Månad: september 2011

While markets have been chaotic lately, the product segment ETF’s, in particular the BULL & BEAR instruments have exploded on Burgundy. As Sweden has a very active retail community, I believe there are two reasons why these products are very popular;

– Low cost and accessibility; all banks/online brokers now offer cheap rates to trade these super-liquid products. It beats struggling with complex derivative documentation, margining etc. These products are as easy to understand and are traded like ordinary stocks.

– Dramatic increase in correlation between individual stocks. As the large-caps move more and more in synch with each other, clients who need portfolio protection or just clean exposure can get in or out with a click. Many clients seem to shun away from stock picking in these turbulent times and go for market/beta exposure instead.

Burgundy is there to provide for the needs of the Nordic investor community and we are proud to have reached a sustainable level of market share in these products!

Here at Burgundy we have made a survey of the 2010 annual reports of the large cap companies in the Nordics. This report showed out of the 136 companies, 60 percent includes information about the share turnover in the annual reports. Of these, 66 percent only includes the turnover on the listing exchange. Thus, the companies are sending out wrong signals about the liquidity in the share, i.e. how fast investors can buy and sell shares. This can lead to that investors might take the wrong decisions.

The survey showed that in Sweden, 58 percent of the companies now include information about trading on alternative venues, which is a big improvement from last year’s survey. However, in Norway, not a single company includes trading outside the listing exchange.