Purview Publication: "Leveraged ETFs: Are You Prepared for the Volatility Jumps? Global Perspectives on the Short-Term versus Longer-Term Risk Profiles", Journal of Index Investing, Summer 2018

Purview's Linda Zhang has conducted a comprehensive empirical study on the short-term risk behavior of leveraged ETF products.  She extended her research beyond the U.S. markets to countries where leveraged ETFs are listed.  She has found overwhelming global evidence suggesting that the near-term volatility of leverage ETFs can be much higher than those suggested by the leverage multiples.  This original research piece contributes in both depth and scope to better understanding of a branch of ETFs that are often less understood and potentially mis-used by investors.  The full article is available at the Journal of Index Investing website for subscriptions.

Abstract:

Leveraged and inverse ETFs represent one of fast growing areas in the ETF industry, with the global AUM breaking $60 billion. The regulatory bodies in many countries are approving the listing of these products. The recent financial market turmoil in February 2018 has exposed the risk behavior of these ETFs in the time of market stress, which are often misunderstood by investors and can catch them by surprise. In this study, we analyze leveraged ETFs risk profiles in both short-term and long-term periods. As leveraged ETFs and inverse ETFs are often used for short-term trading purposes, understanding the nature of short-term volatility is highly critical. We also survey the landscape of the major markets with listed leveraged ETFs outside the U.S., including Asia Pacific and Canada. We examined the volatility behavior of leveraged products in these markets and came to the same conclusion. The near-term volatility jumps more than what the leverage ratio suggested. We’ve also noticed the degree of jumps vary from market to market. Globally, leveraged and inverse ETFs are growing at a healthy pace, led by a faster growth in Asia in 2016. After Japan, South Korea, and Taiwan, Hong Kong became the latest market, allowing both inverse and leveraged products on Hong Kong and China stock indexes. It is in the great interest of global investors to fully understand the nature of these instruments to use them effectively in portfolio management.

Purview Research Published: "How ESG Principles Impact Mainstream Investing", ETF Advisor Magazine, May 1, 2018

In her article published on ETF Advisor, Dr. Zhang, CEO and the founder of Purview Investments laid out various reasons why ALL investors, ESG focused or not, should understand the implications of key ESG principles and their trends. 

In particular, the global regulatory pushes to green transportation to reduce reliance on fossil fuels, and the technology breakthrough that enables such movements, have great implications on the auto industry and commodity industry.  Such trends are affecting these firms business models and the way analysts research these companies. These trends also challenge the traditional roles commodity plays in an investor's portfolio, as managed by advisors and institutional asset managers.

Dr. Zhang also pointed out the trend of rising transparency of corporate gender gap in pay and managements, and why the gap measurements should be part of investment framework for company analysis.

"Many national and city governments have begun to propose timetables to ban the sales of fossil-fuel-burning cars in their territories (see the table). Norway and the Netherlands lead the pack, with plans to ban the sale of such cars starting in 2025." 

"...the challenge to the auto industry is to manage a timely transition to electric vehicles or to face business survival risk."

"ESG reporting has encouraged companies to be more transparent about the gender gap in their workforces, pay scales and management structures. CEOs and their management teams at every level need to be held accountable for making conscious and measurable improvements in closing the gender gap in management and in pay, adjusted or unadjusted, so they can reap all the benefits of having a balanced workplace."

"Many leading asset managers are also leaders in the ESG ETF space, including BlackRock, State Street, Nuveen, Global X and Oppenheimer. These ETFs typically remove harmful investments and champion those making positive impact on the environment and society."

Purview Investments CEO, Linda Zhang was featured on "Potential Trade War Worries Advisors", by Lara Crigger at ETF.com, April 9, 2019

Lara Crigger at ETF.com has featured five investment advisors from various regions in the country, including Purview's Linda Zhang.  They shared with Crigger the major concerns and the outlooks on the economy, policy and capital markets.  Linda shared her concerns for a potential trade war turning into a capital market war.  She also highlighted a possibly underestimated risk of poor policy coordination among major central banks, due to the fact that two of the top four central bank governors are new this year - the Fed and PBOC.

ETF Research Insight: Facebook, Corporate Governance, Impact of ESG Investing

ETF Research Insight: Facebook, Corporate Governance, Impact of ESG Investing

One of the tech giants, Facebook just lost over 20% of its market valuation since its recent peak on 2/1/2018.  Please read this analysis by Linda Zhang, CEO of Purview Investments, addressing the role of corporate governance in investment process framework.  Find out which ETFs, ESG inclined or not, have the most exposure to Facebook stock fluctuations.

Disclosure:  This paper is a research piece.  It does NOT represent the investment advice from the author about Facebook, nor the ETFs mentioned in the article.

Inside ETFs: Zhang On Active ESG Investing - An Interview with Cinthia Murphy

Inside ETFs: Zhang On Active ESG Investing - An Interview with Cinthia Murphy

Watch a video interview of Purview Investment's CEO Linda Zhang by Cinthia Murphy from ETF.com about actively managed ESG ETF solutions at Inside ETFs,2018 in Florida.

Beverly Chandler from ETF Express interviewed Linda Zhang, CEO and the founder of Purview Investments, about the firm's first product launch, Purview Impact Solutions.

Zhang says: “The ESG concept has been relatively slow to catch on in the US compared with Europe. But the demand is rising, with limited full blown ESG ETF managed portfolios in the market. I feel there is a business opportunity and I have a passion and belief in many values represented by the ESG principles.

“I believe our value system evolves.  For the most part of the last 15 years, I have been one of many portfolio managers who focused just on performance.  I realise now that returns should not have to be the only goal.  Many investors look beyond that and want to have a positive influence on the environment and society.  Many people want to satisfy their conscience as well as to meet their investment goals.”

“Protecting the earth is not a political issue.  It’s an economic, generational and personal issue,” Zhang says. “Each one of us needs to think about how we can preserve the earth we all live on.”

Zhang also wants Purview Impact Solutions to represent other values that are important, such as gender diversity in workplace, investing in firms who promote female talents to management and boards. As a co-founder of Women in ETFs, she gets it that diverse opinions lead to better decision making.  

For the full interview, please check the title of this post for the link to the article.

ESG Topics Generated More Interests at Inside ETFs 2018 - With At Least Three Panel Sessions

Among many takeaways from Inside ETFs 2018 this past week, one trend is clear.  More people are interested in understanding investments with environmental, social and governance principles.  At least three panels sessions were dedicated to this issue, with topics ranging from how to apply ESG overlay in traditional investment process, to how to construct climate resilience portfolios, to how to stay true to the ESG principles without sacrificing performance.  

According to Purview Investments' research on ESG ETF products listed on the U.S. exchanges, there are over 40 self-labeled ESG ETFs.  The AUM of these ETFs are still small, yet are growing at a rapid rate.  When we concluded our first comprehensive research in June 2017, the AUM in this category was just about $3.1 billions.  As of Friday, January 26, 2018, the AUM has grown to over $4.5 billions.  The product variety has also increased in fixed income.  Last June, there was only one fixed income ESG ETF, and since then, three more have been launched.  Although Blackrock's iShares and State Street's SPDR still dominate the space, other firms are catching up, with different approaches on product lineups.  For more details on research findings and Purview Impact Solutions ETF managed product, please contact Purview Investments,  info@purviewinvestments.com.