IPOX Schuster LLC


IPOX Global Indexes Weekly Review for 06/27/08

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Some notable events during last week:
1)     IPOX Global Indexes fall, spreads remain steady: The IPOX Global Indexes fell last week, generally tracking respective benchmarks in weakening markets. Relative strength built over the past months remained in the key indexes, driven by IPOX exposure into areas other than financial companies and selected industrials particularly affected by the downturn in blue chip indexes. Positive focus remained on the IPOX-30 Global (All Markets) Index (IPGL30), which outperformed the S&P 500 by another 121 basis points on the week, driven by exposure into Alternative and Energy Related global large- and mega-caps such as Spectra Energy (SE) or OAO Rosneft (ROSN LI). Since the lows on March 20th, the IPGL30 and IPGL100 have outperformed the S&P 500 (SPX) and MSCI World Index (MXWO) by between 1500 and 1800 basis points, sharp moves considering the comparable underlying size breakdown and liquidity in the respective indexes. Notable was, however, the broad weakness amongst stocks in the 2306 member strong IPOX Global Composite Index (IPGLC) with more than 70% of the constituents recording negative returns with the average equally-weighted constituent losing 3.53% (median: -2.95%) on the week. The broad weakness weighted on spreads between the IPOX Sub-Indexes. 
2)     Malaise in Latin American Stock/Futures Exchange Operators continues: The IPOX Latin America 20 Index (IPXULATT) remained under pressure, driven by yet another round of weakness in exchange operators Bolsa de Mercadorias (-8.68%, YTD: -44.20%) and Bovespa Holdings (-8.57%, YTD: -37.81%). Sentiment was not helped as global exchanges Deutsche Boerse AG (YTD: -47.19%), CME Group (YTD: -43.57%) and NYSE Group (YTD: -42.27%) retreated again after the recent run-ups on assumed declines in fixed income trading and upcoming pricing pressure from upstart exchanges.
3)     New Benchmark Choice for the IPOX U.S. Indexes: Following the reclassification of the IPOX-100 U.S. Index Fund (FPX) to large-cap growth by IPOX Constituent Morningstar (MORN), we have adjusted the benchmarks selection in the weekly update accordingly: Instead of the Russell 2000 Index (RUT), we are now using the Russell 1000 Growth Index (RLG) as a comparative benchmarks for the IPOX U.S. Indexes (IPOX-100 U.S. Index and IPOX-30 U.S. Index). While the IPOX-100 U.S. Index is recording a price return of an annualized 7.35% over the past ten years, RLG remains virtually flat. Since start of the first investment product in 2005, actual returns on the IPOX-U.S. Indexes have beaten RLG by around 800 basis points annually, at around 15% higher volatility. THINK GROWTH – THINK IPOX.

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