April ETF Flow Check In

 Michael Cafiero – Vice President ETF Trading – Knight Capital Americas, L.P.

Knight ETF Trading: It is with great pleasure to share with you that our team has been once again been named Top ETF Market Maker for the Americas by exchangetradedfunds.com

http://www.knight.com/investorRelations/pressReleases.asp?compid=105070&releaseID=1808989

 Flows: Month to date Knight ETF Trading has traded in 1,452 ETFs accounting for 13.45% of total ETF volume. (Autex Block Data 4/19/13)

 US Equity ETFs: Despite the recent spike in volatility; volumes remain quite  tepid. For US equity ETFs flows have been two sided for SPY(SPDR S&P 500 ETF TRUST) but heavy from the buy side for IVV(SPDR S&P 500 ETF (ISHARES CORE S&P 500 ETF) and VTI (VANGUARD US TOTAL STOCK MKT). Small cap flows have been seen steady from the buy side as seen in IWM (ISHARES RUSSELL 2000) and SCHA (SCHWAB US SMALL-CAP ETF) and into mid-caps as well as seen in flows into IJH(ISHARES CORE S&P MIDCAP ETF). Heavy inflows into SH (PROSHARES SHORT S&P500) pin points that the bears are positioning themselves for a bigger pull back.

Fixed Income ETFs: We continue to see many trying to stay short on the curve. Overall sellers in JNK (SPDR BARCLAYS HIGH YIELD BD), VCLT (VANGUARD LONG-TERM CORP BOND) while buyers have been seen in short duration names like HYS (PIMCO 0-5 YEAR H/Y CORP BOND), BSJF(GUGGENHEIM BULLETSHARES 2015), and SJNK(SPDR BARCLAYS SHORT-TERM HIG). Bank loan funds continue to see buy side interest specifically in BKLN (POWERSHARES SENIOR LOAN) and newly launched SRLN (SPDR BLACKSTONE/GSO SEN LOAN).

International ETFs: Sellers seen this month in the larger EM ETFs including VWO (VANGUARD FTSE EMERGING MARKE) and EEM (ISHARES MSCI EMERGING MKT IN). Flows have been strong into IEMG (ISHARES CORE MSCI EMERGING), ECON (EGSHARES EM CONSUMER ETF), and EEMV (ISHA MSCI EMERG MKT MIN VOL). Yield oriented international funds continue to see interest specifically in EDIV (SPDR S&P EMERGING MARKETS DI), DYVE (ISHARES EMERGING MKT DVD), and DFJ (WISDOMTREE JAP S/C DVD FUND). To note, sellers have been seen in RSX (MARKET VECTORS RUSSIA ETF), and MCHI (ISHARES MSCI CHINA INDEX FD).

Commodity ETFs/ETNs: Obviously immense sellers and few buyers seen in the last two weeks in most gold funds including GLD (SPDR GOLD TRUST), and IAU (ISHARES GOLD TRUST). Same story with silver funds including SLV(ISHARES SILVER TRUST ) and PSLV(SPROTT PHYSICAL SILVER TRUST)

Sector ETFs: Regarding sectors we have seen buyers of XLP(CONSUMER STAPLES SPDR), XLV (HEALTH CARE SELECT SECTOR), and  IYC (ISHARES DJ US CNSMER SERVICE). Sellers have been seen across the board of XLI(INDUSTRIAL SELECT SECT SPDR), XLB (MATERIALS SELECT SECTOR SPDR),  XOP (SPDR S&P OIL & GAS EXP & PR).

Alternative/Specialty ETFs:  REITs have seen an uptick in buy side demand specifically in names like RWR (SPDR DOW JONES REIT ETF), VNQ (VANGUARD REIT ETF), and IYR(ISHARES DJ US REAL ESTATE). Yield oriented funds such as MDIV(FT NASDAQ US MA DIVERS INC)  and SDIV(GLOBAL X SUPERDIVIDEND ETF) continue to see strong flows. Natural resource funds GNR (SPDR S&P GL NAT RESOURCES) and GUNR (FLEXSHARES GLOBAL UPSTREAM N) also have seen strong buy side flows.

You may reach Michael directly at mcafiero@knight.com

 This communication has been prepared by the trading, market making and/or the sales personnel (“Trader”) of Knight Capital Americas, L.P. (“KCA”), a subsidiary of Knight Capital Group, Inc. (“Knight”). The information contained herein may be the personal perspective of the Knight Trader and/or commentary compiled from public sources. The information from public sources is believed to be reliable but Knight does not guarantee or represent its accuracy or completeness. The opinions and views expressed by the individual trader do not represent the opinions and views of Knight, its affiliates, officers or other personnel. No responsibility and no express or limited liability is assumed jointly or individually for any losses or damages arising out of errors, omissions, delays in the receipt of the information, or any actions taken in reliance upon the information. The information contained herein does not provide investment advice and is not a sufficient basis for an investment decision. No information contained herein should be construed as a solicitation or an offer to buy or sell any security or product. Indications of interest, opinions or views expressed by the trader are not firm orders or quotes and may not be current. No responsibility is assumed to maintain and/or update the information. KCA most likely makes a market in the securities mentioned in this document and its personnel, including those involved in the preparation or issuance of the material may take a position or action which may be inconsistent with the opinions and views expressed therein. Questions regarding the information presented herein or a request for a copy of this document should be referred to your Knight Representative.

Knight Capital Group, Inc. (“Knight”) is comprised of trading and related entities under common control such as Knight Capital Americas, L.P., Knight Capital Europe Limited (a U.K. registered broker-dealer), Knight Capital Asia Limited (a Hong Kong registered broker-dealer), Hotspot FX LLC and Knight Execution and Clearing Services LLC.

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First Quarter 2013 ETF Recap

Michael Cafiero – Vice President ETF Trading – Knight Capital Americas, L.P.

Knight ETF Trading: Rounding out the Q1 of 2013 we saw a record quarter in terms of net inflows into ETFs. Equity linked ETFs were very strong as were flows into dividend income funds and minimum volatility funds. Despite the continued news pouring out of the Eurozone and more recently Cypress the markets remained resilient as we wrapped up the first quarter. The DJIA finished the quarters with an 11.6% gain while the Nasdaq Composite rose 9.1% and S&P gained 10.8%

 Flows: For the month of March Knight ETF Trading had accounted for 14.25% of advertised ETF block shares traded trading in 1,449 unique ETFs. (Autex Block Data 4/2/13)

 US Equity ETFs: Equity linked ETF flows continued to be robust as we moved through March. SPY(SPDR S&P 500 ETF TRUST), IVV (ISHARES CORE S&P 500 ETF), and VOO(VANGUARD S&P 500 ETF) all saw net inflows for the last month. Some notable selling has been seen in Midcap funds including IJH (ISHARES CORE S&P MIDCAP ETF) and MDY (SPDR S&P MIDCAP 400 ETF TRST) over the month. Growth funds including VUG (Vanguard Growth ETF), and IWO (ISHARES RUSSELL 2000 GROWTH) both saw a significant imbalance from the buy side.

