First Trust has entered the ESG space with its recent launch of an actively managed global ESG ETF and cryptocurrency ETPs continue to dominate headlines with the launch of ETC Group’s first Ethereum ETP.

Rumors are swirling that Aberdeen may enter the European ETF market after hiring a Head of ETF Sales strategy.

This is certainly a change from news last month that they had no intentions of moving to ETFs. Exactly one short month ago, the FT reported in an interview with SLA CEO Stephen Bird, that “cold water is poured over his ambitions to compete against the giant ETF businesses.”

File that one under a volte-face. 

Fund Launches and Updates

The first Ethereum cryptocurrency ETP listed on Deutsche Börse’s XETRA last week — ETC Group Physical Ethereum ETC (ticker: ZETH) on Deutsche Börse’s XETRA platform. ZETH will be the first Ethereum product to be central counterparty cleared globally.

HSBC Global Asset Management has reduced the fees across eight single-country emerging market ETFs. The eight ETFs have seen their total expense ratios reduced by 10 basis points to 0.50%. Link

First Trust launched an actively-managed global ESG ETF, the First Trust Global Capital Strength ESG Leaders UCITS ETF (FCSG) and is listed on the London Stock Exchange and Euronext Amsterdam with a TER of 0.75%. This is the first ESG ETF the firm has launched in Europe. Link

Harvest Global Investments launched an ETF in Hong Kong targeting demand from institutional investors in the Asia-Pacific, Europe and the US for sustainable Chinese investments. The Harvest CSI 300 ESG Leaders Index ETF listed on the Hong Kong exchange on March 10th. Link

UBS Asset Management has launched an ETF offering investors access to the S&P 500 filtered through a “strict” ESG criteria. The UBS ETF S&P 500 ESG Elite UCITS ETF tracks the S&P 500 ESG Elite index, which is comprised of companies with best-in-class ESG scores, around 25% of the index’s market capitalisation. Link

WisdomTree has added ESG criteria to every UCITS equity ETF in their range that is self-indexed. Using data from Sustainalytics, 12 ETFs will now implement an ESG screening process. Link

In the U.S., WisdomTree joins the bitcoin ETF race and is the fifth firm this year to file for SEC permission to launch a Bitcoin ETF.

Other contenders include VanEck, which filed on Dec. 30, Valkyrie Digital Assets on Jan. 22, and Bitwise Asset Management and New York Digital Investment Group in February. Recent rumours say investment bank giant Goldman Sachs could soon join them. Link

Mirae Asset Global Investments announced the launch of Global X China Innovator Active ETF, the first China equities active ETF listed in Hong Kong, and Global X China Global Leaders ETF in Hong Kong.

The two China-focused ETFs will enable both retail and institutional investors to tap into the high-growth potential of the innovative and disruptive themes that are transforming the Chinese economy, as well as the leading Chinese companies with an extensive global presence.

A new ETF wants to tap into the fear of missing out among investors desperately chasing the everything rally.

A filing this week with the U.S. Securities and Exchange Commission seeks to create the FOMO exchange-traded fund and intends to invest in “securities that reflect current or emerging trends,” according to a registration statement.

Actively managed FOMO, advised by Connecticut-based Tuttle Tactical Management, will target everything from stocks across both developed and emerging markets to SPACs, other ETFs, derivatives, volatility products and both leveraged and inverse funds. Link

VanEck announced the launch of the Fondo Bursátil VanEck El Dorado Perú ETF, the firm’s first Peruvian-listed ETF and in further expansion of VanEck’s strong presence in the Latin American marketplace.

“Peru has a vibrant and fast-growing public equity market, but to this point gaining access to the largest and most liquid stocks in-market via a single point of entry has not been possible,” said Eduardo Escario, Director, International ETF Sales with VanEck. ETFPERUD trades on the Lima Stock Exchange (BVL) and was launched in partnership with El Dorado Asset Management.

