The Wall Street Journal - 26.11.2019

B10| Tuesday, November 26, 2019 ** THE WALL STREET JOURNAL.

iShCoreS&P500 IVV 315.10 0.7525.2 iShCoreS&P MC IJH 201.08 1.2321.1 iShCoreS&P SC IJR 82.04 2.5018.3 iShS&PTotlUSStkMktITOT 70.90 0.8824.9 iShCoreUSAggBd AGG112.98 0.10 6.1 iShSelectDividend DVY103.75 0.4216.2 iShEdgeMSCIMinEAFEEFAV 75.42 0.4513.1 iShEdgeMSCIMinUSAUSMV 64.32 0.2322.7 iShEdgeMSCIUSAMomMTUM123.02 0.7022.7 iShEdgeMSCIUSAQualQUAL 98.10 0.8727.8 iShFloatingRateBd FLOT 50.97 –0.04 1.2 iShGoldTr IAU 13.91 –0.50 13.2 iShiBoxx$InvGrCpBd LQD127.91 0.3513.4 iShiBoxx$HYCpBd HYG 86.92 0.27 7.2 iShIntermCorpBd IGIB 58.06 0.1710.8

Closing Chg YTD ETF Symbol Price (%) (%)

CnsmrDiscSelSector XLY 121.37 0.8822.6
CnsStapleSelSector XLP 61.37 0.1120.9
EnSelectSectorSPDRXLE 59.89 0.10 4.4
FinSelSectorSPDR XLF 30.11 0.6426.4
HealthCareSelSect XLV 99.41 1.1714.9
IndSelSectorSPDR XLI 82.26 0.7227.7
InvscQQQI QQQ204.22 1.1832.4
InvscS&P500EW RSP113.01 0.9023.6
InvscS&P500LowVolSPLV 57.02 –0.0722.2
iSh3-7YTreasuryBd IEI 126.36 0.01 4.1
iShCoreDivGrowth DGRO 41.15 0.6924.0
iShCoreMSCIEAFE IEFA 64.35 0.8117.0
iShCoreMSCIEmgMk IEMG 52.02 0.9510.3
iShCoreMSCITotInt IXUS 60.67 0.7615.5

Closing Chg YTD
ETF Symbol Price (%) (%)

Monday, November 25, 2019 iShMBSETFiShJPMUSDEmgBd EMBMBB112.26108.15 –0.010.05 3.38.0 iShMSCI ACWI ACWI 77.67 0.7721.1 iShMSCIBrazil EWZ 42.71 –1.04 11.8 iShMSCI EAFE EFA 68.52 0.7916.6 iShMSCI EAFE SC SCZ 61.05 0.8317.8 iShMSCIEmgMarketsEEM 43.30 1.0010.9 iShMSCIJapan EWJ 59.98 0.6918.3 iShNatlMuniBd MUB113.94 0.05 4.5 iShPfd&Incm PFF 37.26 0.19 8.9 iShRussell1000Gwth IWF170.50 1.0330.2 iShRussell1000 IWB173.84 0.7825.3 iShRussell1000Val IWD134.03 0.5820.7 iShRussell2000 IWM161.58 2.1220.7 iShRussell2000Val IWN125.48 1.8716.7 iShRussell3000 IWV183.65 0.9025.0 iShRussellMid-Cap IWR 58.46 0.9525.8 iShRussellMCValue IWS 92.56 0.8321.2

Closing Chg YTD ETF Symbol Price (%) (%) iShS&P500Growth IVW188.34 0.7725.0 iShS&P500Value IVE 126.97 0.7025.5 iShShortCpBd IGSB 53.67 0.03 3.9 iShShortTreaBd SHV110.61 0.01 0.3 iShTIPSBondETF TIP 116.63 0.11 6.5 iSh1-3YTreasuryBd SHY 84.75 0.02 1.4 iSh7-10YTreasuryBd IEF 111.74 0.04 7.2 iSh20+YTreasuryBd TLT 140.31 0.2915.5 iShRussellMCGrowthIWP150.44 1.1132.3 iShUSTreasuryBdETFGOVT 26.18 0.10 6.2 JPM UltShtIncm JPST 50.52 –0.01 0.8 PIMCOEnhShMaturityMINT101.73 –0.01 0.8 SPDR BlmBarcHYBd JNK 108.22 0.28 7.4 SPDR Gold GLD137.08 –0.4813.1 SchwabIntEquity SCHF 33.42 0.7817.9 SchwabUS BrdMkt SCHB 75.07 0.9425.3 SchwabUS Div SCHD 56.95 0.6021.2 SchwabUS LC SCHX 74.97 0.8125.6