Fixed Income ETFs: Overall selling for the month in treasury funds highlighted by MINT (PIMCO ENHANCED SHORT MATURIT), BSV (VANGUARD SHORT-TERM BOND ETF), and BIL (SPDR BARCLAYS 1-3 MONTH T-BI). High Yield funds continued to see inflows specifically in SJNK (SPDR BARCLAYS SHORT-TERM HIG), BSJG(GUGGENHEIM BULLETSHARES 2016), HYS(PIMCO 0-5 YEAR H/Y CORP BOND), and JNK (SPDR BARCLAYS HIGH YIELD BD).Corporate Bond ETFs saw steady inflows; specifically LQD (ISHARES IBOXX INV GR CORP BD), VCIT (VANGUARD INT-TERM CORPORATE), and VCSH (VANGUARD S/T CORP BOND ETF).  Floating Rate funds saw continued inflows specifically in FLOT (ISHARES FLOATING RATE NOTE), and FLRN (SPDR BARCLAYS INVESTMENT GRA). Rounding out fixed income; flows remain strong into BKLN (POWERSHARES SENIOR LOAN), and shorter duration TIPS including  VTP(VANGUARD SHORT-TERM TIPS) and TDTT (FLEXSHARES IBOXX 3-YEAR TARG).

International ETFs: Broad international inflows for the month headed into EEM (ISHARES MSCI EMERGING MKT IN), EEMV (ISHARES MSCI EMERG MKT MIN VOL), EWX (SPDR S&P EMERGING MKTS SMALL), VEA (VANGUARD MSCI EAFE ETF), and VPL (VANGUARD FTSE PACIFIC ETF). Broad outflows for the month included DGS (WISDOMTREE EM SMALL CAP), and ACWX (ISHARES MSCI ACWI EX US INDX).  For individual countries we saw inflows into EWL (ISHARES MSCI SWITZERLAND CAP), EWG (ISHARES MSCI GERMANY INDEX), EWY (ISHARES MSCI SOUTH KOREA CAP), DXJ (WISDOMTREE JAPAN HEDGED EQ), EWA (ISHARES MSCI AUSTRALIA INDEX), and FXI (ISHARES FTSE CHINA 25 INDEX).  Sellers were seen in INDA (ISHARES MSCI INDIA INDEX FND), EWP (ISHARES MSCI SPAIN CAPPED IN), and EWS (ISHARES MSCI SINGAPORE).

Commodity ETFs/ETNs: Gold linked funds saw their share of sellers for the Month of March. IAU (ISHARES GOLD TRUST), GLD (SPDR GOLD TRUST), and GDX (MARKET VECTORS GOLD MINERS) all saw pressure from sellers in the last 30 days.

Sector ETFs: For sector funds we saw money rotate into XLU (UTILITIES SELECT SECTOR SPDR), XLP (CONSUMER STAPLES SPDR), FXG (FIRST TRUST CONSUMER STAPLES), and IYC (ISHARES DJ US CNSMER SERVICE). Selling was seen in XLF(FINANCIAL SELECT SECTOR SPDR), XRT (SPDR S&P RETAIL ETF),and IYM (ISHARES DJ US BASIC MATERIAL).

Alternative/Specialty ETFs:  The yield oriented funds continue to garner assets. Some notable names over the last month include, MDIV (FT NASDAQ US MA DIVERS INC), VIG (VANGUARD DIVIDEND APPREC ETF), DVY (ISHARES DJ SELECT DIVIDEND), and SDY (SPDR S&P DIVIDEND ETF). Demand was seen for Agriculture linked funds including MOO (MARKET VECTORS AGRIBUSINESS) as well as natural resources as seen in GUNR (FLEXSHARES GLOBAL UPSTREAM N).

You may reach Michael directly at mcafiero@knight.com

This communication has been prepared by the trading, market making and/or the sales personnel (“Trader”) of Knight Capital Americas, L.P. (“KCA”), a subsidiary of Knight Capital Group, Inc. (“Knight”). The information contained herein may be the personal perspective of the Knight Trader and/or commentary compiled from public sources. The information from public sources is believed to be reliable but Knight does not guarantee or represent its accuracy or completeness. The opinions and views expressed by the individual trader do not represent the opinions and views of Knight, its affiliates, officers or other personnel. No responsibility and no express or limited liability is assumed jointly or individually for any losses or damages arising out of errors, omissions, delays in the receipt of the information, or any actions taken in reliance upon the information. The information contained herein does not provide investment advice and is not a sufficient basis for an investment decision. No information contained herein should be construed as a solicitation or an offer to buy or sell any security or product. Indications of interest, opinions or views expressed by the trader are not firm orders or quotes and may not be current. No responsibility is assumed to maintain and/or update the information. KCA most likely makes a market in the securities mentioned in this document and its personnel, including those involved in the preparation or issuance of the material may take a position or action which may be inconsistent with the opinions and views expressed therein. Questions regarding the information presented herein or a request for a copy of this document should be referred to your Knight Representative.

Knight Capital Group, Inc. (“Knight”) is comprised of trading and related entities under common control such as Knight Capital Americas, L.P., Knight Capital Europe Limited (a U.K. registered broker-dealer), Knight Capital Asia Limited (a Hong Kong registered broker-dealer), Hotspot FX LLC and Knight Execution and Clearing Services LLC.

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Marching Forward

Michael Cafiero – Vice President ETF Trading – Knight Capital Americas, L.P.

 Knight ETF Trading: With the market continuing to push all-time highs we continue to see ETF trading volumes rise in line with the rising markets. Broad indices continue to see robust volumes as international names are seeing a spike in more granular products. Fixed Income investors continue to stay short on the curve.

 Flows: For the month of February Knight ETF Trading had accounted for 15.07% of advertised ETF block shares traded trading in 1,454 unique ETFs. (Autex Block Data 3/1/13)

 US Equity ETFs: For the month flows were heavy into the S&P 500 as seen in a buy side imbalance of SPY (SPDR S&P 500 ETF TRUST) as well as in IVV (SPDR S&P 500 ETF Trust). Flows out of the NASDAQ linked indices were seen throughout the month highlighted by QQQ(POWERSHARES QQQ NASDAQ 100) and QLD (PROSHARES ULTRA QQQ). Growth led value from a buy side imbalance into IWF (ISHARES RUSSELL 100 GROWTH) as well as VUG (VANGUARD GROWTH ETF). Small cap tracking funds dominated inflows which included IJR (ISHARES CORE S&P SMALL CAP), VBK (VANGUARD SMALL CAP GROWTH ETF), and VBR (VANGUARD SMALL CAP VALUE ETF). EUSA (ISHARES MSCI USA INDEX FUND) rounded out the domestic activity for the month with a significant balance to the buy side.

Fixed Income ETFs: There had been plenty of buying in fixed income funds albeit on the short end of the curve. We saw selling of LQD (ISHARES IBOXX INV GR CORP BD), and VCLT (VCLT VANGUARD LONG-TERM CORP BOND) with buyers moving into VCSH VANGUARD S/T CORP BOND ETF) and SCPB (SPDR BARCLAYS SHORT TERM COR). Flows remained mixed in High Yield with buyers of HYG (ISHARES IBOXX H/Y CORP BOND), and GHYG (ISHARES GLOBAL HIGH YIELD) while selling was seen of JNK (SPDR BARCLAYS HIGH YIELD BD). Broad bond funds saw their share of flows especially in AGG (ISHARES CORE TOTAL US BOND) and BOND (PIMCO TOTAL RETURN ETF).

International ETFs: Outflows for emerging market funds VWO (VANGUARD FTSE EMERGING MARKETS) and EEM (ISHARES MSCI EMERGING MKT IN) led the way however the minimum volatility funds continue to see their share of inflows especially EEMV(ISHARES MSCI EMERG MKT MIN VOL ). Flows were two sided in EAFE linked funds including VEA (VANGUARD MSCI EAFE ETF), SCZ (ISHARES MSCI EAFE SMALL CAP) and EFA (ISHARES MSCI EAFE INDEX FUND).  For individual country funds flows were heavy into DXJ (WISDOMTREE JAPAN HEDGED EQ) and EWJ (ISHARES MSCI JAPAN INDEX FD). Outflows were seen in FXI (ISHARES FTSE CHINA 25 INDEX ), EWZ (ISHARES MSCI BRAZIL CAPPED I), and EWG (ISHARES MSCI GERMANY INDEX).

