• Andrea Murray

Grayscale Plans to Convert to ETF Structure



Fund launches last week continued to be busy while ETF news on the flow side and regulatory front were somewhat quiet given the short holiday week. In the US, the largest crypto trust announced plans to convert to an ETF which has to rattle the competitor cages of those who have already filed. Read on for more top ETF highlights from last week.


Fund Launches and Updates


Amundi is the latest issuer to continue its push in the fixed income ESG ETF space with the launch of an ultra-short corporate bond strategy. The Amundi Euro Corp 0-1Y ESG UCITS ETF (ECR1) is listed on Deutsche Boerse with an ongoing charges figure of 0.08%. Link


BlackRock has expanded its fixed income ETF roster with the launch of three ETFs targeting climate, green bonds, and emerging market debt. The iShares € Green Bond UCITS ETF (GRON) is listed on the Deutsche Boerse with a total expense ratio of 0.20% while the iShares Global Govt Bond Climate UCITS ETF (CGGD) and iShares J.P. Morgan $ EM Investment Grade Bond UCITS ETF (IGEM) are listed on Euronext Paris with TERs of 0.20% and 0.30%, respectively. Link


Fidelity has made its first inroads into fixed income ETFs by launching two active ESG strategies. The Fidelity Sustainable Global Corporate Bond Multifactor UCITS ETF (FSMF) and Fidelity Sustainable USD EM Bond UCITS ETF (FSEM) are listed on the London Stock Exchange, Deutsche Boerse, and SIX Swiss Exchange with ongoing charges figures of 0.25% and 0.45%, respectively. Link


GinsGlobal has shifted its cloud technology and healthcare innovation ETFs from market-cap to equal weighted and added ESG screens. Effective 9 April, the HAN-GINS Cloud Technology UCITS ETF (SKYY) and HAN-GINS Indxx Healthcare Innovation UCITS ETF (WELL) will mark their index changes by being renamed the HANS-GINS Cloud Technology Equal Weight UCITS ETF (SKYY) and the HAN-GINS Indxx Healthcare Megatrend Equal Weight UCITS ETF (WELL), respectively. Link


GraniteShares is expanding its market-leading range of high conviction ETPs with the launch of the world’s first leveraged single stock ETPs on NIO, the electric vehicle maker and distributor also known as the “Chinese Tesla”. Its NIO 3x Long (3LNI) and NIO 3x Short (3SNI) ETPs have listed on the London Stock Exchange Link


UBS Asset Management has expanded its climate change ETF suite with the launch of seven equity strategies. The EMU, European, Japan, US, and global iterations of the UBS MSCI Climate Paris Aligned UCITS ETFs are listed on the Deutsche Boerse, Borsa Italiana, and Swiss SIX Exchange. Its EMU and European renditions have total expense ratios (TERs) of 0.18% while the Japan versions charge 0.20%, and US and World exposures have fees of 0.12% and 0.20%, respectively. Link


VanEck has expanded its thematics range with the launch of a hydrogen economy ETF. The VanEck Vectors Hydrogen Economy UCITS ETF (HDRO) is listed on the London Stock Exchange (LSE) with a total expense ratio (TER) of 0.55%. Link


In the U.S., the ARK Space Exploration & Innovation ETF has finally launched. Set with an expense ratio of 0.75%, the actively managed fund will invest in nearly 40 stocks in four related fields of space exploration and innovation: orbital aerospace, suborbital aerospace, enabling technologies, and aerospace beneficiaries. Link


John Hancock Investment Management has launched the John Hancock Corporate Bond ETF (JHCB) ETF which is their first actively managed fixed-income ETF and is sub-advised by Manulife Investment Management (US) LLC. Link


Flows


In the U.S., ETF inflows are reaching record levels. Nearly $100 billion poured into U.S. ETFs in March, pushing first quarter 2021 flows to a record $251 billion, according to State Street Global Advisors’ ETF Flash Flows report.


Equity ETFs experienced much of the demand for U.S. ETFs in March and in the first quarter, with inflows of $89 billion and $210 billion, respectively. Fixed income flows were $13 billion in March and $44.2 billion in the first quarter, even as close to two-thirds of bond ETFs positive negative returns on the quarter due to rising rates. Commodity ETFs saw net outflows of $6.2 billion, with over $4.5 billion withdrawn in March alone, primarily from gold-related ETFs. Link


Investors have swarmed like bees to the VanEck Vectors Social Sentiment ETF (BUZZ). The fund, which targets the US stocks favoured by investment-related posts on social media sites, has already harvested $420m of assets, just weeks after its launch last month. In the US, 62 ETFs launched since the start of 2020 have already raised at least $100m, according to data from New York-based CFRA Research. Europe has also seen 62 equally successful debuts over the same period, while in the Asia-Pacific region there have been 13. Over half the $100m-plus launches in the US, 32 in total, are classed as actively managed funds. Link

Noteworthy


The company behind the world’s largest cryptocurrency trust intends to flip it into an exchange-traded fund as soon as U.S. regulators allow. Grayscale Investments LLC is “100% committed” to converting the $39 billion Grayscale Bitcoin Trust (ticker GBTC) into an ETF, the company said in a blog post Monday. While the Securities and Exchange Commission has yet to approve the structure, several issuers have filed applications in recent weeks after North America’s first Bitcoin ETFs began trading in Canada in February. Link

Active non-transparent ETF sponsors must send the SEC certain data anywhere between biweekly and monthly, including publicly disclosed data on trade quality, such as spreads, as well as certain confidential information about the funds’ inner workings. The SEC only allows non-transparent ETFs to hold US equities and securities that trade at the same time that the US market is open. But many active managers would like the flexibility to include fixed-income or international equities in the portfolios. Will be interesting to see how those rules evolve as more active ETFs launch and gather assets. Link


Last week Bloomberg noted that the key underlying investment theme so far this year is divergence. Having fallen together as one in 2020, economies are growing again at varying speeds, thanks in part to differing stimulus measures and vaccine rollouts. U.S. yields are diverging from their European and Japanese peers, driving different moves in their currencies and bond markets. And it's no different in the global equity market, where stocks and sectors are moving ever less in tandem. A gauge of the MSCI AC World Index's 60-day pairwise sector correlations -- a measure of how closely sectors move relative to each other -- has fallen back to the 0.50 level, well below its 10-year average.


In case you missed it…

Thankfully, this story ends OK (sorry for the spoiler) but last week a Virginia high school student was napping on a school bus when a deer crashed through the windshield and landed on him. And if you watch the video he continues sleeping! Talk about Olympic medal napping skills.

The deer scampered off after the bus driver slowed down and opened the door. No one was hurt and the student confirmed that despite eventually waking up to a deer on his back, he plans to continue looking for his favourite seat at the front of the bus. Because, wise beyond his 15 years, he said, “There’s no way it’s happening twice.”


Thank you for reading and have a great week!


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