Europe ETFs Enjoy Inflows Despite Market Turmoil
Updated: Mar 8
It has been a busy week of ETF launches and fund updates in Europe along with a full summary of the various implications to funds, exchanges and indices related to Russia.
Fund Launches and Updates
BlackRock is set to start fully replicating the underlying index on the iShares Edge MSCI USA Momentum Factor UCITS ETF (IUMF) and iShares MSCI EM Consumer Growth UCITS ETF (CEMG). Link
Credit Suisse Asset Management has listed the CSIF MSCI USA Tech 125 ESG Universal Blue UCITS ETF (CYSU) on Deutsche Boerse, SIX Swiss Exchange and Borsa Italiana with a total expense ratio of 0.18%. Link
DWS has launched the Xtrackers EMU Net Zero Pathway Paris Aligned UCITS ETF (XNZE) and the Xtrackers World Net Zero Pathway Paris Aligned UCITS ETF (XNZW), TER of 0.15% and 0.19% respectively. Both ETFs are listed on the Deutsche Boerse with listings on the London Stock Exchange and Borsa Italiana to follow. Link
Effective last week, the Franklin LibertyQ U.S. Equity UCITS ETF (FLXU) has switched from tracking the Franklin LibertyQ US Large Cap Equity index to the Franklin US Equity index. Link
Global X launched the Global X Innovation Ucits ETF Model Portfolio. The firm’s model portfolio growth-focused equity strategy is embedded in the new fund, which concentrates on disruptive technology, as well as people and demographics categories within the Global X thematic universe. Link
Additionally, they have also launched the Global X China Clean Energy UCITS ETF, Global X China Electric Vehicles UCITS ETF, Global X China Cloud Computing UCITS ETF, and Global X China Biotech UCITS ETF. The ETFs have been listed on Xetra in euros and SIX Swiss Exchange in Swiss francs. Each comes with a TER of 0.68%. Link
HANetf listed the following three ETFs on Euronext Paris: Procure Space UCITS ETF (YODA), ETC Group Digital Assets and Blockchain Equity UCITS ETF (KOIN), and U.S. Global Jets UCITS ETF (JETS).
WisdomTree launched the following 4 ETPs: WisdomTree STOXX Europe Travel & Leisure 2x Daily Leveraged, WisdomTree STOXX Europe Travel & Leisure 2x Daily Short, WisdomTree STOXX Europe Automobiles 2x Daily Leveraged, and the WisdomTree STOXX Europe Oil & Gas 2x Daily Short ETP. The funds listed on the London Stock Exchange, Borsa Italiana and Borse Xetra as of 2 March, and have management expense ratios of between 0.80% and 0.85%. Link
In Canada, BMO Investments Inc. launched ETF Series units of BMO Brookfield Global Real Estate Tech Fund (Ticker: TOWR) and BMO Brookfield Global Renewables Infrastructure Fund (Ticker: GRNI) on the Toronto Stock Exchange. Link
In the U.S., more household name firms embrace the digital assets ETF world as Charles Schwab files the Schwab Crypto Economy ETF with the SEC. The fund, if launched, will invest in stocks in the bespoke Schwab Crypto Economy index without investing directly in cryptocurrency itself and will hold the “essential nuts and bolts” of the cryptocurrency industry. Link
Full list of U.S. launches
Flows and Trading Volume
Despite market volatility, the European market has experienced in February more than $11.7bn of new net investments compared to $29.3bn in January. Unsurprisingly, given the macro environment, commodities came back into play gaining new inflows of $2.2bn YTD, most of which is being allocated to gold products.
According to ETFGI, $12.4 billion in assets were invested in 100 crypto ETFs/ ETPs listed globally at the end of January. XBT Provider is the largest ETP provider in terms of assets with $3.1 billion, or a 25% market share and 21Shares is second with $1.7 billion and a 14% share. Link
Inflationary concerns, combined with weeks of growing tensions ahead of the invasion of Ukraine, helped attract just under $4.6bn of inflows into gold ETFs in the year so far to February 25. This took total assets in the category to $221bn — the latest data available from the World Gold Council. Meanwhile, ETFs that track the share prices of companies in the US energy sector have gathered net inflows of $4.2bn so far this year, with investors betting that higher prices will boost their earnings. Link
Last week was obviously very busy with various news announcements being released daily from all areas within the ETF ecosystem. Below is a brief collection of those as it relates to funds, exchange announcements, and index provider updates.
In Europe, trading of BlackRock’s iShares European-listed Russia ETF (CSRU) was suspended by Deutsche Börse, Euronext and Borsa Italia. In addition, Euronext has also suspended BlackRock’s iShares MSCI Eastern Europe ETF (IEER) which has a 67 per cent weighting in Russian stocks.
Trading in London and Dublin was suspended on 3 March for Invesco’s Russia ETF (RDX), and also for the FinEx Tradable Russian Corporate Bonds Ucits ETF (FXRU). The decision to suspend was made by the fund managers in both cases and not by the exchanges. Seventeen Russian ETFs listed in Moscow have also been unable to trade this week because of the closure of the exchange following Russia’s invasion of Ukraine. Link
In the U.S., last week kicked off on Tuesday with various creation halts from the ETF issuers on the iShares MSCI Russia ETF (ERUS), the VanEck Russia Small-Cap ETF (RSXJ), the Franklin FTSE Russia ETF (FLRU). By Friday afternoon, 4 March, trading in these Russia-related ETFs as well as the VanEck Russia ETF (RSX) were halted indefinitely by the NYSE Arca and CBOE BZX exchanges. The Direxion Daily Russia 2X Shares ETF (RUSL) was also halted and has plans for official closure on 11 March. And although not directly tied to Russia equity names, Ukraine is one of the largest wheat producers globally and this week, the $387m Teucrium Wheat ETF (WEAT) suspended creations Monday morning (6 March). Link
In terms of actions from index providers, S&P Dow Jones Indices, Morningstar, MSCI Inc., FTSE Russell and Stoxx Ltd. are among the index providers cutting Russian equities from their widely-followed gauges. Link
Stoxx, the operator of Deutsche Börse’s Qontigo indices, was one of the first to remove 61 Russian companies from its indices. The list includes most leading Russian companies, such as Gazprom, Lukoil, Sberbank, Rusal and Aeroflot. Link
21Shares’ Moessler: More education needed in crypto ETP space Link
Vanguard Tightens Grip on $6.8 Trillion ETF World Link
Some tailored thematic ETFs have a poor record of returns despite their appeal Link
Demand for ESG ETFs is being driven by younger investors, specifically those with self-directed accounts. Link
Watchdogs divide over opening up retail risk of crypto funds Link