Commodity ETFs/ETNs: Flows were largely two sided in most precious metal funds. GLD (SPDR GOLD TRUST) saw greater sell side flow while SLV (ISHARES SILVER TRUST) saw a slight positive imbalance to the buy side. Currency funds continued to see inflows into FXY (CURRENCYSHARES JAPANESE YEN) and FXB (CURRENCYSHARES BRITISH POUND).

Sector ETFs: For the last month we saw significant inflows into many sector funds. Funds included, XLF (FINANCIAL SELECT SECTOR SPDR), XLI (INDUSTRIAL SELECT SECT SPDR), XLV (HEALTH CARE SELECT SECTOR), IYJ I(SHARES DJ US INDUSTRIAL SEC), IXJ (ISHARES S&P GLBL HEALTHCARE), IYH (ISHARES DJ US HEALTHCARE SEC), and GNR (SPDR S&P GL NAT RESOURCES). XLE (ENERGY SELECT SECTOR SPDR) was the only fund where we saw notable outflows.

Alternative/Specialty ETFs:  Plenty of buying seen in yield oriented funds including IDV (ISHARES DJ INTL SELECT DIV), SDY (SPDR S&P DIVIDEND ETF), and DVY (ISHARES DJ SELECT DIVIDEND). We have seen outflows in preferred linked funds highlighted by a sell side imbalance of PFF (ISHARES S&P PREF STK INDX FN).  Low volatility funds continue to see a significant amount of positive flows specifically into SPLV (POWERSHARES S&P 500 LOW VOLA) as many have begun to predict a possible rise in liquidity.

You may reach Michael directly at mcafiero@knight.com

This communication has been prepared by the trading, market making and/or the sales personnel (“Trader”) of Knight Capital Americas, L.P. (“KCA”), a subsidiary of Knight Capital Group, Inc. (“Knight”). The information contained herein may be the personal perspective of the Knight Trader and/or commentary compiled from public sources. The information from public sources is believed to be reliable but Knight does not guarantee or represent its accuracy or completeness. The opinions and views expressed by the individual trader do not represent the opinions and views of Knight, its affiliates, officers or other personnel. No responsibility and no express or limited liability is assumed jointly or individually for any losses or damages arising out of errors, omissions, delays in the receipt of the information, or any actions taken in reliance upon the information. The information contained herein does not provide investment advice and is not a sufficient basis for an investment decision. No information contained herein should be construed as a solicitation or an offer to buy or sell any security or product. Indications of interest, opinions or views expressed by the trader are not firm orders or quotes and may not be current. No responsibility is assumed to maintain and/or update the information. KCA most likely makes a market in the securities mentioned in this document and its personnel, including those involved in the preparation or issuance of the material may take a position or action which may be inconsistent with the opinions and views expressed therein. Questions regarding the information presented herein or a request for a copy of this document should be referred to your Knight Representative.

Knight Capital Group, Inc. (“Knight”) is comprised of trading and related entities under common control such as Knight Capital Americas, L.P., Knight Capital Europe Limited (a U.K. registered broker-dealer), Knight Capital Asia Limited (a Hong Kong registered broker-dealer), Hotspot FX LLC and Knight Execution and Clearing Services LLC.

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Mid February ETF Round Up

Michael Cafiero – Vice President ETF Trading – Knight Capital Americas, L.P.

Knight ETF Trading: Year to date the market maintains its upward trajectory so it has been difficult at times for tactical traders to have much conviction. We continue to see ETF flows which seek yield along with some newer names see an uptick in flows as the S&P 500 Index has risen this year nearly 7% year to date.

Flows: Month to date Knight ETF Trading has accounted for 14.52% of advertised ETF block shares traded trading in 1,430 unique ETFs. (Autex Block Data 2/19/13)

US Equity ETFs: Continuing to see limited conviction despite the continued market rally flows have been two sided for this month in SPY (SPDR S&P 500 ETF TRUST), IVV (ISHARES CORE S&P 500 ETF), and VTI (VANGUARD US TOTAL STOCK MKT). Heavier buy side flows in SDS (PROSHARES ULTRASHORT S&P500) and SSO (PROSHARES ULTRA S&P500) may suggest that bears are here and waiting for a pullback. Overall flows were better to the buy side for names like IWM (ISHARES RUSSELL 2000), IWF (ISHARES RUSSELL 1000 GROWTH), and VV (VANGUARD LARGE-CAP ETF). Sell side flows had a significant imbalance this month so far as seen in QQQ (POWERSHARES QQQ NASDAQ 100).

Fixed Income ETFs: Fixed income names continue to garner assets highlighted in strong buy side flows into BND (VANGUARD TOTAL BOND MARKET), and AGG (ISHARES CORE TOTAL US BOND M). To note we have start to see some selling particularly in the high yield space as seen in mixed flows of HYG (ISHARES IBOXX H/Y CORP BOND) and sell side flows of JNK (SPDR BARCLAYS HIGH YIELD BD). Corporate fixed income flows are staying to the short end of the curve as seen in buy side flows of VCSH (VANGUARD S/T CORP BOND ETF) and outflows of VCLT(VANGUARD LONG-TERM CORP BOND). We are continuing to see steady demand for bank loan funds especially in BKLN (POWERSHARES SENIOR LOAN).  Notable sell side flows included IGOV (ISHARES S&P/CITI INT TRE BND), TIP (ISHARES BARCLAYS TIPS BOND), and EMB (ISHARES JP MORGAN EM BOND FD). Buy side flows were seen in VTIP (VANGUARD SHORT-TERM TIPS), MUB (ISHARES S&P NAT AMT-FREE MUN), HYD (MARKET VECTORS HI YLD MUNI), STPZ (PIMCO 1-5 YEAR US TIPS INDEX), and BOND (PIMCO TOTAL RETURN ETF).

International ETFs: Mixed flows seen in emerging markets funds (EEM – ISHARES MSCI EMERGING MKT IN and VWO VANGUARD FTSE EMERGING MARKE) over the last several weeks however there has been continued demand in other international names including VEA (VANGUARD MSCI EAFE ETF), VEU (VANGUARD FTSE ALL-WORLD EX-U), and ACWX (ISHARES MSCI ACWI EX US INDX). For individual countries flows have been steady into EWJ (ISHARES MSCI JAPAN INDEX FD), DXJ (WISDOMTREE JAPAN HEDGED EQ), EPU (ISHARES MSCI PERU CAPPED), and EWT (ISHARES MSCI TAIWAN INDEX FD). Country funds seeing outflows included EWG (ISHARES MSCI GERMANY INDEX), EWS (ISHARES MSCI SINGAPORE) and EPI (WISDOMTREE INDIA EARNINGS).

Currency and Commodity ETFs/ETNs: Hard to get an idea of the direction in gold and silver as flows were mixed in both GLD(SPDR GOLD TRUST), IAU(ISHARES GOLD TRUST), and SLV(ISHARES SILVER TRUST). To note PPLT (ETFS PLATINUM TRUST) saw strong buy side flows over the last several weeks. For currency funds we saw inflows into FXY (CURRENCYSHARES JAPANESE YEN) and FXB (CURRENCYSHARES BRITISH POUND) with outflows of UUP (POWERSHARES DB US DOL IND BU).

Sector ETFs: Buyers for the month in XLK (TECHNOLOGY SELECT SECT SPDR), XLF (FINANCIAL SELECT SECTOR SPDR), and RGI(GUGGENHEIM S&P 500 EQUAL WEI) while we saw sellers in NUCL(ISHARES S&P GBL NUCLEAR ENGY). FAA(GUGGENHEIM AIRLINE ETF), and IXC (ISHARES S&P GLBL ENERGY SECT).

