May ends with extensive list of ETF launches
Given the extended bank holiday week we have a longer than average list of fund launches and updates, mostly in the digital asset and thematic space. Global supply issues and increased demand has led to strong returns for some commodity-based ETPs and once again, retrocessions are in the news as being a hinderance to ETF growth – this time focusing on retail investors.
Fund Launches and Updates
21Shares has selected CryptoCompare to provide settlement pricing for all of its single asset ETP data effective today, June 1st 2021. 21Shares, the Swiss innovation-led crypto ETP issuer, whose product range includes Bitcoin, Ethereum, as well as HODL Basket ETP and its newly launched Stellar and Cardano Bitcoin ETPs, is opening up investment in cryptocurrencies which currently lists 14 ETPs on the Zurich SIX as well Frankfurt and Vienna exchanges. Link
ETC Group is listing the BTCetc -ETC Group Physical Bitcoin (ticker BTCE) and ETHetc – ETC Group Physical Ethereum (ticker: ZETH) on Euronext Paris in EUR and on Euronext Amsterdam in USD today, 1 June 2021. The ETCs are issued in Germany by ETC Group and marketed and distributed by HANetf.
HANetf is also launching Europe’s first ETF targeting sports and online betting companies. The Sports Betting and iGaming UCITS ETF (BETZ) will list on the London Stock Exchange with a total expense ratio of 0.69%. Link
HANetf is on a roll with fund launches – the FT reported the upcoming HANetf’s Procure Space Ucits ETF which is expectedto launch in early June on the London Stock Exchange. HANetf partnered with Procure, a Pennsylvania-based boutique to create the ETF, known as YODA and will carry a total expense ratio of 75 basis points. Couldn’t pick a better ticker for this one! Link
KraneShares has launched an ETF in Europe which offers exposure to the 50 largest companies in China’s STAR market. The KraneShares ICBCCS SSE Star Market 50 Index UCITS ETF (KSTR) is listed on the London Stock Exchange with a total expense ratio of 0.82%. Link
Legal & General Investment Management expanded its thematic range with the launch of the L&G Digital Payments Ucits ETF. The L&G Digital Payments Ucits ETF is listed on the London Stock Exchange, Deutsche Börse and Borsa Italiana. Link
Leverage Shares has launched nine new single stock tracker ETPs. The new ETPs are listed on the London Stock Exchange with a management fee of 0.15%, offering 1:1 exposure to leading US and Canadian stocks such as Coinbase, Shopify, Tesla and the FAANGs. Each ETP is physically backed and trades in sterling, euros and US dollars. Link
Vanguard has expanded its ESG ETF range with the launch of a corporate bond strategy. The Vanguard ESG Global Corporate Bond UCITS ETF (V3GD) is listed on the London Stock Exchange and Deutsche Boerse with an ongoing charges figure of 0.15%. Link
Wichita, Kansas-based 6 Meridian launched a new actively managed equity ETF, the 6 Meridian Quality Growth ETF (SXQG), to run alongside last year’s launch of four ETFs which replicated their existing strategies, run in separately managed accounts. Link
ETF group Strategy Shares has launched the Gold-Hedged Bond ETF (GLDB), designed to enable investors to generate income from a portfolio of investment grade corporate bonds, while hedging against inflation with a gold overlay. Link
Tuttle Capital Management announced the launch of two new actively managed ETFs going after different parts of the societal spectrum. The FOMO ETF (FOMO) looks to invest in securities favoured by thematic ETFs, while the Fat Tail Risk ETF (FATT) protects investors from major market downturns. FOMO will trade on the CBOE, FATT on the NYSE. Link
The Defiance Next Gen Altered Experience ETF began trading Friday under the ticker PSY, offering exposure to firms involved in “the next generation of medicine, including psychedelics, cannabis and other psychedelic-derived treatments,” according to a statement. Link
Flows
In the U.S., investors added to their ETF holdings this week ahead of the holiday weekend.
On net, $24.1 billion flowed into U.S.-listed ETFs during the week ending Thursday, May 27, bringing year-to-date inflows up to $393.5 billion. That compares to year-to-date inflows of $137.9 billion at this same time a year ago. Link
Commodity ETPs listed in the U.S. have seen $2.6bn on inflows in May as the demand for raw materials has skyrocketed during a period of economic revival.
