Invesco to enter Bitcoin ETF space
A number of significant announcements from the larger ETF issuers last week. Invesco has officially filed two bitcoin ETFs and State Street has created their own digital assets team and hinted at possible crypto ETFs in the future. And the Amundi and Lyxor deal is ahead of schedule.
Fund Launches and Updates
21Shares, announced that one of the first cryptocurrency exchange traded products will become available to institutional investors in the UK to trade on Aquis Exchange.
21Shares and Aquis Exchange plan to cooperate on bringing more of 21Shares’ suite of institutional cryptocurrency products to institutional investors in the UK, including ETPs in other prominent cryptocurrencies such as Ethereum, Ripple, Tezos, Polkadot, Cardano and Stellar. Link
CoinShares announced that three of their recently launched physically-backed ETPs — Bitcoin, Ethereum, Litecoin — have cross-listed on Germany’s Börse Xetra exchange. Link
iClima Earth is set to launch the world’s first ETF offering investors exposure to firms promoting the decentralisation of energy generation on HANetf’s white label platform. The iClima Distributed Renewable Energy UCITS ETF (DGEN) is listed on the London Stock Exchange and is the second fund to be launched by the firm. Total expense ratio of 0.69%. Link
Lyxor launched the Lyxor Core Euro Government Bond (DR) UCITS ETF – Dist on Xetra and Deutcshe Borse which provides exposure to fixed-income and euro-denominated government bonds of the eurozone. Link
In addition to the fund launch, Lyxor announced reduced fees on the Lyxor Net Zero 2050 S&P 500 Climate PAB (DR) UCITS ETF (PABU LN) –0.20% to 0.07%, and the Lyxor Net Zero 2050 S&P Europe Climate PAB (DR) UCITS ETF (RPAB LN) — 0.20% to 0.18%. Link
State Street Global Advisors launched three ESG versions of its dividend aristocrat ETFs.
The SPDR S&P Global Dividend Aristocrats ESG UCITS ETF (GEDV), SPDR S&P US Dividend Aristocrats ESG UCITS ETF (UEDV) and SPDR S&P Euro Dividend Aristocrats ESG UCITS ETF (ZPD9) have listed on the Deutsche Boerse and Euronext Amsterdam, while GEDV and UEDV will also list on the London Stock Exchange. GEDV has a total expense ratio (TER) of 0.45% while UEDV and ZPD9 have TERs of 0.35% and 0.30%, respectively. Link
VanEck lists four crypto currency ETPs at SIX. These ETPs provide investors with exposure to the price of Bitcoin and Ethereum without having to buy the crypto currencies themselves. Link
In Asia, Samsung has listed an ETF on the New York Stock Exchange’s FANG+ index. It is the first FANG+ exchange traded fund to be listed on the Hong Kong Stock Exchange, and is an ETF comprising 10 United States publicly listed technology-focused companies. Link
Moving on to the U.S., Emles Advisors announced the launch of a new actively managed ETF — the Emles Alpha Opportunities ETF (EOPS). The new fund provides institutional investors with access to a hedge fund strategy through an ETF structure. Link
It’s official, Invesco announced plans for two cryptocurrency-focused exchange-traded funds, becoming the latest entrant into the field while approval of an actual bitcoinETF by the U.S. Securities and Exchange Commission remains elusive. Link
Invesco launched two new exchange-traded funds Friday with management costs waived until the end of the year, further escalating the ETF industry’s long-running fee war. The Invesco Nasdaq Biotechnology ETF (IBBQ) and Invesco PHLX Semiconductor ETF (SOXQ) will effectively cost nothing until Dec. 17, after which each will carry an expense ratio of 19 basis points. Link
T. Rowe Price launched the actively managed U.S. Equity Research ETF on NYSE Arca (Ticker: TSPA) and marks the firm’s fifth strategy in the active ETF vehicle space. The ETF is constructed similarly to the corresponding T. Rowe Price’s U.S. Equity Research Fund (Ticker: PRCOX) and has a net expense ratio of 0.34% Link
Volt Equity has filed an exchange-traded fund application with the U.S. Securities and Exchange Commission. The ETF would offer exposure to bitcoin-related companies, including MicroStrategy. The Volt ETF trust will invest in companies that are involved with bitcoin, similar to the Bitwise ETF. Link
In the U.S. real estate and related ETFs are heating up right now. A housing shortage, low interest rates, and global supply-chain delays are helping real estate exchange-traded funds rake in cash according to a Bloomberg report.
The $6.2 billion iShares U.S. Real Estate ETF (ticker IYR), posted $1.3 billion of inflows last week. Not to be outdone, the $41.4 billion Vanguard Real Estate ETF, (ticker VNQ), also was on the leaderboard, pulling in $338 million.
As an aside, it is quite possible that unknowing retail investors are trying to play the U.S. housing market situation through these ETFs which primarily provide exposure to REITS, not personal homes. Impossible to say for sure but that’s our guess. Link
Global gold ETFs added US$3.4 billion in May, reversing three straight months of net outflows. Global AUM stand at US$222 billion. Regionally, larger funds in the US, UK, and Germany were once again the primary driver of flows.
