Active and Crypto ETFs top European investors’ wish list
The US continues to dominate headlines with new semi-transparent active ETF launches making us wonder if the release of BBH’s newest survey prompted European investors to want some of the action. Europe is certainly well ahead of the US on the crypto ETP front but when will non-transparent active be allowed here? Not sure if we should hold our breath on that one. Read on for more top ETF highlights from last week.
Fund Launches and Updates
21Shares is set to launch the world’s first centrally cleared ethereum and bitcoin cash ETPs. The 21Shares Ethereum ETP (21XE) and 21Shares Bitcoin Cash ETP (21XC) will list on Deutsche Boerse on 9 March, with annual management fees of 1.49% and 2.50%, respectively. This follows previous listings of the products on the Swiss stock market in mid-2019. Link
HANetf expanded their listing of the iClima Global Decarbonisation Enablers UCITS ETF (LON:CLMA) and Digital Infrastructure and Connectivity UCITS ETF (LON:DIGI) on the SIX Swiss Exchange, adding to their existing listing in London, Frankfurt and Milan.
Invesco has launched the Invesco Global Clean Energy UCITS ETF which provides investors with exposure to companies focused on wind, solar, biofuels, hydro and other renewable energy sources. The Invesco Global Clean Energy ETF has an OCF of 0.6%. Link
Last week, Invesco also launched a China all-share ETF that only includes A-Shares if they have a stock connect listing. The Invesco MSCI China All Shares Stock Connect UCITS ETF (MCHN) is listed on the London Stock Exchange (LSE) with a TER of 0.35%. Link
UBS Global Asset Management has launched the UBS (Irl) ETF plc – MSCI World Socially Responsible UCITS ETF (USD) A-acc n Xetra and Börse Frankfurt.
WisdomTree has launched the WisdomTree Energy Enhanced – EUR Daily Hedged ETC on Xetra and Börse Frankfurt.
In the US, Putnam Investments has made its first move into the ETF market, aiming at a spring launch of portfolio-protected products. The active manager intends to launch four ETFs and will be replicating existing mutual fund strategies. FT Link
On Thursday, VanEck launched the VanEck Vectors Social Sentiment ETF (ticker BUZZ) which follows an index that scours online sources including social media, news articles and blogs for equity-specific messages and posts. Bloomberg Link
Dimensional Fund Advisors has laid out the timeline for converting nearly $26 billion worth of mutual funds into exchange-traded funds. The Texas-based firm will turn four equity funds into ETFs “on or about” June 11, according to a Wednesday filing with the U.S. Securities and Exchange Commission. That puts the $601 billion manager on course to be only the second issuer to undertake a conversion.
Fidelity Investments has added two active bond ETFs to its suite, the Fidelity Investment Grade Bond ETF and Fidelity Investment Grade Securitized ETF. With the new funds, Fidelity now has 39 ETFs with more than $25 billion in assets. They both charge an expense ratio of 36 basis points.
A BlackRock China-focused ETF suffered the heaviest outflows in Hong Kong last year, even as the wider ETF industry in the territory recorded its highest annual inflows in years. BlackRock’s iShares FTSE A50 China ETF recorded net redemptions of $1.17bn, followed by CSOP Asset Management’s FTSE China A50 ETF, which saw redemptions of $897.8m. The net outflows were recorded even though China’s A-share market experienced a strong bull run for most of the year and the Hong Kong-domiciled ETF market attracted more than $3bn in net inflows to reach a new high of $50.7bn. FT Link
February data from TrackInsight reveals that ETFs continued their seemingly unstoppable growth trajectory to reach a new global high of USD8 trillion, in assets under management, driven by what it calls ‘exploding flows’ in North American markets and huge investor appetite for ESG products.
Contributing to this important milestone were ETFs listed in North America which witnessed historic flows of USD95 billion over February, an almost 50 per cent increase month-on-month. There are now 3,200 ETFs listed on North American exchanges with USD5.9 billion in assets.
ESG ETFs, which nearly tripled assets in 2020, saw flows of USD19 billion (9 per cent) over February to reach a new high of USD210 billion in assets, making February the largest single-month in history in terms of ESG ETF flows, according to TrackInsight.
Today, over 200 exchanges to ‘ring the bell for gender equality in 2021‘ with Women in ETFs and five partner organisations. For the seventh consecutive year, a global collaboration of over 100 exchanges around the world will hold a bell ringing event to celebrate International Women’s Day 2021.
Actively managed and cryptocurrency exchange traded funds are top of the wish list for European financial advisers and institutional investors when it comes to ETF launches. A survey of 382 financial advisers, institutional investors and fund managers conducted by Brown Brothers Harriman found that active ETFs are now the product type most in demand in Europe. FT Link
Cboe Global Markets Inc. yesterday submitted an application to the SEC to list a bitcoin ETF. If granted approval, the VanEck Bitcoin Trust could become the first ETF with exposure to the cryptocurrency in the U.S.
This is the latest attempt by Cboe to list a bitcoin ETF since 2016 when Cameron and Tyler Winklevoss proposed one of the first such products later rejected by the Securities and Exchange Commission. Link
AJ Bell will use socially responsible investing (SRI) ETFs as the basis for its new responsible Managed Portfolio Service. The responsible MPS aims to offer clients the chance to invest in long-term strategies which avoid companies involved in controversial sectors and those with low ESG rankings. The new service has the same structure as AJ Bell’s equivalent passive, active and ‘pactive’ offerings, with six broadly diversified portfolios offering different levels of risk exposure. Link
There were a number of reports circulating based on a BIS paper which claimed that the arbitrage mechanism evidently broke down for fixed income ETFs during March 2020. The paper suggests this was due to ETF sponsors deliberately handing APs lower quality bonds in order to discourage them from redeeming shares in the ETFs. The report further claims that if ETF sponsors want to discourage redemptions during market runs they can potentially stuff the redemption baskets with lower-quality bonds, such as those that are high risk or illiquid. Not only would this discourage redemptions by APs, it could also soothe the jitters of end investors in the ETF, potentially dissuading them from selling. FT Link
In case you missed it…
Only in Australia – an Australian athlete broke a world record when he ran a marathon in 16 hours and 12 minutes — while pulling a 1.6-ton truck. Corey Phillpott, 23, of Glenbrook, pulled the 3,300-pound Ford Ranger truck for a distance of 26.2 miles through Jamison Park in Penrith, New South Wales, to take the new world record title for the World’s Strongest Marathon. “I’ve got no injuries, I feel great, I’ll go for a run tomorrow,” Phillpott told the Blue Mountains Gazette after the attempt. And we think a 5k is impressive, especially the day after a Sunday roast!
Thank you for reading and have a great week!