Flows

The ETF industry has made its fastest ever start to a year with a new record of $139.5bn in monthly inflows in February as investors, betting on a strong economic rebound in 2021. Investors worldwide have allocated $222.5bn in new cash to ETFs in the first two months of 2021, more than double the same period last. Link

One of the hottest trades in the $5.9 trillion U.S. ETF market is cooling fast.

The $20.7 billion clean-energy sector has been bleeding cash, with one prominent green product — the $3.7 billion Invesco Solar exchange-traded fund (U.S. ticker: TAN) — on course for a seventh week of investor exits, equaling the longest run of outflows in its 13-year history.

The biggest fund in the space, the $5.7 billion iShares Global Clean Energy ETF (ICLN), is down 23% from its January peak. Link

Noteworthy

Ireland has strengthened its position as an international investment hub, with figures published for December by Irish Funds, showing record breaking net sales.

In January 2021 alone, 27 financial firms entered or expanded their presence in Ireland bringing the total to 137 new entries or expanded offers since January last year.

The primary driver behind the growth has been alternative fund managers, reflecting growing investor interest in diversifying and alternative investment products. Link

Grayscale Investments is making a bet that the approval of a U.S. cryptocurrency ETF is not too far off in the future.

The digital-asset management firm has posted at least nine ETF-related positions to LinkedIn, signalling it is anticipating a green light from the SEC for a crypto ETF — a goal that has eluded U.S. funds for years. Link

The latest survey from ETF custodian and administrator Brown Brothers Harriman (BBH) 2021 Global ETF Survey, found that 72 per cent of their global respondents are still planning to increase their ETF allocation in the next 12 months.

ETF allocation remains lower in Europe (62 per cent) compared to 76 per cent in both the US and Greater China.

The report found that 80 per cent of investors in the US and 92 per cent in Greater China are planning on increasing their investment in ESG products, a respective increase of 11 per cent and 13 per cent against the 2020 Survey. While ESG is booming in the US and Greater China, it may be seeing signs of saturation in Europe.

Thematic ETFs are going mainstream, with 80 per cent of global investors increasing their allocation to thematic ETFs in 2021 and 66 per cent plan to increase fixed income ETF allocations this year. Link

A survey of institutional investors and wealth managers who already engage with bitcoin reveals that 85 per cent plan to increase their investment in the cryptocurrency over the next two years.

The survey, which was commissioned by Nickel Digital Asset Management, reveals that between now and 2023, 72 per cent expect professional investors to invest in bitcoin for the first time or increase their exposure. Link

Aberdeen Standard Investments (ASI) has started to ramp preparations for a push into the European ETF market with the appointment of Chanchal Samadder who has taken on the role of head of ETF sales strategy.

His appointment signals ASI’s plans to roll out ETFs this side of the pond, a move that has been expected for some time now given the firm’s $10bn index business in Europe and ETF house in the US.

ASI entered the ETF industry in 2018 following the acquisition of ETF Securities’ US business which currently has $6bn AUM. Link

There is a stark contrast between the synthetically replicated ETFs of today compared to 10 years ago, according to a report from Morningstar, as the structure begins to see investor demand once again after a decade in the wilderness.

The report said there has been a “major improvement in transparency” over the past decade with ETF issuers now disclosing the full contents of substitute baskets and employing a multi-swap counterparty model to mitigate the risks of swap exposure.

Demand for synthetic ETFs fell off a cliff the number of assets held in equity falling from 46% in 2010 to 17% by the end of 2020 while fixed income dropped from 35% to 5%, according to Morningstar. Link

Willis Towers Watson is advising its clients to shift from passive to active asset management, amid growing concern about the risks of passive equity investing.

The move comes as a UBS report suggests that the meteoric rise of passive investing is slowing down. Luba Nikulina, global head of manager research at Willis Towers Watson, said the firm had been raising concerns about the risks of concentration in passive equity for about three years.

Nikulina said that in the US market, where there have been the largest inflows, passive investing was “very concentrated” in the small number of companies investors are exposed to.

According to UBS, Europe’s active equity managers also enjoyed the highest alpha generation in two decades last year. Link