The EU market for exchange-traded-derivatives (ETDs) is worth approximately €200tn – with an average daily turnover of €1.3tn, according to the European Securities and Markets Authority (Esma).

According to the Market in Financial Instruments Directive (Mifid 2), ETDs cover asset classes such as equity, credit, interest rate and commodity derivatives. The Esma study is a first analysis of the ETD market based on data used for the Mifid 2/Mifir Transitional Transparency Calculations (TTC).

Esma’s latest Trends, Risks, and Vulnerabilities (TRV) Report No. 1, 2018, which analysed data received from European trading venues for the second half of 2016, also shows high concentration both in terms of products and trading venue location. Interest rate derivatives represent more than 80% (€166tn) of total EU volumes, with the United Kingdom being the largest market followed by Germany. The TRV also found that ETD products were more standardised than in the over-the-counter (OTC) market.

Click in the link to read the full Esma Trends, Risks, and Vulnerabilities (TRV) Report.

China Internet Index ETF debuts in Hong Kong

International Capital Corporation Limited (CICC), one of China's leading investment banking and financial services firms, and Krane Funds Advisors (KraneShares) have launched the CICC KraneShares CSI China Internet Index ETF, the first ever tracker fund linked to the CSI Overseas China Internet Index, in Hong Kong.

The exchange-traded fund (ETF) matches the benchmark and strategy of the US-listed KraneShares CSI China Internet ETF which is listed on the New York Stock Exchange, and has US$1.7bn in assets under management. KraneShares is a US asset management firm known for its China focused KraneShares exchange traded funds (ETFs).

The ETF will provide investors with exposure to Chinese Internet companies that benefit from the increasing domestic consumption within China. Key constituents include Tencent, Alibaba, Baidu, JD, Weibo, etc. The fund will be available to trade on the Hong Kong exchange in three currencies: USD, HKD and RMB.

BlackRock targets global economic growth

BlackRock has launched a global equity small cap ETF in response to growing investor demand to gain dedicated exposure to developed market small-cap companies.

The iShares MSCI World Small Cap Ucits ETF (WSML) is a way for investors to express a nuanced view within their equity allocation, allowing them to take a building block approach to broad exposure but with a lower level of idiosyncratic risk than single stock investments. It will also provide greater exposure to companies within real estate, industrials and materials, according to BlackRock.

The index provides access to over 4,000 small-sized companies from 23 developed market countries globally, accounting for approximately 14% of the free float-adjusted market capitalisation across each country. The iShares MSCI World Small Cap Ucits ETF is physically backed meaning it buys the constituents of the underlying index, and has a total expense ratio of 0.35%.

First Freight Futures ETF launched in the US

Breakwave Advisors, in partnership with ETF Managers Group, has launched the first freight futures exchange-traded fund (ETF) in the US focusing exclusively on dry bulk shipping.

The Breakwave Dry Bulk Shipping ETF (BDRY) offers exposure to the dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices. This offers investors exposure to dry bulk freight without the need for a futures trading account. BDRY is designed to reduce the effects of rolling contracts by using a laddered strategy to buy contracts while letting existing positions expire and settle in cash.

The fund will hold freight futures with a weighted average of approximately three months to expiration, using a mix of one-to-six-month freight futures, based on the prevailing calendar schedule. The fund intends to progressively increase its position to the next calendar quarter three-month strip while existing positions are maintained and settle in cash. The initial freight futures allocation will be 50% Capesize contracts, 40% Panamax contracts and 10% Supramax contracts, rebalancing annually.

Nationwide boosts smart beta line-up with EM play

Nationwide has bolstered its smart beta ETF offering with the launch of an emerging markets strategy tracking the MSCI Emerging Market index.

The Nationwide Maximum Diversification Emerging Markets Core Equity ETF (MXDE) will be the fourth addition to Nationwide's smart beta suite. Nationwide made its debut in the ETF market in September 2017 with the launch of the Nationwide Maximum Diversification US Core Equity ETF (MXDU), Nationwide Risk-Based US Equity ETF (RBUS), and the Nationwide Risk-based International Equity ETF (RBIN).

All these funds, and the new emerging markets strategy, track indices developed by Paris-based asset manager Tobam, which use liquidity and socially responsible screens to narrow down the investible universe. Stocks are weighted using Tobam's proprietary diversification ratio to craft a portfolio with less correlations between holdings. Since their launch in November, the Nationwide Maximum Diversification US Core Equity ETF (MXDU), Nationwide Risk-Based US Equity ETF (RBUS), and the Nationwide Risk-based International Equity ETF (RBIN) have all crossed the $100 million mark in assets, according to Morningstar.

VanEck debuts real asset allocation play to combat rising inflation

US ETF provider VanEck has launched the VanEck Vectors Real Asset Allocation ETF (NYSE Arca: RAAX), a fund that seeks long-term total return from exposure to a range of real assets, including commodities and companies involved in natural resources, real estate, and infrastructure, while mitigating downside risk.

The fund is designed to provide exposure to real assets while seeking to minimize the impact of drawdowns. Real assets can potentially help investors combat rising inflation, enhance portfolio diversification, and participate in global growth. The new fund uses a rules-based model to allocate among approximately 12 exchange-traded products (ETPs) and has the ability to allocate up to 100% to cash and cash equivalents in the event of market stress.

The ETPs provide exposure to agribusiness, coal, infrastructure, real estate, steel, oil services, unconventional oil and gas, and gold mining companies as well as diversified commodity futures exposure and physical gold.