Alternative/Specialty ETFs:  REITs have seen continued inflows including FFR(FT FTSE EPRA/NAREIT REAL EST), FTY(ISHARES FTSE NAREIT REAL EST), and ROOF (IQ US REAL ESTATE SMALL CAP). Yield oriented funds have also seen there share highlighted by MDIV(FT NASDAQ US MA DIVERS INC), SDIV (GLOBAL X SUPERDIVIDEND ETF), and VIG (VANGUARD DIVIDEND APPREC ETF).

You may reach Michael directly at mcafiero@knight.com

This communication has been prepared by the trading, market making and/or the sales personnel (“Trader”) of Knight Capital Americas, L.P. (“KCA”), a subsidiary of Knight Capital Group, Inc. (“Knight”). The information contained herein may be the personal perspective of the Knight Trader and/or commentary compiled from public sources. The information from public sources is believed to be reliable but Knight does not guarantee or represent its accuracy or completeness. The opinions and views expressed by the individual trader do not represent the opinions and views of Knight, its affiliates, officers or other personnel. No responsibility and no express or limited liability is assumed jointly or individually for any losses or damages arising out of errors, omissions, delays in the receipt of the information, or any actions taken in reliance upon the information. The information contained herein does not provide investment advice and is not a sufficient basis for an investment decision. No information contained herein should be construed as a solicitation or an offer to buy or sell any security or product. Indications of interest, opinions or views expressed by the trader are not firm orders or quotes and may not be current. No responsibility is assumed to maintain and/or update the information. KCA most likely makes a market in the securities mentioned in this document and its personnel, including those involved in the preparation or issuance of the material may take a position or action which may be inconsistent with the opinions and views expressed therein. Questions regarding the information presented herein or a request for a copy of this document should be referred to your Knight Representative.

Knight Capital Group, Inc. (“Knight”) is comprised of trading and related entities under common control such as Knight Capital Americas, L.P., Knight Capital Europe Limited (a U.K. registered broker-dealer), Knight Capital Asia Limited (a Hong Kong registered broker-dealer), Hotspot FX LLC and Knight Execution and Clearing Services LLC.

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2013 ETF Trading Kick Off

Michael Cafiero – Vice President ETF Trading – Knight Capital Americas, L.P.

Knight ETF Trading:  2013 has been off to a quick start as the markets reap the benefit of continued liquidity being added by central backs and a solid start to earnings season. Month to date Through 1/22/13, the DJIA jumped 4.46% , the S&P 500 inched ahead at 4.46%, and the Nasdaq followed with a jump of 4.10%. ETF flows were heavy as we start off the New Year.

Flows: Month to date Knight has accounted for 14.05% of advertised ETF block shares traded trading in 1,213 unique ETFs. (Autex Block Data 1/22/13)

US Equity ETFs: As the fund which started it all  nears its 20^th birthday; SPY (SPDR S&P 500 ETF TRUST) saw flows slightly to the sell side as RSP (GUGGENHEIM S&P 500 EQUAL WEI), and IVV (ISHARES CORE S&P 500 ETF) saw slight buy side flows since the beginning of the New Year. Across the board there was plenty of new fund flows into funds including VTI (VANGUARD US TOTAL STOCK MKT), VV (VANGUARD LARGE-CAP ETF), and IWM (ISHARES RUSSELL 2000). Flows were two sided but quite heavy for QQQ (POWERSHARES QQQ NASDAQ 100)

Fixed Income ETFs: Flows were heavy in fixed income as we started the New Year. Taking a look at the broad fixed income funds; AGG (ISHARES CORE TOTAL US BOND M), and BND (VANGUARD TOTAL BOND MARKET) saw significant two sided flows in the last two weeks. Treasuries saw heavy flows as MINT (PIMCO ENHANCED SHORT MATURIT) saw two sided, while BIV (VANGUARD INTERMEDIATE-TERM B), SHY (ISHARES BARCLAYS 1-3 YEAR TR), BIL (SPDR BARCLAYS 1-3 MONTH T-BI)  and IEI (ISHARES BARCLAYS 3-7 YEAR) all saw sell side flow. Corporate bond funds saw significant inflows highlighted by CORP (PIMCO INV GRADE CORP BD ETF), CSJ (ISHARES BARCLAYS 1-3 YEAR CR), VCIT (VANGUARD INT-TERM CORPORATE), and LQD (LQD ISHARES IBOXX INV GR CORP BD). High Yield flows were mixed however SJNK (SPDR BARCLAYS SHORT-TERM HIG) did see buy side flows. Rounding out fixed income two emerging market debt funds both saw heavy buy side flows which included ELD (WISDOMTREE EMRG MKTS DEBT) and EMB (ISHARES JP MORGAN EM BOND FD).

International ETFs: Continued buying as seen in late 2012 was essentially in most international funds including ACWI (ISHARES MSCI ACWI INDEX FUND), EFA (ISHARES MSCI EAFE INDEX FUND), FEZ (SPDR EURO STOXX 50 ETF) and VEA (VANGUARD MSCI EAFE ETF). Emerging market funds continue to see significant inflows; including VWO (VANGUARD FTSE EMERGING MARKE), and IEMG (ISHARES CORE MSCI EMERGING). Also significant buy side flows for the month so far in specialty emerging markets funds including; DEM (WISDOMTREE EMG MKTS EQ INCOM), PIE (POWERSHARES DWA EM-MK TC LDR), ECON (EGSHARES EM CONSUMER ETF), DGS (WISDOMTREE EM SMALL CAP), and PXH (POWERSHARES FTSE RAFI EM MKT). Japan funds have seen some sizeable inflows including EWJ (ISHARES MSCI JAPAN INDEX FD) and DXJ (WISDOMTREE JAPAN HEDGED EQ).

Currency and Commodity ETFs/ETNs: Commodity metal flows have been mixed as seen in two sided flows for SLV ISHARES SILVER TRUST and GLD SPDR GOLD TRUST while buy side flows were seen in PALL (ETFS PHYSICAL PALLADIUM SHAR), IAU (ISHARES GOLD TRUST) and DGL (POWERSHARES DB GOLD FUND). To note natural gas saw sell side flows of UNG (US NATURAL GAS FUND LP), while currency funds were headlined by outflows of FXE (CURRENCYSHARES EURO TRUST).

Sector ETFs: For the New Year we have seen sector rotations of inflows into XLF (FINANCIAL SELECT SECTOR SPDR), IYF (ISHARES DJ US FINANCIAL SECT), XLI (INDUSTRIAL SELECT SECT SPDR), IYJ (ISHARES DJ US INDUSTRIAL SEC), and XLB (MATERIALS SELECT SECTOR SPDR). Money flowed from IXN (ISHARES S&P GLBL TECH SECTOR), XLY (CONSUMER DISCRETIONARY SELT), and XLU (UTILITIES SELECT SECTOR SPDR).

Alternative/Specialty ETFs:  Many continue to seek yield as we saw last year as seen in flows into SDIV (GLOBAL X SUPERDIVIDEND ETF), VIG (VANGUARD DIVIDEND APPREC ETF), and SDY (SPDR S&P DIVIDEND ETF). Preferred funds gained flows as seen in PGF (POWERSHARES FINANCIAL PREFRD), PFF (ISHARES S&P PREF STK INDX FN), and PFXF (MARKET VECTORS PREF EX-FINAN).