Closing Chg YTD ETF Symbol Price (%) (%) SPDR DJIA Tr DIA 280.80 0.7020.4 SPDR S&PMdCpTr MDY366.61 1.2421.1 SPDR S&P 500 SPY313.37 0.7825.4 SPDR S&P Div SDY106.16 0.6318.6 TechSelectSector XLK 87.85 1.4641.7 UtilitiesSelSector XLU 62.79 –0.33 18.7 VanEckGoldMiner GDX 26.20 –2.09 24.2 VangdInfoTech VGT235.56 1.4741.2 VangdSC Val VBR134.47 1.3217.9 VangdSC Grwth VBK195.04 1.6929.5 VangdDivApp VIG 121.78 0.4024.3 VangdFTSEDevMk VEA 43.15 0.7716.3 VangdFTSE EM VWO42.61 0.9011.8 VangdFTSE Europe VGK 56.56 0.8216.3 VangdFTSEAWxUS VEU 52.54 0.8315.3 VangdGrowth VUG176.29 0.9931.2 VangdHlthCr VHT186.11 1.3615.9

Closing Chg YTD ETF Symbol Price (%) (%) VangdHiDiv VYM 91.66 0.4517.5 VangdIntermBd BIV 87.70 0.06 7.9 VangdIntrCorpBd VCIT 91.44 0.1810.4 VangdLC VV 144.03 0.7325.4 VangdMC VO 174.80 1.0226.5 VangdMC Val VOE116.82 0.7722.6 VangdMBS VMBS53.30 0.04 3.5 VangdRealEst VNQ 91.84 0.3223.2 VangdS&P500ETF VOO287.82 0.7625.2 VangdST Bond BSV 80.72 0.02 2.7 VangdSTCpBd VCSH81.05 0.06 4.0 VangdSC VB 162.63 1.5723.2 VangdTotalBd BND 84.28 0.10 6.4 VangdTotIntlBd BNDX58.18 0.02 7.2 VangdTotIntlStk VXUS54.32 0.7415.0 VangdTotalStk VTI 159.64 0.9525.1 VangdTotlWrld VT 78.98 0.7720.7 VangdValue VTV117.62 0.5620.1

Closing Chg YTD ETF Symbol Price (%) (%)

Exchange-Traded Portfolios|WSJ.com/ETFresearch

Largest 100 exchange-traded funds, latest session

nancial Strategies Group Inc., an Okemos, Mich.-based advisory firm. For an adviser, switching from one custodian to another typically involves getting the signoff of every client affected, as well as a significant amount of paperwork. If an adviser is unhappy with the service a custodian is providing, that process makes it difficult to decamp for a ri-

val custodian, said Mr. Carter, whose firm manages about $280 million in client assets, much of which are with TD Ameritrade. Increasing concentration of the RIA custody business could be a red flag for regula- tors, some analysts have warned. “This deal may face some- what significant antitrust hur- dles, depending on how the

Schwab CEO Walt Bettinger tried to reassure independent advisers.

MADDIE MCGARVEY FOR THE WALL STREET JOURNAL

ScalingUp TheCharlesSchwab-TDAmeritradedealwouldunitetwoofthe largestcustodiansofassetsforregisteredinvestmentadvisers.

