Europe ETFs Close at Record Pace – Does it Matter?
Fund Launches and Updates
BlackRock has launched a sovereign bond ETF designed to weight countries on their level of risk from climate change. Government debt from Germany, Spain, the Netherlands, Belgium and Ireland will be underweighted in the new ETF because of their higher greenhouse gas emissions or greater exposure to climate change risks. The iShares € Govt Bond Climate UCITS ETF (SECD) is listed on Xetra with a total expense ratio of 0.09%. Link
BNP Paribas has launched a new ETF providing investors with access to companies of the ‘Blue Economy’ worldwide on Xetra and Börse Frankfurt. The BNP Paribas Easy ECPI Global ESG Blue Economy UCITS ETF – Acc gives investors the opportunity to invest worldwide in sustainable industrial companies. Link
First Trust launched the actively managed First Trust Low Duration Global Government Bond UCITS ETF (“FGOV”) on the London Stock Exchange last week. Initially listed on the Euronext Amsterdam in November 2019, the fund applies a rules-based methodology to select carry and value opportunities across global sovereign bond yield curves. Link
First Trust also launched new cloud computing and cybersecurity ETFs on Xetra. The First Trust Cloud Computing UCITS ETF and the First Trust Nasdaq Cybersecurity UCITS ETF offer investors a targeted investment in technology stocks. Link
HSBC Global Asset Management has added a UK equity ETF to its low carbon ESG range. The HSBC UK Sustainable Equity UCITS ETF (HSUK) is listed on the London Stock Exchange with a total expense ratio (TER) of 0.12%. Link
Phillip Capital Management launched the first Singapore-domiciled money market ETF on Monday, 5th October, with $100 million in initial assets under management. The Phillip SGD Money Market ETF invests in short-term money market securities and deposits of established institutions to generate returns comparable to the Singapore-dollar savings deposits. Link
Investor yanks $600m from Invesco’s commodity ETF. Second-highest across all European-listed ETFs last week, Invesco’s broad commodity ETF saw over half of its assets pulled last week as concerns of a new demand hit from rising coronavirus cases weighed on commodity prices. Link
BlackRock S&P 500 fund is Europe’s biggest equity ETF loser in third quarter. BlackRock’s $50bn iShares Core S&P 500 ETF had the largest net outflows of any equity ETF in Europe, leaking €1.1bn. Vanguard’s S&P 500 ETF, another physical equity ETF, was hit by the same trend, shipping €560m. The outflows came despite strong inflows into equity ETFs in general, which raked in €17.1bn in the quarter, up from €4.2bn in the previous three months, and US large-cap funds in particular, which took in €3.4bn. Link
ESG ETF inflows on track for record year
ETFs struggle to gain traction in Malaysia. A lack of distributors willing to market and promote exchange traded funds, as well as a belief that ETFs deliver lower returns, are holding back the growth of the industry in Malaysia. The first ETF in Malaysia was launched in 2005 and 19 ETFs are now listed on the Malaysian stock exchange. Their combined assets amounted to just $551.16m as of end-August. Link
Cleaning house – ETFs in Europe closing at record pace as issuers struggle to attract assets to new products. According to data from Morningstar, some 286 ETFs were closed in 2019 with a further 223 shut during the first eight months of this year. With a monthly average rate of 28 closures, this figure to climb to a record high of 334 by the end of the year. Link
Citi has been awarded the mandate to provide ETF services for the full fund range of FinEx ETF, Russia’s first and leading exchange-traded fund issuer. Under the agreement, Citi will service FinEx’s 13 ETFs representing $600 million in assets. Link
London Stock Exchange Group announces proposed divestment of the Borsa Italiana Group to Euronext for €4.325 billion Link
FCA bans the sale of crypto-derivatives to retail consumers. The FCA has published final rules banning the sale of derivatives and exchange traded notes (ETNs) that reference certain types of cryptoassets to retail consumers. The FCA considers these products to be ill-suited for retail consumers due to the harm they pose. The ban will come into effect on 6 January 2021. Link
Fund in Focus
Small cap shares have climbed to a 25-year relative high against the broader market. The Stoxx Europe Small 200 Index has surged 6% over the last two weeks, handily beating the Stoxx 600 by over 2 percentage points.
Curious to confirm this, this week we review the Invesco STOXX® Europe Small 200 UCITS ETF which has a fixed component of 200 European small cap stocks. The index is derived from the STOXX® Europe 600 Index and covers Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. TER is 0.35%, AUM €3.14m.
YTD, the ETF is -6.43% but looking at March 27th lows, the fund is up +32.43% through last Friday. Compare that to the Invesco Stoxx 600 ETF which is only up +20.52% for the same period. Apparently, the news is correct.