Credit Suisse surpasses $2bn AuM
Stocks in Europe and the U.S. were positive last week even against persistent virus concerns. As the first half of the year drew to a close, European equities outperformed U.S. markets for the first full month since September. For the month of June, the Stoxx 600 was up +3.11% whilst the S&P 500 was up +1.99% for the same period.
On the week , the FTSE 100 was flat with a slight increase of 0.04%, the FTSE 250 was up +1.14%, Stoxx Europe 600 increased +2.08% and the DAX was up +3.63%. U.S. equities were up +4.07% for the same period (*markets were closed on Friday).
The CBOE Volatility Index dropped 20.3% from the previous week closing at 27.68 points, the lowest level since June 10. In the past month, the VIX reached a high of 44.44 points and a low of 23.54 points.
WTI Crude oil closed last week at $40.32 a barrel, up +5.61% for the week.
Since their return to the ETF space in March of this year, Credit Suisse’s range of ETFs have surpassed $2bn in assets under management. The three products that were launched in March, the CSIF MSCI USA Blue, CSIF MSCI USA ESGLeaders Blue and CSIF MSCI World ESG Leaders Blue Ucits ETFs complement their 98 existing index funds with $104bn assets under management.
They also recently launched two new passive strategies that focus on ESG and allocate to global real estate and US small caps: the CSIF (IE) MSCI USA Small Cap ESG Leaders Blue UCITS ETF and CSIF (IE) FTSE EPRA Nareit Developed Green Blue UCITS ETF. Both ETFs are trading on SIX Swiss Exchange, Deutsche Börse, and Borsa Italiana.
~~French Asset Manager Amundi launched a new ETF providing investors access to sustainable investment opportunities in emerging markets. The Amundi MSCI Emerging ESG Leaders UCITS ETF DR (C), holds large and medium-sized companies from 26 emerging markets in accordance with sustainability criteria. The ETF is trading on Xetra and Börse Frankfurt. TER is 0.18%. Source: ETF Express
Flows and Performance:
The Financial Times published analysis from Morningstar comparing active management performance versus passive funds. The data looked at European domiciled, open-ended funds with at least €1bn in assets at the end of June and found that approximately two-thirds of the more than 1,700 actively managed funds Morningstar examined delivered negative returns this year. About two-thirds of passive funds that Morningstar examined also generated negative returns. But the analysis also found fewer examples of outsized positive returns among index or exchange traded funds compared with active funds. The best-performing actively managed fund was theRuffer gold fund, which returned 55.7%. The best performing passive fund, BlackRock’s iShares Gold Producers ETF, returned 22%. Source: FT
In the US
In the US fund flows have already been published for the month of June. Fixed-income ETFs took in $33.5 billion in net new flows–a monthly record. On net, $58.6 billion flowed into U.S.-listed ETFs during the month, pushing year-to-date inflows to $202.2 billion.
Of June’s inflows, $10.9 billion headed for U.S. equity ETFs; $7.6 billion went into international equity ETFs; and $31.1 billion flowed into U.S. fixed income ETFs. Top gainers for June are below. Source: ETF.com
Traders in the investment management and banking industries have continued their call for a reduction to market trading hours. Responding to the Euronext consultation which closed last week, the Association for Financial Markets in Europe (AFME) and the Investment Association (IA) have called for market trading hours to beshortened by 90-minutes to seven hours, from either 10:00-17:00 or 10:30-17:30 (CET).
This latest consultation follows on from that of the LSE, which published its results at the beginning of June, and found that a ‘significant majority’ of respondents supported the arguments for a shorter trading day.
AFME and IA have now made the case to Euronext that a reduction of 90 minutes in European markets would concentrate liquidity creating more efficient markets – a move which would ultimately benefit savers and investors. Currently, 54% of trading on Euronext markets takes place within the last two and a half hours of trading (16.30-17.35), nearly a quarter of which is trading in the final five-minute closing auction. Source: Institutional Asset Manager
According to data from Morningstar, assets in fixed income ESG ETFs in Europe have risen 543% over the past three years to €8.3bn, as at 31 May. During the most volatile month in March, ESG ETFs in Europe saw €509m inflows while wider ETFs saw a record €22bn outflows. In a separate report, Citi analysts predict ESG ETFs will hit $300bn in assets under management by 2030, up from current levels of $34bn.