EstimatedRIAassetsincustody,intrillions

Source: Cerulli Associates

$0 05 10 15

CharlesSchwab

FidelityInvestments

TDAmeritrade

Pershing

competitive market is viewed by relevant authorities,” analysts at Keefe, Bruyette & Woods said in a note. KBW, whose approach to modeling market share is dif- ferent from Cerulli’s, esti- mated that Schwab has roughly 50% of the RIA custody business, while TD Amer- itrade has between 15% and 20%. Such estimates can differ because some custodians, such as Fidelity, are privately owned and don’t release de- tailed data. Mr. Bettinger, the Schwab CEO, voiced confidence that the deal would pass antitrust review and be completed by late next year. Speaking on the conference call, he said Schwab and TD Ameritrade had a “much more modest” share of the RIA custody business than some analysts and media reports had said. The other big group of customers at Schwab and TD Ameritrade—investors and in- dividual traders who use the firms’ platforms to manage their portfolios—may see ben- efits from a deal, said Blain Reinkensmeyer, head of research at StockBrokers.com, a website that reviews e-brokers. Schwab users could benefit from access to TD Ameri- trade’s sleeker trading tools, while TD Ameritrade users might benefit from access to Schwab’s market research and commentary, Mr. Reinkens- meyer said. Still, he added, investors could suffer in the long run if consolidation among online brokerages slows down the companies’ efforts to please customers with new offer- ings. “Schwab’s acquisition of TD Ameritrade could negatively impact self-directed investors long term,” Mr. Reinkens- meyer said. “Yes, there are obvious syn- ergies for customers of both firms, but removing competi- tion comes with the secondary punch of reducing innovation.”

Services platform, which made
it easier for advisers to set up
shop independently and com-
pete with stockbrokers at big
brokerage firms such as Mer-
rill Lynch.
TD Ameritrade has more
than 7,000 advisers, which
tend to manage less money
than those at Schwab, while
Fidelity has around 3,000.
Other players in the space in-
clude Pershing, an arm of
Bank of New York Mellon
Corp., and E*Trade Financial
Corp., which itself has been
seen as a potential acquisition
target.
Consolidation in industries
can sometimes help consum-
ers by letting companies
achieve greater efficiencies,
allowing them to cut prices.
That is part of why Ama-
zon.com Inc. can undercut
smaller retailers on prices for
the goods it sells.
But in the online-brokerage
world, fees are already at rock
bottom: Schwab, TD Ameri-
trade, Fidelity and other e-
brokers lowered commissions
for online stock trades to zero
in October.
They make much of their
money from RIAs and individ-
ual investors by collecting in-
terest on cash balances.
That means advisers don’t
have much to gain from fur-
ther e-broker price cuts. In-
stead, advisers worry that the
main effect they will feel
from a Schwab-TD Ameri-
trade deal is worse customer
service, along with technol-
ogy hiccups as the two firms
integrate.
“All of us out there are
questioning whether you can
maintain service quality at
that size,” said Brice Carter,
chief investment officer at Fi-

Continued from page B1

Schwab,

TD Deal

Stirs Fear

BANKING & FINANCE

he worked at Goldman Sachs Group Inc. Mr. Himmelberg is chief markets economist atGold- man Sachs GroupInc., where he has worked since 2005. He worked at the New York Fed from 2001 to 2005 and taught economics at Columbia Uni- versity and New York Univer- sity. He has co-written several papers with Simon Gilchrist, a Boston University economist who has also collaborated on research with Mr. Williams. Ms. Logan has worked at the New York Fed since 1999 and played a role in develop- ing and implementing the Fed’s postcrisis-era policies, including the expansion of the $4 trillion asset portfolio and

the tools used to help unwind that support when the Fed lifted interest rates from near zero earlier this decade. None of the candidates responded to inquiries seeking comment. Fed representatives declined to comment. It couldn’t be learned if officials are considering additional candidates. The appointments are the most important facing Mr. Williams, who became New York Fed president in June 2018 after leading the San Francisco Fed for seven years. Since the 2008 financial crisis, the head of the New York Fed’s markets desk has been the most high-profile staff job at the central bank. The people who have held the

