JPMorgan ETFs take off; Goldman’s scapegoat?

Wall Street Journal

Recipe for success: JPMorgan Chase’s four-year-old exchange-traded fund business, previously a laggard compared to Wall Street competitors, including Goldman Sachs, brought in “a record haul” of $2.5 billion last month. The winning formula? Cheaper fund fees and an expanded sales force, which now numbers 16 people, up from two three years ago. “The changes have worked. ETF assets surged to $7.6 billion at the end of July, triple where it was a year ago. The cheapest funds are some of the biggest winners, with 60% of the assets in ETFs that cost less than $20 a year for every $10,000 invested.”

Early close: Cerrano Capital, a hedge fund “backed by some of the industry’s biggest names,” is closing down after less than a year, having raised only $230 million versus the $1 billion it hoped to raise. “The decision underscores the difficulties many hedge funds are having making money and raising capital, as investors rethink the value of such funds.”

Two to go?: Nearly nine out of 10 economists surveyed by the paper expect two more interest rate increases from the Federal Reserve this year, one next month and one in December. Among the nearly 60 economists surveyed, 88% said they expect two rate hikes to bring the federal funds rate up to a range between 2.25% and 2.5%, compared to 84% in the previous month's survey.

Financial Times

For sale? MassMutual is considering selling its OppenheimerFunds unit in a deal that could fetch more than $5 billion. OppenheimerFunds, which was founded in 1959, was acquired by MassMutual in 1990.

Day in court: A former Goldman Sachs managing director is suing the bank claiming it tried to “pin the blame” on him for trades that may have violated anti-money laundering laws. Christopher Rollins, a 16-year Goldman veteran who was fired in 2017, says in his lawsuit that he tried to blow the whistle on more than $1.6 billion in trades for an unnamed “notorious European businessman,” who court exhibits appear to indicate is Lars Windhorst, a German entrepreneur. Windhorst and Goldman both deny the claims.

New York Times

Weekend reading: "One of the great strengths" of Adam Tooze's book about the 2008 financial crisis — Crashed: How a Decade of Financial Crises Changed the World — "is to demonstrate the deeply intertwined nature of the European and American financial systems. But while the crisis may have been caused in both America and Europe, it was solved largely by Washington."

Elsewhere

Bottom-fishing: Bank stocks, the worst performing sector in the euro zone this year, down 13%, are “starting to tempt some investors as a string of solid earnings updates persuade them there are cut-price deals to be had.” Euro zone banks “have generally delivered strong second-quarter results, and their low valuations and growing dividend payouts are attracting investors,” Reuters reports. “There is still a long way to go. But that is precisely what is attracting value investors keen to find a bargain before the rest of the market catches on.”

Scandal scorecard: Need a handy reference guide to every Wells Fargo scandal dating back to 2015? Yahoo Finance has it here.

Quotable

"We have been adding to European banks particularly as we've seen U.S. banks get closer to fair value whereas there's a big disparity in valuations in Europe.” — Chris Dyer, head of global equity at Eaton Vance.