However, based on a recent Tracksight published survey, 73% of its respondents either investing or considering investing in ESG ETFs, believe that a number of challenges still remain within the space. The main one, 68% of respondents said, was the lack of consistency across ESG analysis providers while 64% warned of a lack of transparency and simplicity of ESG index methodologies.
Difficulties in identifying ESG-compliant ETFs or understanding the ESG strategy within the portfolio construction were the most cited explanations for the lack of ESG product uptake. “With no commonly agreed norm and lack of transparency, investors still heavily rely on external expertise to support their ESG selection process,” the report explained. Source: ETF Stream
The FCA is taking positive first steps in a long crypto asset regulation journey. This represents the culmination of four years’ work by the FCA to ensure the crypto-market is properly regulated while ensuring innovation is not stifled.
Following the last consultation period ending in October 2019, the FCA tightened the regulation to include all classes of crypto assets, addressing concerns that some types of tokens would be exempt. “Regulating crypto assets is always going to be a complex and challenging task. These are the first steps in a long journey, and the FCA has made a solid start by developing token definitions and categories. Although there are some grey areas within the definitions, the FCA has also chosen not merely to follow the hybrid token classification used by other regulators. Rules for unregulated tokens will also require definition further down the road, and as the market continues to evolve the wider area of unregulated crypto assets will require greater scrutiny.” Source: InstitutionalAsset Manager
In the United States
A US-listed $4.6 billion ETF that has Tesla Inc. as its biggest holding posted the best week of inflows on record. Investors put almost $180 million into the Ark Innovation ETF (ARKK) in the five-day period ended Friday, the most since it began trading in 2014, according to data compiled by Bloomberg. That was the actively managed fund’s 17th straight week of inflows. The ETF, which has taken in $1.7 billion in 2020, has rallied almost 40% in the span — compared with a six per cent drop for the S&P 500. Source: BNN Bloomberg
Fund in Focus:
Bloomberg recently posted a story about skyrocketing sales of canned meat as demand for such staple items is booming across the globe. In the United States, sales surged more than 70 percent in the 15 weeks ended June 13. In the U.K., consumption of canned corned beef has taken off and even in South Korea, where Spam is an old favourite, sales are expanding at the fastest pace in years. At first, people were loading up on pantry staples with a long shelf life during lockdown conditions. Then, shortages of some fresh meat supplies, especially in the U.S., also helped to drive sales. Now, the economic downturn is underpinning demand. All of this brings us to look at how consumer staples performed during the lockdown with this week’s fund in focus – the SPDR MSCI Europe Consumer Staples UCITS ETF.
The investment objective of the Fund is to track the performance of European large and mid-sized companies in the Consumer Staples sector. TER 0.30%. Assets under management as of Friday, the 3rd of July were €528.95m. Year-to-date the fund has net inflows of approximately $34million and is down -5.22% for the year. However, the ETF has seen gains of +20.39% since the market lows of 23 March.
Fund Performance and Flows (data sourced from ETFLogic):
Top 3 Best Weekly Performers in the UK
WisdomTree Brent Crude Oil +5.39%
WisdomTree Brent Crude Oil GBP Daily Hedged +5.39%
WisdomTree WTI Crude Oil GBP Daily Hedged +5.26%
Top 3 Worst Weekly Performers in the UK
WisdomTree Brent Crude Oil 1x Daily Short -5.27%
WisdomTree Cocoa -5.06%
Lyxor MSCI Russia UCITS ETF (Dist) -2.16%
Top 3 Weekly UK Inflows
Lyxor US Tips DR UCITS ETF Monthly Hedged GBP (Dist) +$218.2m
iShares Treasury Bond 0-1yr UCITS ETF USD (Acc) +102.2m
iShares Global High Yield Corp Bond GBP Hedged UCITS ETF (Dist) $45.9m
Top 3 Weekly UK Outflows
ETFS Gold Bullion Securities -$64.8m
iShares Core € Corp Bond UCITS ETF EUR (Acc) -$60.3m
Invesco FTSE 250 UCITS ETF -$25.7m
*Fund in Focus or any portion of this newsletter are informational only and not intended to provide recommendations of any kind.