• Andrea Murray

Medical Cannabis ETFs are on a High




This week Iconic Funds enters the crypto ETP space with their new fund launch, ETF assets under management eclipse traditional index-tracking mutual funds for the first time, and Cannabis ETFs are swelling this year. Read on for more top ETF highlights from this week.


Fund Launches and Updates


Iconic Funds is the newest firm to enter the crypto ETP space with the launch of the Iconic Funds Physical Bitcoin ETP (XBTI). Listed on the Deutsche Boerse with a total expense ratio of 0.95%, XBTI is in line with the WisdomTree Bitcoin (BTCW) as the cheapest bitcoin ETP available in Europe. It is worth noting that in March, VanEck halved its TER to 1% for the VanEck Vectors Bitcoin ETN making us wonder if there is a price war ahead? Link

WisdomTree closed the WisdomTree EURO STOXX Banks 3x Daily Short (3BAS) ETP due to a significant drop in the product’s performance. The fund has returned -45.9% so far this year and -92.9% over the trailing 12 months, as at 22 April. Link


VanEck filed for the first ethereum ETF in the U.S., which follows their application with the SEC for a bitcoin ETF. There are now 8 total bitcoin ETFs before the Committee for approval and many are divided on whether this will happen in 2021 or not. Link


More on the digital assets front in the U.S. – the CBOE filed with the Securities and Exchange Commission to list Fidelity’s Wise Origin Bitcoin Trust, saying concerns about potential manipulation of a Bitcoin ETP have been “sufficiently mitigated.” Link


With all of this talk around digital assets and new product launches globally, check out Blackwater’s recent video clip on where this space is going. Link


Flows


ETFs are attracting more supporters as 57% of investors said they have replaced an active mutual fund with an ETF, a 39% increase from 2020, according to a survey by TrackInsight. The ETF industry continued its growth trajectory amid the pandemic, with assets surging to $7.6trn last year and product launches showing no sign of slowing down. Link


ETF Stream reported this week that Vanguard’s FTSE 250 ETF has been one of the most popular ETFs in Europe this year. Having already seen $882m inflows YTD, the Vanguard FTSE 250 UCITS ETF (VMID) was among the most popular strategies in Europe in the week to 7 May, gathering $294m of inflows. Link

Assets under management in exchange traded funds are eclipsing traditional index-tracking mutual funds for the first time, after the global passive investment industry vaulted past $15tn in assets last year. ETFs stood at $7.71tn under management at the end of last year — narrowly behind index mutual funds at $7.76tn. Comprehensive global data comes with a lag, but consultancy ETFGI calculates that assets under management in ETFs stood at $8.33tn at the end of March. Link

Interesting FT article highlighting the Rize Medical Cannabis and Life Sciences Ucits ETF noting the massive regulatory hurdles prior to launching the fund due to varying country laws around cannabis. Rize succeded in listed its fund on the London Stock Exchange, Deutsche Börse Xetra and Six Swiss Exchange after negotiating a maze of European legislation and are confident that an increasing numbers of countries will soften the rules around cannabis. Broadly speaking, assets under management in cannabis funds swelled from $792m at the end of March last year to $4.4bn at the end of March 2021. Link




Noteworthy


Index providers are vying with each other to provide the benchmarks needed to meet demand for sustainable funds. In Europe, flows into exchange traded funds that focus on ESG factors outstripped flows into all other types of ETFs in the first quarter of this year. Globally, ESG fund AUM has ballooned from $10bn in 2015 to $246bn as at the end of March, according to ETFGI. Meanwhile, the number of ESG ETFs has jumped from 90 globally in 2015 to 578 today. With investor appetite for sustainable ETFs soaring, index providers have rushed to grow their range of indices, often buying up specialist data providers or investing in internal tools in anticipation of ESG benchmarks becoming more lucrative. Link


Gatekeepers at Harbor Capital have picked a London-based boutique run by BlueBay Asset Management and BlackRock alumni to run its first two ETFs. Harbor has selected BlueCove, which was set up by BlueBay co-founder Hugh Willis and former CEO Alex Khein, to run its forthcoming ETF offerings - the Harbor Scientific Alpha High-Yield ETF and the Harbor Scientific Alpha Income ETF - when they launch in the fall. According to a filing with the SEC, the Scientific Alpha High-Yield ETF will have an expense ratio of 0.48%, while the Scientific Alpha Income ETF will have an expense ratio of 0.50%. Link

In an FT article this morning highlighting the case for emerging market investing, it was noted that the number and value of emerging market-focused exchange traded funds have risen remarkably during the coronavirus crisis. There were 1,670 such products worldwide at the end of March, up from 1,447 at the start of last year, while their market capitalisation rose by more than a quarter to $742bn (£528bn) over the same period. Link

In Asia, Shanghai and Korean exchanges have agreed to launch a cross-border scheme for exchange-traded funds. The agreement, which will facilitate cross-border investment between China and Korea, comes as the two Asian countries will celebrate 30 years of diplomatic ties next year. Plans to launch ETF Connect between China and Korea represents Beijing’s latest effort to open up its financial markets. China is close to launching Wealth Connect linking Guangdong with neighboring Hong Kong and Macau. Link


Really good interview here with Eric Balchunas of Bloomberg ETF Intelligence on why he thinks the U.S. is closer to approving bitcoin ETFs. This contradicts the news on 12/5 where CNBC’s Andrew Sorkin reported that the SEC warned of the risks of mutual funds investing in Bitcoin derivatives, setting back the hopes of crypto enthusiasts eagerly awaiting a Bitcoin ETF in the U.S.


In case you missed it…

Bloomberg has created a “Pret Index” which shows sandwich sales as a guide to City of London activity and not surprisingly, numbers are showing that London’s bankers, corporate lawyers and asset managers are taking their time returning to the office. Our guess is that you won’t see a pick-up until mid-summer and maybe even September. Pret Index Would love to see a pub activity index for the City - nothing like a pint at Ye Olde Mitre.

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