North American funds added $2.1 billion, while European funds saw inflows of $1.6 billion. Asian-listed funds had outflows for a second straight month (-US$210 million, -2.7%) coming almost entirely from China, which had strong local stock market strength. Link
Bloomberg reported that last week a single giant trade fuelled the biggest ever inflow to the iShares MSCI Eurozone ETF (EZU). The trade lured about $1.1 billion of new money on Monday, boosting its assets to $8.1 billion — among transactions on the day was one trade worth $977 million. Pretty impressive. Link
The sale of Lyxor from Société Générale and Amundi has been signed by both parties today with the deal expected to complete by the end of the year. In an announcement last week, Amundi said the €825m acquisition had been finalised earlier than scheduled. Link
With at least nine applications for Bitcoins ETFs collecting dust in the Securities and Exchange Commission’s in-box, U.S. ETP issuers are cobbling together a growing number of workarounds.
A slate of companies are releasing or planning “Bitcoin adjacent” products that skirt U.S. regulators’ refusal to allow the largest cryptocurrency to be put in an exchange-traded fund wrapper. Invesco became the latest on Wednesday, announcing a pair of funds packed with crypto-linked equities.
The SEC has already delayed its decision to approve or deny a Bitcoin ETF once this year and is expected to punt again at its next deadline on June 17. Link
State Street announced the establishment of a new digital division seeking to keep up with customers who had increased their crypto exposure by 300% in the past two to three months.
The creation of State Street’s new division for digital finance follows similar moves in recent months by competitors including Bank of New York Mellon, Northern Trust and Standard Chartered. Link
In addition to their new digital division, separate reports show that State Street’s ETF business is mulling how it can harness increasing client demand for digital currencies like bitcoin.
A State Street official noted in the report that the bar is “extremely high” for the company to roll out offerings that will give investors exposure. Link
Sygnia has bemoaned the JSE’s refusal of its request to list what would have been SA’s first bitcoin-based exchange-traded fund (ETF) on the grounds that no national policy exists to guide the listing of crypto assets.
The Cape Town-based firm, which has about R27bn in assets invested in its ETFs, is the second-largest provider of the passive investment products in SA. Link
Securities lending by exchange traded funds has almost doubled since 2017, data from EquiLend show. The value of ETFs’ on-loan balances rose 77 per cent, from an average of $37.5bn in 2017 to $66bn between January 1 and mid-May.
This dwarfed an overall increase of 21 per cent in the wider securities lending market. Securities owned by ETFs remain a small proportion of the total lending market, at 2.57 per cent in 2021 compared to 1.75 per cent in 2017. Link
Citigroup recently predicted that the $21 trillion U.S. mutual-fund industry could consist mostly of ETFs within the next 10 years. ETFs have absorbed $387 billion since the end of December, while mutual funds have taken in $87 billion, according to Investment Company Institute and Bloomberg Intelligence data.
The growing adoption of semi-transparent ETFs, which reveal their holdings once a quarter, should also help accelerate the trend, according to the bank. Of course, assets in the mutual-fund industry still dwarf the fast-growing $6.4 trillion ETF universe.
Additionally, the U.S. retirement system and 401(k)s are largely designed to integrate mutual funds. Link
About a third of institutional traders surveyed by Keefe, Bruyette & Woods said they’re embracing ETFs more in the wake of the March 2020 stock collapse. Of 40 respondents, 85% said the liquidity of products is their key selling point. Nearly nine in 10 plan to use them to the same degree or more this year.
In a surprising conclusion, the survey found that just 3% of respondents used ETFs tracking ESG themes, while only 8% planned to do so in the future. That comes even as inflows into equity-focused ESG ETFs are on track this year to break 2020’s record of $31.1 billion. Link
Exchange traded funds that focus on ESG themes have become the top choice for Chinese institutions investing in the vehicles, despite enduring doubts over performance.
Mainland Chinese and Taiwan investors rank ESG ETFs as their top choices for new products, while Hong Kong investors rank it as their third-most desired ETFs, a new survey from Brown Brothers Harriman shows.
More than 300 institutional investors, financial advisers and fund managers, including 146 respondents across the three markets of the mainland, Hong Kong and Taiwan, were questioned for the survey. A total of 80 per cent of the surveyed mainland investors said they planned to allocate between 11 per cent and 20 per cent of their assets into ESG ETFs over the next five years. Link
BlackRock has received the first approval for a foreign asset manager to launch a wholly owned mutual fund business in China.
The move followed a wave of activity from big US banks and asset managers as they seek to more fully integrate themselves into China’s financial system and take advantage of its vast pool of savings, which have historically been directed towards cash and property.
China’s asset management market was worth Rmb121.6tn ($19tn) last year, according to Boston Consulting Group and China Everbright Bank. Since April 2020, foreign companies have been permitted to fully own mutual fund businesses in China, a shift from a previous requirement to operate through a joint venture with a local partner. Link