You may reach Michael directly at mcafiero@knight.com

This communication has been prepared by the trading, market making and/or the sales personnel (“Trader”) of Knight Capital Americas, L.P. (“KCA”), a subsidiary of Knight Capital Group, Inc. (“Knight”). The information contained herein may be the personal perspective of the Knight Trader and/or commentary compiled from public sources. The information from public sources is believed to be reliable but Knight does not guarantee or represent its accuracy or completeness. The opinions and views expressed by the individual trader do not represent the opinions and views of Knight, its affiliates, officers or other personnel. No responsibility and no express or limited liability is assumed jointly or individually for any losses or damages arising out of errors, omissions, delays in the receipt of the information, or any actions taken in reliance upon the information. The information contained herein does not provide investment advice and is not a sufficient basis for an investment decision. No information contained herein should be construed as a solicitation or an offer to buy or sell any security or product. Indications of interest, opinions or views expressed by the trader are not firm orders or quotes and may not be current. No responsibility is assumed to maintain and/or update the information. KCA most likely makes a market in the securities mentioned in this document and its personnel, including those involved in the preparation or issuance of the material may take a position or action which may be inconsistent with the opinions and views expressed therein. Questions regarding the information presented herein or a request for a copy of this document should be referred to your Knight Representative.

Knight Capital Group, Inc. (“Knight”) is comprised of trading and related entities under common control such as Knight Capital Americas, L.P., Knight Capital Europe Limited (a U.K. registered broker-dealer), Knight Capital Asia Limited (a Hong Kong registered broker-dealer), Hotspot FX LLC and Knight Execution and Clearing Services LLC.

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2012 ETF Trading Wrap Up

2012 ETF Trading Wrap Up

 Michael Cafiero – Vice President ETF Trading – Knight Capital Americas, L.P.

 Knight ETF Trading:  With the fiscal cliff headlines dominating the final weeks of 2012, the US equity market broad indices missed out on taking their well-deserved “victory lap”. After all many wouldn’t have expected this considering the slow US economic growth, pressures for the Euro zone, and a slowing China.  For 2012 we saw the S&P 500 gain 13.4%, the Dow Jones Industrial Average rise 7.3%, and NASDAQ rise near 16%. Considering such movement in broad based indices it is no wonder why the entire ETF landscape saw significant inflows throughout the year.

 Flows: Recapping ETF trading volumes for 2012, Knight accounted for 15.59% of advertised ETF block shares traded trading in 1,609 unique ETFs. (Autex Block Data 1/2/13)

 US Equity ETFs: For the final weeks in 2012 we saw flows slanted to the buy side for all S&P 500 linked funds including; SPY (SPDR S&P 500 ETF TRUST), IVV (ISHARES CORE S&P 500 ETF), and RSP (GUGGENHEIM S&P 500 EQUAL WEIGHT). Mid-Caps dominated inflows for the last two months as we saw strong inflows into; IJH (ISHARES CORE S&P MIDCAP ETF), MDY (SPDR S&P MIDCAP 400 ETF TRST), and MVV (PROSHARES ULTRA MIDCAP400). Growth funds including VUG (VANGUARD GROWTH ETF), IWZ (ISHARES RUSSELL 3000 GROWTH) and value funds IWD (ISHARES RUSSELL 1000 VALUE) and VTV (VANGUARD VALUE ETF) saw an imbalance to the buy side. Growth however did inch ahead in terms of overall flows. In the final two months QQQ (POWERSHARES QQQ NASDAQ 100) did see strong but two sided flows.

Fixed Income ETFs: A tremendous year in terms of fixed income flows as both BND (VANGUARD TOTAL BOND MARKET) and AGG (ISHARES CORE TOTAL US BOND) saw strong buy side flows. BOND (BOND PIMCO TOTAL RETURN ETF) did as well as we have now see a consistent demand for actively managed fixed income funds. High Yield funds continued to see solid flows as 2012 wrapped up highlighted by HYG (ISHARES IBOXX H/Y CORP BOND), EMHY (ISHARES EM HY BOND), JNK (SPDR BARCLAYS HIGH YIELD BD), and SJNK (SPDR BARCLAYS SHORT-TERM HIG). Corporate bond flows were mixed as seen in buy side flows into CIU (ISHARES INTERMEDIATE CREDIT), VCSH (VANGUARD S/T CORP BOND ETF), BSCH (GUGGENHEIM BULLETSHARES 2017), while some were exiting LQD (ISHARES IBOXX INV GR CORP BD). Treasuries saw sell side flows albeit quite heavy in funds including BIL (SPDR BARCLAYS 1-3 MONTH T-BI) and IEI (ISHARES BARCLAYS 3-7 YEAR). Flows were two sided buy very heavy in MINT (PIMCO ENHANCED SHORT MATURITY). TIP funds which saw buy side flows included, ISHG ISHARES S&P/CITI 1-3 INT TRS and VTIP VANGUARD SHORT-TERM TIPS, while both TIP (ISHARES BARCLAYS TIPS BOND), and TDTT (FLEXSHARES IBOXX 3-YEAR TARG) saw mixed flows. Rounding out fixed income buy side flows were seen in BKLN (POWERSHARES SENIOR LOAN), MUNI (PIMCO INTERMEDIATE MUNICIPAL) and EMB (ISHARES JP MORGAN EM BOND FD) while selling was seen in CWB(SPDR BARCLAYS CONVERTIBLE SE).

International ETFs: Emerging market funds all saw flows from the buy side for both November and December as seen in EEM (ISHARES MSCI EMERGING MKT IN), VWO (VANGUARD MSCI EMERGING MARKETS), DEM (WISDOMTREE EMG MKTS EQ INCOME), and very heavy into EEMV (ISHA MSCI EMERG MKT MIN VOL) ,IEMG (ISHARES CORE MSCI EMERGING) and DGS(WISDOMTREE EM SMALL CAP). Broad international names all saw buy side flows as we headed into the New Year including; EFA (ISHARES MSCI EAFE INDEX FUND), VEA (VANGUARD MSCI EAFE ETF), VXUS (VANGUARD TOTAL INTL STOCK ETF), VGK (VANGUARD MSCI EUROPEAN ETF), and VPL (VANGUARD MSCI PACIFIC ETF). For individual countries inflows were seen in EWA (ISHARES MSCI AUSTRALIA INDEX), EWP (ISHARES MSCI SPAIN INDEX FD), EWG (ISHARES MSCI GERMANY INDEX) while outflows were eminent in EWM (ISHARES MSCI MALAYSIA), EWC (ISHARES MSCI CANADA), and RSX (MARKET VECTORS RUSSIA ETF). Rounding out international flows strong two sided flows were seen in EWZ (ISHARES MSCI BRAZIL).

Currency and Commodity ETFs/ETNs: Selling in GSG (ISHARES S&P GSCI COMMODITY INDEX) in the last two months signaled stronger sell side flows on most commodity linked funds. As the year wrapped up and metals tailed off we did see selling in most gold names including GLD (SPDR GOLD TRUST), IAU (ISHARES GOLD TRUST), and GDXJ (Market Vectors Ju Gld). Silver on the other hand saw mixed two sided flows as seen in SLV (ISHARES SILVER TRUST). Sellers were seen in oil funds including USO (UNITED STATES OIL FUND LP), and OIH (MARKET VECTORS OIL SERVICE). Selling was also seen in the currency space specifically in UUP (POWERSHARES DB US DOL IND BULLISH).

Sector ETFs: For November and December we saw sectors funds have a buy side rotation into IXG (ISHARES S&P GLBL FINL SECTOR), IYW (ISHARES DJ US TECHNOLOGY SEC) and, IYK (ISHARES DJ US CONSMR GOODS). Sellers were seen rotating ouy of XLF (FINANCIAL SELECT SECTOR SPDR), IYE (ISHARES DJ US ENERGY SECTOR), XES (SPDR OIL & GAS EQUIP & SERV), and XLU (UTILITIES SELECT SECTOR SPDR).

