• Andrea Murray

ETF Flows Are Set to Surpass 2020


We may be in the dog days of summer but that is not stopping the record number of ETF flows and the growing number of SEC filings for crypto ETPs in the U.S. Speaking of summer, we will be taking a break from the newsletter for the month of August but will be back in September. We hope you enjoy your summer holidays!


Fund Launches and Updates

EUROPE

HANetf has announced the launch of Europe’s first Enterprise Software ETF with an ESG screen, Purpose Enterprise Software ESG-S UCITS ETF (Ticker: SOFT).

‘SOFT’ will list on London Stock Exchange in late July and will be passported for sale across Europe. Link


The iShares MSCI Europe SRI UCITS ETF EUR Hedged (Dist), launched on Xetra, is designed to allow investors to participate in the performance of large and medium-sized companies from 15 European industries that have a comparatively high ESG rating within their sector, are not involved in the extraction or production of fossil fuels and do not own fossil reserves. Charges on the fund are 0.23 per cent. Link

BNP Paribas Asset Management has launched a China socially responsible investment (SRI) ETF. The BNP Paribas Easy MSCI China Select SRI S-Series 10% Capped UCITS ETF (CHINE) is listed on Euronext Paris and Deutsche Boerse with a TER of 0.45%. Link


THE AMERICAS Goldman Sachs filed an application with the SEC to offer an ETF focused on securities of cryptocurrency-related companies. The Goldman Sachs Innovate DeFi and Blockchain Equity ETF will track the Solactive Decentralized Finance and Blockchain Index. Goldman has been ramping up its cryptocurrency work in recent months. It’s restarting its crypto trading desk to help clients like hedge funds deal in publicly traded futures tied to Bitcoin. In June, it also announced plans to offer options and futures trading in Ether, the second-largest cryptocurrency after Bitcoin. Link


ProFunds launched the Bitcoin Strategy ProFund (BTCFX) and is the first publicly available US mutual fund or ETF designed to provide investment results, before fees and expenses, that generally correspond to the performance of bitcoin. The Bitcoin Strategy ProFund principally invests in bitcoin futures contracts. Link

BNY Mellon Investment Management’s first active exchange traded fund will be an international equity product. The company plans to launch the Concentrated International ETF, which will be fully transparent and will invest in 25 to 30 companies in developed markets outside of the United States. Walter Scott, a subsidiary of BNY Mellon, will subadvise the portfolio. Though shops had churned out plans for new active ETFs, there are only 53 active international ETFs available in the US market, 13 of which launched this year. Link


Flows

Investors have ploughed half a trillion dollars into US exchange traded funds in less than eight months, eclipsing last year’s record haul. Net inflows into US listed ETFs are running at $505bn so far this year, topping the total for 2020 by $1bn, according to CFRA. Total US ETF assets under management have hit $6.6tn. US-listed stock ETFs have attracted $384bn of new money so far this year, well ahead of the $249bn posted for all of last year.


Flows into fixed income ETFs are running at $116bn and are on track to meet 2020’s record of $206bn, said CFRA. Commodity-focused ETFs have posted inflows of $40bn. Among the major ETF providers, Vanguard has led the way, attracting $200bn of new money, matching its entire total for last year. BlackRock, the dominant player, has garnered $100bn of inflows, just shy of 2020’s $122bn, while Invesco, Schwab and JPMorgan are running ahead of last year’s totals, according to CFRA. Link

Noteworthy


The biggest names in asset management are preparing for a major shift to an era in which investors demand customised equity portfolios that have traditionally been the preserve of wealthier clients. Vanguard, JPMorgan, BlackRock and Morgan Stanley have all done deals since 2020 to bolster their offerings in so-called direct indexing — a more bespoke approach to off-the-shelf investment products. Fund managers expect this will mark the next stage in the democratisation of finance, and will probably put pressure on traditional products such as mutual funds and ETPs.


By the middle of this decade, direct indexing is forecast to account for $1.5tn of global assets, up from less than $500bn now, “by taking share from other passive products such as mutual funds and ETFs”, according to a recent report from Morgan Stanley and Oliver Wyman. “While the growth of ETFs will not be stopped by the rising popularity of direct indexing, wealth and asset managers will face disruption in how advisers expect products to be constructed and distributed,” he added. Link


UBS Group’s prime brokerage unit has started to offer the clearing and settlement of crypto exchange-traded products to a limited number of clients. The Swiss bank is operating a pilot scheme and the matter is being reviewed internally, ahead of a planned wider rollout later in the year, one of the sources said. Both Goldman Sachs and Bank of America have also been offering the clearing and settlement of cryptocurrency ETPs for hedge funds, as financial institutions continue to make tentative steps toward the adoption of crypto.

Bank of America has also approved the trading of bitcoin futures for some clients and is clearing cash-settled contracts. Link


Although we already included the news of AssetCo’s 63% stake in London-based Rize ETF, it was interesting to read the Rize owners take on how they view the deal particularly from Rahul Bhushan -- ‘We have seen some ETF boutiques and ETF specialists purchased by big asset managers - I should say, rolled up by big asset managers - and that hasn’t always worked. That isn’t the route we wanted to take. We felt that through the deal with AssetCo, we could really accelerate what we are trying to do. We want to grow at our own speed as well, as we have taken time to build up and do it relatively conservatively.’ Link


Disclosure: This newsletter consists of curated articles which we have read across the globe and while we can't include every ETF related news item, we would like to hear your thoughts on something we may have missed that you feel is important. All information is sourced from 3rd party media outlets, not our own material and should also not be viewed as financial advice.

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