Exchange, in a statement. 'At the same time, there are plenty of other challenges for traders on the horizon - the biggest being regulation coming into effect in 2018.'

BNP Paribas Easy introduces two new ETFs with strong ESG characteristics

BNP Paribas Easy, the BNP Paribas Asset Management range of ETFs and index funds, has launched two new ETFs providing exposure to US-listed and emerging market equities with strong environmental, social, and corporate governance (ESG) characteristics. Constituent selection is based on data from MSCI ESG Research.

The first product, the BNP Paribas Easy MSCI KLD 400 US SRI Ucits ETF (EKUS FP) tracks the MSCI KLD 400 Social Index, a capitalization-weighted index of 400 US securities that provides exposure to companies with outstanding ESG ratings. The index is derived in two stages from the starting universe of the MSCI USA IMI - a broad index covering the large-, mid-, and small-cap segments of the US equity market. First, companies involved in nuclear power, tobacco, alcohol, gambling, military weapons, civilian firearms, GMOs and adult entertainment are excluded. Secondly, the remaining constituents are evaluated according to MSCI's ESG Intangible Value Assessment, which identifies companies that have demonstrated an ability to manage their ESG risks and opportunities.

BNP Paribas' second launch is the BNP Paribas Easy MSCI Emerging Markets SRI ETF (EISR FP) which tracks the MSCI Emerging Markets SRI Index and currently includes 183 high ESG scoring companies from across 24 emerging market countries. The index follows a similar process to the MSCI KLD 400 Social Index while utilizing constraints to ensure the final index does not differ significantly from the parent MSCI Emerging Markets Index.

Invesco PowerShares launches five ETFs for focused exposure to equity factors

Invesco PowerShares has launched five ETFs that offer investors focused exposure to factor investing in the European equity market. Investors can choose between value, quality, low beta, price momentum and earnings momentum.

The new ETFs track the Solactive Tradable European Factor indices, which are derived from a universe of 675 stocks. Each index is created by selecting the 50 stocks with the greatest exposure to the respective factor. Liquidity and tradability of the underlying stocks are taken into account to reduce concentration risk, while the indices are rebalanced monthly. The new products are:

PowerShares Tradable European Value Factor Ucits ETF (PFTV GY); PowerShares Tradable European Quality Factor Ucits ETF (PFTQ GY); PowerShares Tradable European Low Beta Factor Ucits ETF (PFTB GY); PowerShares Tradable European Price Momentum Factor Ucits ETF (PFTP GY); and PowerShares Tradable European Earnings Momentum Factor Ucits ETF (PFTE GY)

'We expect these new ETFs to attract a variety of investors who want to pursue factors from either a tactical or a strategic perspective,' said Chris Mellor, equity product specialist at Invesco PowerShares. 'For example, hedge funds are likely to use them in the same way as our sector ETFs, providing them with an easy way to capture or adjust exposure to a specific part of the market for hedging purposes.'

Invesco PowerShares has €25.4bn in total assets under management in Europe, with more than €3.3bn of this in its range of European and US sector ETFs. The new factor ETFs are available in EUR on Xetra, with an ongoing charge of 0.30% per annum.