Alternative/Specialty ETFs:  REIT funds continued to see buy side flows as 2012 wrapped up with inflows into VNQ (VANGUARD REIT ETF), and IYR (ISHARES DJ US REAL ESTATE). Also a strong ending for Master Limited Partnerships as seen in buy side flows into AMLP (ALERIAN MLP ETF). Yield oriented funds also saw inflows specifically into SDIV (GLOBAL X SUPERDIVIDEND ETF) and DVY (ISHARES DJ SELECT DIVIDEND).

You may reach Michael directly at mcafiero@knight.com

This communication has been prepared by the trading, market making and/or the sales personnel (“Trader”) of Knight Capital Americas, L.P. (“KCA”), a subsidiary of Knight Capital Group, Inc. (“Knight”). The information contained herein may be the personal perspective of the Knight Trader and/or commentary compiled from public sources. The information from public sources is believed to be reliable but Knight does not guarantee or represent its accuracy or completeness. The opinions and views expressed by the individual trader do not represent the opinions and views of Knight, its affiliates, officers or other personnel. No responsibility and no express or limited liability is assumed jointly or individually for any losses or damages arising out of errors, omissions, delays in the receipt of the information, or any actions taken in reliance upon the information. The information contained herein does not provide investment advice and is not a sufficient basis for an investment decision. No information contained herein should be construed as a solicitation or an offer to buy or sell any security or product. Indications of interest, opinions or views expressed by the trader are not firm orders or quotes and may not be current. No responsibility is assumed to maintain and/or update the information. KCA most likely makes a market in the securities mentioned in this document and its personnel, including those involved in the preparation or issuance of the material may take a position or action which may be inconsistent with the opinions and views expressed therein. Questions regarding the information presented herein or a request for a copy of this document should be referred to your Knight Representative.

Knight Capital Group, Inc. (“Knight”) is comprised of trading and related entities under common control such as Knight Capital Americas, L.P., Knight Capital Europe Limited (a U.K. registered broker-dealer), Knight Capital Asia Limited (a Hong Kong registered broker-dealer), Hotspot FX LLC and Knight Execution and Clearing Services LLC.

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September ETF Recap

Michael Cafiero – Vice President ETF Trading – Knight Capital Americas, L.P. 

Knight ETF Trading: Similar to what we saw in August, ETF inflows were concentrated in commodity linked funds as many wrapped up Q3 quite cautious despite the continued rally. Heading into the last quarter of the year all major indices have seen a strong rally in 2012. (DJIA +9.98% YTD, NASDAQ +19.62% YTD, and S&P 500 +14.5% YTD)

Flows: Recapping ETF volumes for the month of September, Knight accounted for 13.67% of advertised ETF block shares traded trading in 1,474 unique ETFs. (Autex Block Data 10/1/12)

US Equity ETFs: Flows for the S&P 500 were two sided for SPY (SPDR S&P 500 ETF Trust) however we did see some sellers in IVV (iShares S&P 500) and buyers of RSP (Guggenheim S&P 500 Equal Wt). The buy side favored growth throughout the month with flows heading into IWF (iShares Russell 1000 Growth), and VUG (Vanguard Growth ETF). Broad exposure demand was apparent in flows into UWM (ProShares Ultra Russell 2000) and IWM (iShares Russell 2000 Index). Rounding out domestic flows midcaps also saw strong inflows highlighted by IJH (iShares S&P Midcap 400) and MDY (SPDR S&P Mid 400 Equity).

Fixed Income ETFs: Broad fixed income had mixed flows into AGG (iShares Barclays Aggregated) and BND (Vanguard Total Bond). BOND (PIMCO Total Return ETF) saw inflows albeit modest for the month. Notable outflows were seen in the high yield space highlighted by JNK (SPDR Barclays Capital High Yield) while HYG (iShares IBOXX H/Y Corp Bond) saw more mixed flows. BKLN (Powershares Senior Loan) and FLOT (iShares Floating Rate Note) both saw significant buy side flows on the month as did VGSH (Vanguard Short-Term Gov Bond Fund).  For corporate bond funds flows were mixed across LQD (iShares IBOXX Inv Grade Corp Bond), and VCIT (Vanguard Int-Term Corporate). Flows were further balanced to the buy side for CIU (iShares Intermediate Credit) and VCSH (Vanguard S/T Corp Bond Fund). Flows were positive for the bullet share corporate products as seen in flows into BSCI (Guggenheim Bullet Shares 2018 Corp Bond Fund), BSCG (Guggenheim Bullet Shares 2016 Corp Bond Fund) and BSJH (Guggenheim Bullet Shares 2017 Corp Bond Fund). For treasuries as expected most funds saw two sided flows or leaned towards the sell side as expected for a month like September.

International ETFs: Same scenario of what we saw in August was here once again in September as we saw a significant imbalance to the buy side in several broad international ETFs including  ACWX (iShares MSCI ACWI), VEU (Vanguard FTSE All World Ex US), and EFA (iShares MSCI EAFE Index Fund). Emerging market funds saw their share of inflows including EEM (iShares MSCI Emerging Market Index), VWO (Vanguard Emg Mkts Index) and DEM (Wisdomtree Emg Mkts Eq Income). For single country funds buyers were heading into THD (iShares MSCI Thailand Invest), EWS (iShares MSCI Singapore) and CHFX (Wisdomtree China Dividend Ex Financials). Sellers were seen in many single countries including; MCHI (iShares MSCI China Index Fd), FKO (First Trust South Korea), EWJ (iShares MSCI Japan Index Fund), EWM (iShares MSCI Malaysia), EWP (iShares MSCI Spain Index Fund), and EWD (iShares MSCI Sweden Index Fund).

Currency and Commodity ETFs/ETNs: Once again a large amount of flow headed into GLD (SPDR Gold Trust), and IAU (iShares Gold Trust). Unlike August silver saw significant buy side flows of SLV (iShares Silver Trust), and AGQ (ProShares Ultra Silver). Rounding out precious metals PALL (ETFS Physical Palladium) also saw its share of buy side flows for the month of August. Selling was seen in GSG (iShares S&P GSCI Commodity-Indexed) as broad based commodity exposure was out of favor for the month while particularly we saw selling in CORN (Teucrium Corn Fund). Regarding oil we saw two sided flows in OIL (iPath S&P GSCI Crude Oil Total Return).

Sector ETFs: For the month of September we saw buying in the following sector funds; GNR (SPDR S&P Gl Nat Resources), CUT (Guggenheim Timber ETF), IYC (iShares DJ US Consumer Service) and FXR (First Trust Indst/Producers). The rotation into these funds can be attributed the selling of IYZ (iShares DJ US Telecommunications), XLY (Consumer Discretionary Select Sector) and VCR (Vanguard Consumer Discretionary).

Alternative/Specialty ETFs:  Plenty of continued buying in specialty yield oriented products such as SDIV (Global X Superdividend ETF), VIG (Vanguard Dividend Appreciation ETF), and PFF (iShares S&P Pref Stk Index Fund). We also saw increased buy side activity in MDIV (FT NASDAQ US MA DIVERS INCOME), DVYE (ISHARES EMERGING MKT DVD), and EMLP (FIRST TRUST NORTH AMERICAN ENERGY).  AMLP (Alerian MLP ETF), and YMLP (Yorkville High Income MLP) saw buy side flows as MLPs continue to see interest. REIT fund activity was mixed as seen in slightly better buy side flows into REM (iShares FTSE NAREIT MORTGAGE). The tepid volatility in the market for most of the month led to two sided flows in VXX (iPath S&P ST Vix Futures).