role were highly influential in helping officials create and employ new policy tools. The markets desk imple- ments Fed policy by buying and selling securities in trades with private financial firms, and the officer briefs top officials at each policy meeting on the state of the markets and the working of central- bank policies. The personnel search has drawn added attention because the Fed has “lost some confidence among market par- ticipants over the last few months that they’re on top of things,” said Julia Coronado, a former Fed economist who runs an economic-consulting firm and is on an advisory panel at the New York Fed. Interest rates in very short- term lending markets rose sharply in mid-September due to shortages of funds that banks were willing to lend. The Fed responded by in- jecting billions of dollars into markets to pull rates down to its target range. Wall Street veterans and former Fed officials said that tapping two outsiders for the jobs could further hurt flag- ging morale at the New York Fed. Ms. Logan served as Mr. Potter’s deputy and had been groomed to succeed him. “She is widely regarded for her competence and experience,” said Ms. Coronado. When Fed officials met in a rare videoconference in early October, Ms. Logan briefed officials on steps to address temporary money-market vol- atility. The rate-setting com- mittee unanimously adopted a proposal she outlined to pur- chase $60 billion a month in short-term Treasury bills. Those purchases could decline over time and will last at least into the second quar-

ter of next year. They are de- signed to replace the daily and week-to-week cash injec- tions the Fed has been con- ducting to prevent further funding strains. In late May, Mr. Williams roiled the New York Fed when he announced Mr. Potter and another senior executive would be leaving. People familiar with the matter said the departure had less to do with particular policy disputes than with tension over day-to-day management issues including personnel, promotions and strategic di- rection. Tensions had been building for months between the two men and their bosses, Mr. Williams and , the bank’s operating chief. Fed Chairman Jerome Powell and Vice Chair- man Richard Clarida are par- ticipating in the search for the portfolio manager candidate, according to people familiar with the process. In addition to monetary- policy implementation, Mr. Potter’s portfolio included a range of issues including cy- bersecurity and technology. His departure followed a problem-plagued technology project the markets group oversaw called Titan, a front- to-back revamp of the Trea- sury’s electronic system for receiving and processing bids sent into U.S. Treasury auc- tions. Promoting from within the bank could help improve morale that was unsettled first by the management shake-up in June and later by the market rupture in September. “I am impressed by how strong our team has been,” Mr. Williams said last week. “We haven’t lost a step or missed a cue on any of this. They’ve done a fantastic job.”

Top Federal Reserve offi-
cials are in the final stages of
a search to fill two top staff
jobs overseeing the bank’s fi-
nancial-markets operations,
according to people familiar
with the matter.
Candidates who have been
considered for the Federal Re-
serve Bank of New York posts
include private-sector econo-
mists Daleep Singh and
Charles Himmelberg, accord-
ing to these people. Lorie Lo-
gan, the interim manager of
the central bank’s asset port-
folio, is also seen as a front-
runner for one of the two po-
sitions, people said.
The person in one of the
jobs will oversee the central
bank’s $4 trillion securities
portfolio and open-market op-
erations, implementing Fed
officials’ interest-rate deci-
sions. The other will handle
the markets group’s opera-
tions and technology.
The two positions were
created to assume the respon-
sibilities previously held by
one person, Simon Potter,
whowas ousted in June by
New York Fed President John
Williams.
The decision comes as Fed
officials are debating numer-
ous technical decisions to
fine-tune their control of very
short-term interest rates fol-
lowing a mid-September spike
in an overnight lending rate.
Mr. Singh is chief North
American economist at SPX
Capital, a Brazilian investment
fund. He served in the Trea-
sury Department’s interna-
tional division and markets
room from 2011 to 2016, when
he was named acting assistant
secretary for financial mar-
kets, a position he held until
the end of the Obama admin-
istration in 2017. Before that,

BYNICKTIMIRAOS

Fed Close to Filling 2 Jobs

One of the positions will oversee a $4 trillion securities portfolio.

down just 0.3%. In terms of the 2017 streak: “Once that ended, buying continued,” he said. For a time. That rally from Nov. 3, 2017, to Jan. 26, 2018, was followed by a steep selloff on worries about wage-related infla- tion and a resurgence of volatil- ity. The S&P 500 had its first cor- rection in more than two years in the following days and didn’t set a new high until August 2018. Still, the S&P 500 hit another all-time high Monday, the ninth record of the month. That makes November the calendar month with the most record closes since January 2018, according to Dow Jones Market Data. The index has recorded 24 record closes this year. This month’s rally has been driven in part by shares of economically sensitive companies, suggesting growing confidence about the health of the economy.