And some issuers are chasing the trend – on Thursday Aberdeen Standard Investments filed for two broad commodity ETFs and an industrial metals fund. Tidal ETF Trust filed for the SonicShares Global Shipping ETF. Link
European stocks are back in favour and the likes of Credit Suisse and Morgan Stanley joining an increasingly bullish chorus, according to a Bloomberg report.
The Euro Stoxx 50 Index is up 13% so far in 2021, outperforming the S&P 500 in the opening five months of the year for the first time since 2017 and topping all other major regional benchmarks.
International investors are also voting for euro-area equities by piling into ETFs. The U.S.-listed SPDR EURO STOXX 50 ETF is set for its biggest month of inflows since 2017 with about $300 million new additions in May, while the iShares MSCI Eurozone ETF this week had its largest single-day inflow of $187 million since October 2019. Link
Noteworthy
Hong Kong’s central bank is working with the supervisory board of the $12.03bn Tracker Fund to review State Street Global Advisors’ role as manager of the territory’s largest ETF in the territory.
The Tracker Fund is Hong Kong’s largest vehicle for pension savings, managing money for approximately 200k retail investors.
According to the FT, CSOP Asset Management and Hang Seng Investment Management have been identified as two of the most likely candidates that might replace SSGA as manager of the Tracker Fund but it is too early to say if SSGA will definitely be replaced. Link
During ETF Stream’s two-day virtual conference last week, Martin Gilbert, the former Aberdeen Asset Management CEO, mentioned in an interview that one of his biggest regrets during his tenure at the firm was not launching an ETF business to sit alongside the mutual fund range.
“One of the mistakes I made was not realising how big they would get,” he reflected. “Asset managers should have an ETF business; it is the future.”
Interesting article from the FT recapping something most of the ETF issuer community is already fully aware of — retail investors in Europe are missing out on the benefits of investing with ETFs because they still remain hard to buy in the region.
The problem in Europe is partly historical because most investors in the region have historically relied on advisers and banks to recommend products and to act as intermediaries.
At the same time, most countries in Europe also rely on a so-called retrocession fee model where those same intermediaries receive a kickback fee or commission if an investor buys a mutual fund.
The article goes on and quotes Morningstar’s Monika Dutt saying, “In European countries where retrocessions are not banned: buyers beware. In these markets we encourage investors to examine whether their wealth managers are benefiting financially from their product recommendations.” While we agree with this and probably have said this exact thing at some point in our careers, it all ties back to investor education.
Who is letting them in on the not-so-secret fact that you need to even “beware” of your investments and question the person who is selecting them on your behalf? Link
Questions over whether more regulation is needed in the index provider space have bubbled to the surface after S&P Dow Jones Indices was fined $9m by the Securities and Exchange Commission for failing to disclose a feature to Credit Suisse that led to estimated losses of $1.8bn during Volmageddon.
Currently, index providers are viewed as data publishers by US regulators instead of investment advisers, however, this is looking more likely to change. Link
The Securities and Exchange Commission is weighing several bitcoin exchange-traded fund proposals and is now soliciting comments on applications from Fidelity Investments and hedge fund SkyBridge Capital. To date, the SEC has not approved a bitcoin ETF, but a decision on at least one proposal could come in by June 17. Link
Ownership of renewable energy stocks is as crowded a trade as technology stocks were at the height of the 1999 dotcom boom, according to index provider MSCI.
The claim follows a flood of investment into the sector, with global inflows into clean energy exchange traded funds surging to $14.7bn in the six months to the end of March, according to data from Morningstar, up from just $1.3bn in the same period of 2019-20.
Almost a dozen clean energy ETFs have launched since the start of 2020, according to data provider TrackInsight, taking the total to 26, with combined assets of $22.4bn, up from just $2.4bn at the end of 2019. Link
One beneficiary of the ETF boom and widely viewed as being an attractive target for a larger asset manager is Wisdom Tree.
“The macro trends of mutual funds losing out to ETFs and wealth managers moving towards model portfolios means we can benefit and take market share from others,” Jarrett Lilien, president and chief operating officer of Wisdom Tree told the Financial Times.
“Our core business is humming and we are expanding,” he said, while he acknowledged “we are mindful that we are attractive”. Will be interesting to see how this progresses if at all. Link