You may reach Michael directly at mcafiero@knight.com

This communication has been prepared by the trading, market making and/or the sales personnel (“Trader”) of Knight Capital Americas, L.P. (“KCA”), a subsidiary of Knight Capital Group, Inc. (“Knight”). The information contained herein may be the personal perspective of the Knight Trader and/or commentary compiled from public sources. The information from public sources is believed to be reliable but Knight does not guarantee or represent its accuracy or completeness. The opinions and views expressed by the individual trader do not represent the opinions and views of Knight, its affiliates, officers or other personnel. No responsibility and no express or limited liability is assumed jointly or individually for any losses or damages arising out of errors, omissions, delays in the receipt of the information, or any actions taken in reliance upon the information. The information contained herein does not provide investment advice and is not a sufficient basis for an investment decision. No information contained herein should be construed as a solicitation or an offer to buy or sell any security or product. Indications of interest, opinions or views expressed by the trader are not firm orders or quotes and may not be current. No responsibility is assumed to maintain and/or update the information. KCA most likely makes a market in the securities mentioned in this document and its personnel, including those involved in the preparation or issuance of the material may take a position or action which may be inconsistent with the opinions and views expressed therein. Questions regarding the information presented herein or a request for a copy of this document should be referred to your Knight Representative.

Knight Capital Group, Inc. (“Knight”) is comprised of trading and related entities under common control such as Knight Capital Americas, L.P., Knight Capital Europe Limited (a U.K. registered broker-dealer), Knight Capital Asia Limited (a Hong Kong registered broker-dealer), Hotspot FX LLC and Knight Execution and Clearing Services LLC.

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August ETF Recap

August ETF Recap

Michael Cafiero – Vice President ETF Trading – Knight Capital Americas, L.P.

Knight ETF Trading: A quiet August as expected however major indices were positive on the month including the DJIA +.64%, SPX +1.88%, and NASDAQ + 4.34%. Despite the record low exchange traded stock volume seen in August; the value traded remains nearly the same. This can be attributed to higher equity prices and is certainly viewed as a silver lining amongst traders. ETF volume was moderate on the month however there were sizable inflows into Gold, Emerging Markets, Corporate Bonds, and Volatility Linked Funds.

Flows: Recapping ETF volumes for the month of August, Knight accounted for 11.33% of advertised ETF block shares traded trading in 1,466 unique ETFs. (Autex Block Data 8/4/12)

US Equity ETFs: Despite the overall low share volume traded there were inflows of size into many broad based equity ETFs. VOO (Vanguard S&P 500 ETF); SPY (SPDR S&P 500 ETF Trust); IVW (iShares S&P 500 Growth Index) all saw an imbalance of trading from the buy side. Other broad based indices included DIA (SPDR DJIA Trust); QQQ (PowerShares QQQ Nasdaq 100); and XLG (Guggenheim Russell Top 50 ETF) saw inflows as well.  Regarding the Russell 1k and 2k we saw flows into IWM (iShares Russell 2000) and buy side flows of IWF (iShares Russell 1000 Growth). One outflow to note was seen in OEF (iShares S&P 100 Index Fund).

Fixed Income ETFs:  While not the large size of what we saw in the early months of 2012, once again we are seeing significant flows into corporate bond ETFs including LQD (iShares IBOXX Inv Grade Corp Bd), VCSH (Vanguard S/T Corp Bond ETF), and VCIT (Vanguard Int-Term Corporate). High yield is also seeing some inflows of size highlighted by JNK (SPDR Barclays Capital High Yield), and SJNK (Short-Term High Yield). The buy side also had a positive imbalance of muni buying seen in MUB (iShares S&P Nat Amt-Free Muni) and buying in mortgage backed securities including MBB (iShares Barclays MBS Bond FD). Not much regarding treasury inflows however international treasuries saw activity specifically of inflows into BWX (SPDR Barclays Capital Intl).  Cash going to work was obvious from outflows in several treasury funds including BIL (SPDR Barclays Capital 1-3 Month), TLT (iShares Barclays 20+ Year TR), and TLO (SPDR Barclays Capital Long Term Treasury). Sizeable two sided flows were seen in BOND (PIMCO Total Return ETF) and in the inflation hedged TIP (iShares Barclays TIPS Bond).

International ETFs: A significant imbalance to the buy side was seen in several broad international ETFs including ACWX (iShares MSCI ACWI), VEU (Vanguard FTSE All World Ex US), CWI (SPDR MSCI ACWI EX-US) and EFA (iShares MSCI EAFE Index Fund). For individual countries we saw flows move into RSX (Market Vectors Russia ETF), EWY (iShares MSCI South Korea Ind), and EWA (iShares MSCI Australia Index).  Emerging markets saw mixed flows with inflows into VWO (Vanguard MSCI Emerging Markets) and outflows of EEM (iShares MSCI Emerging Market Index). Broad outflows were led by EEB (Guggenheim BRIC ETF), and VXUS (Vanguard Total Intl Stock).

Currency and Commodity ETFs/ETNs: Flows have been quite strong back into gold headlined by GLD (SPDR Gold Trust), and IAU (iShares Gold Trust). The same conviction cannot be had for Silver as flows have been heavy but two way as seen in SLV (iShares Silver Trust), and AGQ (ProShares Ultra Silver). Inflows into broad-based commodity exposure was seen throughout the month as seen in DBC (PowerShares DB Commodity Index) and more concentrated into DBA (PowerShares DB Agriculture Fund).  Commodity outflows were seen in OIH (market Vectors Oil Service), UNG (US Natural Gas Fund LP), and UCO (ProShares ULT DJ-UBS Crude Oil).

Sector ETFs: For the month of August sectors seeing inflows included XLB (Materials Select Sector SPDR), XLK (Technology Select Sector SPDR), XLE (Energy Select Sector SPDR), XHB (SPDR S&P Homebuilders ETF), and ITB (iShares DJ US Home Construction). A rotation was seen out of the following; VPU (Vanguard Utilities ETF), XLU (Utilities Select Sector SPDR), and VOX (Vanguard Telecom Service ETF).

Alternative/Specialty ETFs:  Plenty of activity during the month was seen in many specialty ETFs, mostly ones which incorporated ways of achieving yield. They included SDIV (Global X Superdividend ETF), VIG (Vanguard Dividend Appreciation ETF), HDV (iShares High Dividend EQ FD), and PFF (iShares S&P Pref Stk Index Fund). AMLP (Alerian MLP ETF), and YMLP (Yorkville High Income MLP) saw buy side flows as MLPs continue to see interest. With volatility at its lows we have seen inflows pick up for several VIX products including; UVXY (ProShares Ultra VIX ST Futures), VXX (iPath S&P 500 S/T FU ETN), and XIV (Velocityshares Inv Vix SH-TM).

You may reach Michael directly at mcafiero@knight.com

This communication has been prepared by the trading, market making and/or the sales personnel (“Trader”) of Knight Capital Americas, L.P. (“KCA”), a subsidiary of Knight Capital Group, Inc. (“Knight”). The information contained herein may be the personal perspective of the Knight Trader and/or commentary compiled from public sources. The information from public sources is believed to be reliable but Knight does not guarantee or represent its accuracy or completeness. The opinions and views expressed by the individual trader do not represent the opinions and views of Knight, its affiliates, officers or other personnel. No responsibility and no express or limited liability is assumed jointly or individually for any losses or damages arising out of errors, omissions, delays in the receipt of the information, or any actions taken in reliance upon the information. The information contained herein does not provide investment advice and is not a sufficient basis for an investment decision. No information contained herein should be construed as a solicitation or an offer to buy or sell any security or product. Indications of interest, opinions or views expressed by the trader are not firm orders or quotes and may not be current. No responsibility is assumed to maintain and/or update the information. KCA most likely makes a market in the securities mentioned in this document and its personnel, including those involved in the preparation or issuance of the material may take a position or action which may be inconsistent with the opinions and views expressed therein. Questions regarding the information presented herein or a request for a copy of this document should be referred to your Knight Representative.

