This week we publish content highlights and presentation slides from our guest keynote speakers Marco Montanari, Head of Deutsche Bank ETFs and db-X funds, Asia Deutsche Bank Hong Kong and Chris Johnson, Director of Listed Derivatives Sales, Knight Capital Limited.
Marco Montanari noted that it is now the best time to invest in ETFs from a macro-economic perspective. Globally, stock-selection opportunity used to account for approximately 80% of the total opportunity set, but now it falls to around 40% while opportunity set explained by macro timing (e.g., country selection, industry rotation, and style timing) is close to all-time highs. In addition, Montanari shared the view of Deutsche Bank Research on key economic forecasts and did some comparisons between major indices tracking by ETFs with China exposure and looked into the differences between Deutsche Bank China A-Shares ETFs and RQFII ETFs.
Chris Johnson mainly talked about how to trade ETFs intelligently. His presentation showed the paths of execution, which included: (1) Risk trade; (2) Standard agency order types; (3) NAV-based trade; and (4) Hybrid (Combination of two or more of the above). When choosing a path, investors should consider the following aspects: (1) Investor objective for the trade; (2) Liquidity profile of the product; and (3) Broker capabilities. Moreover, Johnson said that investors should be aware of the hidden costs of a transaction. The transparent costs are the “tip of the iceberg”, but hidden below the visible surface are the larger and less transparent costs. The hidden transaction costs are mainly from: (1) Gap risk; (2) Impact cost; and (3) Opportunity cost. The liquidity of an ETF can greatly influence transaction costs, so it is important to assess an ETF’s liquidity.
For presentation slides from our guest keynote speakers, please click .
Guest Speaker Introduction
(Marco Montanari; Chris Johnson)
Marco Montanari has been based in Hong Kong since 2009. He is responsible for both ETFs and db-X funds platforms for Deutsche Bank in Asia.
Before relocating to Asia, Macro was based in London where he was responsible for setting up the Fixed Income ETFs platform and for structuring db-X funds for Deutsche Bank’s institutional clients in southern Europe. Prior joining Deutsche Bank in 2006, Marco spent six years at Société Générale in Paris where he was in charge of ETFs structuring in the Lyxor Asset Management financial engineers team and for products listed on the Italian Stock Exchange.
Chris Johnson is a Director of Listed Derivatives Sales at Knight Capital. Based in the United States, he has responsibility for broadening the firm’s ETF trading relationships worldwide and managing the team’s thought leadership.
Mr. Johnson has been in the financial service industry for more than fourteen years and has been involved in sales, development, and product management of ETFs since 2002. Prior to joining Knight Capital, Mr. Johnson held several internationally focused management roles with Vanguard over the course of thirteen years. Most recently, he was a senior manager in the firm’s ETF Product Management Department, leading a team dedicated to the development of ETFs domiciled and listed in Canada, the U.K., and Hong Kong.