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It seems very strange the success that Active ETFs are having currently. Every man and his dog seem to see this area of the market as being the “next big thing” for ETF growth, like the second coming of Jesus.

BUT, why?

We all know that active management rarely, if ever if beats the market over the long term (that’s what passive has been so successful), so who are people rushing to buy tickets to the Active ETF train? Do people think the outcome is going to be somewhat different if the active strategy is wrapped in an ETF rather than a mutual fund?

OR, are people acting this way because that is what everyone else is doing right now and they don’t want to be different or FOMO is kicking in?

People are sheep, they act irrationally and are easily influenced and manipulated. We wonder what the late Daniel Kahneman would think of all of this.

Fund Launches and Updates

 

EUROPE

 

AXA Investment Managers have become the first ETF manager to list Active ETFs in Euronext Paris listing the AXA IM ACT Biodiversity Equity UCITS ETF (ABIT), the AXA IM ACT Climate Equity UCITS ETF (ACLU), the AXA IM Euro Credit PAB UCITS ETF (AIPE), the AXA IM USD Credit PAB UCITS ETF (AIPU) and AXA IM US High Yield Opportunities UCITS ETF (AHYU).

DWS has entered the crypto exchange-traded product (ETP) market with the launch of two strategies tracking bitcoin and ethereum. The Xtrackers Galaxy Physical Bitcoin ETC Securities (XXBT) and the Xtrackers Galaxy Physical Ethereum ETC Securities (XETH) are listed on Deutsche Boerse with total expense ratios (TERs) of 0.35%

Eurizon is planning on entering the ETF market in Europe with a soon to launch emerging market bond strategic income ETF. The firm intends to target the UK market with this product.

ABRDN is planning on launching a suite of thematic ETFs in the second half of the year to add to the ABRDN Global Real Estate Active Thematics UCITS ETF they already have, according to Ignites Europe.

Deka has launched an S&P 500 UCITS ETF on XETRA priced at a TER of 0.12%. Now I don’t typically comment on product launches but why in God’s name would they think the market needs another S&P 500 ETF, especially when it’s not even the cheapest. Someone will need to explain that one to me.

 

AMERICAS

 

Fred Alger Management has rolled out two new exchange-traded funds, bringing its ETF family to five funds. Unlike the rest of the firm’s entirely actively managed lineup, these newest additions are fully transparent.

The Alger AI Enablers & Adopters ETF (NYSE Arca: ALAI) andThe Alger Concentrated Equity ETF (NYSE Arca: CNEQ) both have an expense ratio of 0.55%.

ProShares added to its portfolio of bitcoin-related products today with the launch of two ETFs. One offers leveraged exposure and the other offers inverse exposure to physical bitcoin rather than bitcoin futures.

The ProShares UltraBitcoin ETF (NYSE Arca: BITU) looks to provide 2x the daily price performance of bitcoin as represented by the Bloomberg Bitcoin Index. Meanwhile, the ProShares UltraShort Bitcoin ETF (NYSE Arca: SBIT) aims to deliver investors 2x the inverse of the daily performance of the same reference index. The two funds have expense ratios of 0.95%.

River1 Asset Management has launched the actively managed Trenchless Fund ETF (NYSE Arca: RVER), which invests in a fairly narrow portfolio of 12-30 U.S.-listed equity securities. The fund’s managers implement a bottom-up approach that screens for valuation, growth exposure, and institutional ownership and has an expense ratio of 0.65%.

AllianzIM has debuted its second ETF that looks to provide capped upside exposure to the price performance of the SPDR S&P 500 ETF Trust (SPY) and limit downside losses to just 5% within its outcome period via a floor. The AllianzIM U.S. Equity 6 Month Floor5 Apr/Oct ETF (NYSE Arca: FLAO) resets April 1 and October 1 of each year and currently has an upside cap before expenses of 8.43%.

FLAO is a follow up to the AllianzIM U.S. Equity 6 Month Floor5 Jan/Jul ETF (FLJJ), which launched February 1. Both FLJJ and FLAO have expense ratios of 0.74%.

Like its sister fund, FLAO is actively managed and uses flexible exchange (FLEX) options on SPY to execute its strategy.

 

ASIA

 

Monochrome, an Australian asset manager plans to launch its flagship spot Bitcoin exchange-traded fund on the global listing exchange Cboe Australia. Monochrome filed for the spot Bitcoin ETF in July 2023.

The Monochrome Bitcoin ETF, if approved, will become Australia’s first spot Bitcoin ETF to permit direct Bitcoin holding.

 

 

 

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Flows

 

In the US, Equity ETF inflows had a breakout start to the year amid the S&P 500 having its best first quarter since 2019.

Investors poured $196 billion into exchange-traded funds in the first quarter, according to Bloomberg.

This marked the second best beginning to a year ever in terms of inflows into ETFs, with the strongest still the first quarter of 2021 when investors added $249 billion into ETFs. Investors pulled money from safe havens like money markets in the first quarter, pouring it into riskier investments like stock ETFs as markets jumped.

Investors seem not to be slowing their excitement about active ETFs, according to Morningstar. The category took in about a third of first quarter flows, even though the category makes up less than 10% of the market.

 

Noteworthy

 

Cboe Global Markets has asked the SEC to approve a rule change that would allow issuers to add an exchange-traded fund share class to existing mutual funds.

If approved, asset managers could offer exposure to existing mutual fund portfolios through an ETF, similar to the way they make mutual fund share classes with different fees and other features available now.

Counterpart risk once seen as a big no no by European ETF investors now seems less relevant. Last week we saw BlackRock launch a synthetic ETF and this week Invesco have announced that they are increasing the securities lending limit on over 50 ETFs from 15% to 30%. Seems like investors have short memories.

 

 

Movers and Shakers

 

Débora Cazotti has become Head of Business Development at Global X ETFs in Brazil.

Cameron Finley has joined Invesco in the US as an Institutional ETF.

 

From behind the Desk

 

A bit morbid maybe, but did you know the typical 5 regrets of the dying?

 

• I wish I’d had the courage to live a life true to myself, not the life others expected of me.
• I wish I hadn’t worked so hard.
• I wish I’d had the courage to express my feelings.
• I wish I had stayed in touch with my friends.
• I wish I had let myself be happier

 

Something for us all to chew over there whilst we still have the opportunity to course correct.

 

 

 

About us

 

 

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We are specialists in helping companies find the best strategy to enter and navigate the ETF marketplace, enhance their reputation, craft innovative and engaging targeted ETF content and source the very best of talent across the ecosystem.

If you would like to discuss any of the above then please reach out at mike@blackwatersearch.com.