Knight Capital Group, Inc. (“Knight”) is comprised of trading and related entities under common control such as Knight Capital Americas, L.P., Knight Capital Europe Limited (a U.K. registered broker-dealer), Knight Capital Asia Limited (a Hong Kong registered broker-dealer), Hotspot FX LLC and Knight Execution and Clearing Services LLC.

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July ETF Themes

Michael Cafiero – Vice President ETF Trading – Knight Capital Americas, L.P.

Knight ETF Trading: Earnings season mixed with Euro Zone Concerns are making July quite turbulent from what we have seen. As a result all major indices have seen loosing steaks as we moved toward the middle of the month. We are seeing ETF volume projections overall on the rise for this month despite July’s historic relatively tepid flows.

Flows: Recapping ETF volumes for the month of June, Knight accounted for 15.6% of advertised ETF block shares traded trading in 1,490 unique ETFs. (Autex Block Data 7/2/12)

US Equity ETFs: Broad domestic inflows have been seen in the last two weeks albeit modest in SPY (SPDR S&P 500 ETF TRUST), IWM (ISHARES RUSSELL 2000), and QQQ(POWERSHARES QQQ NASDAQ100). Small cap exposure has been un-favored from what we have seen so far this month by looking at outflows of TNA (DIREXION DLY SM CAP BULL 3X) and inflows heading into its inverse counterpart TZA(DIREXION DLY SM CAP BEAR 3X). Strong flows into VUG(VANGUARD GROWTH ETF) are signaling investor’s favor  towards growth.

Fixed Income ETFs: Once again we are seeing money flow back into the High Yield ETF offerings which saw major inflows in Q1 of 2012. HYG (ISHARES IBOXX H/Y CORP BOND), JNK (SPDR BARCLAYS CAPITAL HIGH), and SJNK (SPDR SHORT-TERM HIGH YIELD) all have seen significant inflows as appetites are once again looking for yield. Corporates Bond ETF exposure also has been on the rise highlighted in LQD(ISHARES IBOXX INV GR CORP BD), and PHB(POWERSHARES FNDMTL H/Y CORP). BOND (PIMCO TOTAL RETURN ETF) continues to soak up broad bond exposure flows as we have seen since its launch. Treasuries have shed assets seen in SHY(ISHARES BARCLAYS 1-3 YEAR TR) and IEI (ISHARES BARCLAYS 3-7 YEAR) although MINT(PIMCO ENHANCED SHORT MATURIT) continues to be heavily demanded for cash management and FLOT (ISHARES FLOATING RATE FUND) has seen a rise in buy side volume. Significant selling in all TIPS funds has been seen in the last month and some selling in municipals headlined by MUB(ISHARES S&P NAT AMT-FREE MUN) round out what we have seen in the Fixed Income space.

International ETFs: Emerging market funds have seen a peel back in the last few weeks as seen in both EEM(ISHARES MSCI EMERGING MKT FUND) and VWO(VANGUARD MSCI EMERGING). Flows have headed for other international broad funds including EFG (ISHARES MSCI EAFE GROWTH INDX) and FDT(FIRST TRUST DEVELP MKT EXUS). Money from the buy side is also moving into single country exposure. EWG (ISHARES MSCI GERMANY), EWW(ISHARES MSCI MEXICOINVESTAB), EWQ(ISHARES MSCI FRANCE INDEX), and EWJ(ISHARES MSCI JAPAN INDEX). Some selling to note was in both THD(ISHARES MSCI THAILAND) and EWC(ISHARES MSCI CANADA).

Currency and Commodity ETFs/ETNs: Selling in metals highlighted by GLD(SPDR GOLD TRUST) and SLV(ISHARES SILVER TRUST). Buyers in oil seen by flows into SCO(PROSHRE U/S DJ-UBS CRUDE) and selling in coal seen in KOL(MARKET VECTORS COAL ETF). For aggs we have seen buyers of CORN (TEUCRIUM CORN FUND) and sellers of MOO (MARKET VECTORS AGRIBUSINESS). In regard to currencies flows in the last few weeks have been two sided, perhaps sellers in EUO(PROSHARES ULTRASHORT EURO) are signaling some stabilization of the EURO for the moment.

Sector ETFs: Sector rotations have seen sellers of XLB(MATERIALS SELECT SECTOR SPDR) and VPU (VANGUARD UTILITIES ETF). Buyers has been seen in many funds including XLE (ENERGY SELECT SECTOR SPDR), XLF(FINANCIAL SELECT SECTOR SPDR), IYE(ISHARES DJ US ENERGY, VOX(VANGUARD TELECOM SERVICE), XLI(INDUSTRIAL SELECT SECT SPDR), and XRT(SPDR S&P RETAIL ETF).

Alternative/Specialty ETFs:  REITS have seen heavy buy side flows especially in; VNQ(VANGUARD REIT ETF), IYR(ISHARES DJ US REAL ESTATE), and ICF(ISHARES COHEN & STEERS). Buyers have been also looking for alternatives in gaining some yield over the summer seen in flows into; PFF (ISHARES S&P PREF STK INDX), HDV(ISHARES HIGH DIVIDEND EQ), and DVY(ISHARES DJ SELECT DIVIDEND). MLP flows have also spiked perhaps because of the current creation suspension for AMJ(JPMORGAN ALERIAN MLP INDEX). MLPN(CREDIT SUISSE CUSHING 30 MLP), MLPA(GLOBAL X MLP ETF) and YMLP(YORKVILLE HIGH INCOME MLP) all have benefitted from this in regard to inflows.

You may reach Michael directly at mcafiero@knight.com

This communication has been prepared by the trading, market making and/or the sales personnel (“Trader”) of Knight Capital Americas, L.P. (“KCA”), a subsidiary of Knight Capital Group, Inc. (“Knight”). The information contained herein may be the personal perspective of the Knight Trader and/or commentary compiled from public sources. The information from public sources is believed to be reliable but Knight does not guarantee or represent its accuracy or completeness. The opinions and views expressed by the individual trader do not represent the opinions and views of Knight, its affiliates, officers or other personnel. No responsibility and no express or limited liability is assumed jointly or individually for any losses or damages arising out of errors, omissions, delays in the receipt of the information, or any actions taken in reliance upon the information. The information contained herein does not provide investment advice and is not a sufficient basis for an investment decision. No information contained herein should be construed as a solicitation or an offer to buy or sell any security or product. Indications of interest, opinions or views expressed by the trader are not firm orders or quotes and may not be current. No responsibility is assumed to maintain and/or update the information. KCA most likely makes a market in the securities mentioned in this document and its personnel, including those involved in the preparation or issuance of the material may take a position or action which may be inconsistent with the opinions and views expressed therein. Questions regarding the information presented herein or a request for a copy of this document should be referred to your Knight Representative.

Knight Capital Group, Inc. (“Knight”) is comprised of trading and related entities under common control such as Knight Capital Americas, L.P., Knight Capital Europe Limited (a U.K. registered broker-dealer), Knight Capital Asia Limited (a Hong Kong registered broker-dealer), Hotspot FX LLC and Knight Execution and Clearing Services LLC.

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