• Andrea Murray

Global Bitcoin ETPs Heat Up




In this week’s newsletter, we highlight a number of ESG and fixed income ETF launches and two back-to-back bitcoin ETF launches in Canada. A true test of the “first-mover advantage” and we are sure you can guess which one smoked the competition. European ETF flows were also published last week with a positive start to the year – read more below to catch up on any top ETF news that you may have missed.


Fund Launches and Updates


Legal & General Investment Management (LGIM) expanded its fixed income ESG range with the launch of the L&G ESG Green Bond UCITS ETF (GBND). Listed on the LSE, Borsa Italiana and Deutsche Boerse, the fund has a total expense ratio of 0.25%. Link


HSBC Global Asset Management is set to launch a securities lending programme for its European ETF range. The programme will not include either the HSBC S&P 500 UCITS ETF (HSPX) or any of its sustainable ETFs range. Link


Invesco launched the first municipal bond ETF in Europe which is managed by a team in the US and has an ongoing charge figure of 0.28%. Link


WisdomTree launched the world’s first coronavirus recovery ETF, a basket of EU-issued bonds focused on limiting the damage caused by the pandemic. The WisdomTree European Union Bond UCITS ETF (EUBO) is listed on the Borsa Italiana and Deutsche Boerse with a TER of 0.16%. Link


Following VanEck and Valkyrie, NYDIG is the third firm in the U.S. to file for a Bitcoin ETF. Word is that Morgan Stanley is listed as the initial AP in the ETF, making it the financial giant's latest potential foray into cryptocurrency. Link

The first publicly traded bitcoin ETF in North America had an explosive debut last week. The Purpose Bitcoin ETF, had trading volume approach $400 million in just two days and gathered $421.8 million in AUM. A day later, Evolve Fund Group’s Bitcoin ETF debuted, but with a less impressive trading volume of about $14.5 million worth of shares. Bloomberg Link


Flows


Globally, ETF and ETP assets broke through the $8 trillion milestone at the end of January. A record $83.08 billion in net inflows was gathered during January.


And more record breaking as the European ETF market broke through the €1trn barrier according to data from Refinitiv Lipper.


Positive inflows drove the greatest growth in AUM over January 2021, adding €15.2bn, while market performance added €1.1bn, bringing the total AUM of the European ETF industry to €1.01trn.


Equity funds remain the greater portion of the European passive industry, with €690.1bn representing 68% of the market, followed by fixed income with €272.6bn (27%), while commodities accounts for 4% of AUM at €36.6bn.


The European ETF industry remains even more concentrated by provider as iShares alone represents 45.8% of the market, holding €462bn in AUM. Xtrackers follows in second place with €118bn, in turn followed by Lyxor ETF's €77.6bn, with the top ten promoters accounting for 93.2% of all European ETF AUM. Link


Noteworthy


A recent study by TrackInsight looked at 7,228 passive ETFs and found that 11 per cent of ETFs have changed the index they are benchmarked against in some way. Doesn’t sound too shocking but they did point out one extreme change -- in 2017 the Tierra XP Latin America Real Estate ETF (LARE), an ETF investing in Latin American real estate investment trusts, changed to tracking an index of cannabis companies — relaunching itself as ETFMG Alternative Harvest ETF (MJ). FT Link

New research from ETC Group revealed that ETPs are the most popular way for European institutional investors and wealth managers to gain exposure to Bitcoin. Its research surveyed 66 institutional firms across Germany, the UK, Italy, the Netherlands, Belgium and the Nordics, and revealed that 53% use ETPs to gain exposure to the cryptocurrency. This is followed by 23% who said they use structured products, 21% who use direct investment channels and 17% who use hedge funds. Link

DWS is ramping up its sales force in Switzerland, the UK, the Nordics and France to help support the growth of its ETF business, particularly in response to a surge in queries about ESG issues. They have observed that clients are planning to shift their multi-asset portfolios to ESG strategies highlighting the need for ETF salespeople to “tool up” and “add more depth and context to what they know about these products”. FT Link

Rising demand for sustainable investment prompted managers to change the strategy or investment profile of 253 European funds in 2020, helping to push regional assets invested in funds with an ESG tilt to a record €1.1tn by the end of December. In addition to the repurposed vehicles there were 505 new ESG fund launches in Europe over the year. Passive funds were a strong driver of the growth in assets, accounting for 22.5 per cent of the ESG market in Europe by the end of 2020. FT Link


In the U.S., Putnam Investments has eyes on the world of exchange-traded funds. The 84-year-old global money manager plans to join the ETF fray later this spring with the launch of four actively managed U.S. equity funds, two of which will be focused on sustainable investments. Link


In Japan, BOJ's Kuroda says no plan to 'permanently reduce' ETF buying commenting that “our ETF buying has had a positive impact on the economy and prices. We don’t have any plan to end or permanently reduce our purchases,” Kuroda said. Reuters Link


In case you missed it…

Great lesson this weekend from Ben Cichy (unless perhaps you’re a parent paying for a very expensive Uni) -- “Got a 2.4 GPA my first semester in college. Thought maybe I wasn’t cut out for engineering. Today, I’ve landed two spacecraft on Mars, and am now designing one for the Moon.


STEM is hard for everyone. Grades ultimately aren’t what matter. Curiosity and perseverance matter.”


If you like what you read, feel free to spread it around. Thank you and have a great week.

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