The S&P 500 snapped a six- week winning streak Friday, but some analysts played down the significance of the broken record and suggested the bench- mark stock index has more room to run. The stretch of gains was the S&P 500’s longest since 2017, when it rose eight consecutive weeks between September and November. In that case, the index kept climbing: It rose 11% over the next 12 weeks. “Just because a weekly win streak ended doesn’t mean de- mand for stocks is going to abruptly end as well,” said Frank Cappelleri, executive di- rector of Instinet. He also noted last week’s pullback was a modest 1.16% from peak to trough; the S&P 500 ended the week

BYKARENLANGLEY

Investors Unfazed After End

Of S&P Weekly Win Streak

ABREAST OF THE MARKET

communities, appear to be se- niors, small-business owners and those lacking reliable transportation. The closing of local banks could mean for some communities the loss of a source of financial advice and civic lead- ership, the authors said. The impact could be particularly significant for small businesses, which could face reduced access to credit needed to maintain and ex- pand their operations, the authors wrote. The Fed researchers pointed out that loan interest rates increase as the distance between a business and the local branch of its lender grows—a potential reason why most small businesses borrow from institutions with a local presence. While a growing share of consumers are adopting online and mobile banking to meet their basic banking needs such as transferring money and checking balances, the shift is much slower for some groups of consumers, particularly those who are older, have lower incomes or live in rural areas. Much of the information for the report was gathered at lis- tening sessions hosted by re- gional Fed banks across the country between July 2018 and January 2019.

WASHINGTON—A majority of U.S. counties lost bank branches in recent years, and rural communities with poorer residents or large minority populations have been particularly hard hit, according to Federal Reserve research. A little more than half—51%—of the 3,114 counties in the U.S. saw net de- clines in the number of bank branches between 2012 and 2017, said the report released Monday, a result of industry consolidation after the financial crisis. A total of 794 rural counties lost a combined 1,553 bank branches over the five- year period, representing a decline of 14% in the number of institutions. The declined was much greater than the 9% drop in the country’s 802 ur- ban communities that also saw a decline. The trend could have broad implications for affected communities, many of which are struggling economically. “Some consumer segments appear to have been left with- out sufficient, convenient, and low-cost access to the financial services they need to manage their financial lives,” the Fed researchers wrote. They added that the groups most affected, at least in rural

BYYUKAHAYASHI

Banks Close Branches

In Blow to Rural Areas

WASHINGTON—The Securi- ties and Exchange Commission is taking another stab at regu- lating the use of derivatives by investment funds, after an at- tempt by the Obama adminis- tration to establish stricter rules was shelved amid industry opposition. The SEC said Monday its members had voted to propose a rule on the use of swaps, op- tions, futures and other derivatives by mutual funds and exchange-traded funds. If enacted, the proposed rules would replace a patchwork of guidelines issued over recent decades to enable funds to work around a 1940 law that restricts their use. Among the proposed changes would be the elimina- tion of a requirement that funds set aside enough liquid assets to cover any obligations under their derivatives positions. Instead, the new rule would require funds to imple- ment a derivatives risk-man-

agement program and hire a derivatives risk manager. The draft rule, which is open for public comment, would replace a 2015 proposal that sought to establish stricter requirements for how mutual funds manage the risks associated with derivatives. Lobbyists for the investment industry had argued that the earlier rule used an overly re- strictive measure of funds’ le- verage risk. “The commission’s proposal recognizes the extensive changes that have taken place in our capital markets and the fund industry over the past several decades, including the importance of derivatives in effective portfolio management,” SEC Chairman Jay Clayton. “By standardizing the framework for funds’ derivatives risk management, the proposal would benefit investors, funds and our markets, including by providing for more-effective risk management across funds and en- hanced investor protections.”

BYPAULKIERNAN

SEC Takes Up Use

Of Derivatives by

Investment Funds

The Wall Street Journal - 26.11.2019

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