Fund Launches and Updates

Ossiam has launched the Ossiam Food for Biodiversity Ucits ETF. The new fund, which will be traded on the Xetra has a total expense ratio of 0.75%. Link

Deutsche Börse welcomed Global X as a new ETF issuer on Xetra with their two thematic ETFs — the Global X Video Games & Esports UCITS ETF and the Global X Telemedicine & Digital Health UCITS ETF.Link

First Trust has expanded its thematic ETF range by changing the underlying indices on three smart beta ETFs – the new names are the First Trust Nasdaq Clean Edge Green Energy UCITS ETF (QCLN), the First Trust Dow Jones International Internet UCITS ETF (FDNI) and the First Trust Indxx NextG UCITS ETF (NXTG). Link

21Shares has expanded its cryptocurrency range with the launch of the world’s first polkadot exchange-traded product (ETP). The 21Shares Polkadot ETP (ADOT) is set to list on the SIX Swiss Exchange on 4 February and will track the price of polkadot, the third-largest cryptocurrency. Link

In the U.S., buffered funds enjoyed a breakthrough year in 2020, with 65 launches (up from the previous record of 19 in 2019) accounting for more than 20 per cent of all ETF debuts in the US, according to data from FactSet.

Total buffered ETF assets have surged from $300m to $5bn in the past 12 months. Link

Fidelity launched four non-transparent ETFs last week including a clone of the well-known Magellan mutual fund. The ETFs launched are: FMAG (Magellan), FGRO (Growth Opportunities), FPRO (Real Estate) and FSMO (Small-Mid Cap).

South Korea’s KB Asset Management has slashed management fees on a trio of exchange traded funds to just 0.001 per cent, the lowest level in the domestic industry, in a bid to expand the firm’s market share against the country’s largest ETF issuers, Mirae Asset and Samsung Asset Management. Link

Flows

Europe monthly net flow numbers are not out yet so looking at the U.S., January ETF inflows saw a net $65.7 billion. International equity ETFs led the way with inflows of $36.2 billion. US fixed income ETFs saw $15.6 billion in net new money, while US equity ETFs picked up $7.8 billion. Link

Ark Investment Management outgunned established Wall Street titans BlackRock and State Street last month, as the firm’s actively managed exchange traded funds have attracted $8.2bn this year, outstripping BlackRock’s iShares division and State Street’s ETF business. Ark’s AUM hit $46.7bn in January. Link

Noteworthy

Sixty-three per cent of UK investors plan to buy bitcoin for the first time or increase their holding in the digital currency during 2021, according to a survey to over 800 respondents. 

Among the bitcoin investors who were surveyed, 74 per cent affirmed that they plan to increase their investment in the cryptocurrency this year. And of those not currently invested in bitcoin, as many as 47 per cent said they planned to become new investors of the digital currency in 2021. Link

Investment platforms in the UK have seen a surge in new business from younger investors, following the rush by retail investors to target shorted stocks, e.g. Gamestop.

Investment platforms in the UK said the episode had delivered a boost to the number of retail investors signing up to their services, reinforcing a record intake of new joiners in 2020.

Interactive Investor reported a surge of nearly 1,200 per cent in the number of women under the age of 24 opening accounts on the platform in the final two weeks of January, and a 1,388 per cent rise in the number of men under 24 — compared with the same two-week period in January 2020.

Total growth across all age groups was 368 per cent compared with the same period a year earlier, the platform said.

“New ETFs, Forced to Chase Trends, Shorten Their Own Lives” which highlighted that of the 277 exchange-traded products that shut down in 2020, one-quarter of them had been trading for less than three years.

One fund was just four months old when it shut in December: North Shore Dual Share Class ETF (DUAL). The study researchers point out that to attract sufficient assets to give a newly launched ETF any hope of survival, fund sponsors tend to focus on increasingly specialized sectors and investment themes that are currently capturing investors’ attention.

Nothing new for those of us in the industry but we did find the four-month lifespan mention to be unusual. Link

The competition among exchanges for ETF business is driving innovations that help make buying and selling shares easier and more attractive to investors.

Cboe’s BZX Exchange debuted a programme that allows ETF market makers to receive better payments from the exchange for providing liquidity on heavily traded products, rather than receiving a flat incentive payment for taking on lead market maker duties.

The programme is designed to incentivise market makers to take on lead market making duties on heavily traded ETFs. Link

The stock market turmoil around GameStop sparked a probe by US financial regulators into whether market manipulation was involved, but lawyers doubt it will lead to prosecutions.

While the SEC plans to closely review Reddit users for possible market manipulation, legal experts say they will have a difficult case to prove.

One case that might prove a precedent is the 2001 SEC action against Jonathan Lebed, the New Jersey teenager who made hundreds of thousands of dollars buying stocks in thinly traded companies before hyping them on internet message boards.

But Mr Lebed was accused of deception: regulators said he used dozens of different online aliases to create the illusion of widespread interest in those stocks. Link

The Nasdaq published a report on the correlation of VIX and ETF trading volumes in the U.S. A few highlights and full article link below:

• Over the past decade, there has been a 60% correlation of total ETF trading volumes to changes in the CBOE VIX Index (VIX).

• As volatility spiked in 2020, trading volumes surged, reaching a high daily watermark of $397 billion.

• 2020’s full-year trading volume set a record of $32 trillion.

• Over the past 15 years, ETF trading volumes accounted for an average of 27% of all exchange volume. However, from February to April 2020 there were 36 consecutive trading days where ETF volumes represented more than 30% of tape volumes — the longest streak since the Global Financial Crisis. Link

Fund in Focus

BlackRock’s ageing population ETF which booked significant inflows as vaccine rollouts offered hope for an economic recovery.

The $581m iShares Ageing Population UCITS ETF (AGED) saw its assets under management increase by 39.1% week-on-week, courtesy of $179m inflows in the week to 29 January. Launched in September 2016, AGED tracks the STOXX Global Ageing Population index, a long-term theme which BlackRock said has potentially been exacerbated by low birth rates since the onset of the coronavirus pandemic. Link