• Andrea Murray

SSGA Dismisses ETF Merger Rumours


State Street Global Advisors, SSGA has finally come out to address merger rumours and ESMA proposes amended SFDR rules. And very few global fund launches last week which is probably good given futures-based Bitcoin ETFs stole most of the headlines.

Read on for more ETF highlights from the week:


Fund Launches and Updates


EUROPE

DWS is adding an ESG filter to six more ETFs as well as slashing fees.

Effective 20 October, the latest round of index swaps will see all six ETFs track MSCI indices with some more than halving fees as the group expands its ESG range. Fund names and reduced TER listing can be found here.


Melanion Capital has launched the BTC Equities Universe Ucits and was listed in Paris on 22 October. The ETF will provide investors with bitcoin exposure by tracking the Melanion Bitcoin Exposure Index, a custom basket of 30 equities that are the most sensitive to the price of bitcoin. GHCO has been selected as the liquidity provider. Link


THE AMERICAS

In a blink of an eye, there are already two U.S. Bitcoin futures ETFs with more to come. The second entrant, the Valkyrie Bitcoin Strategy fund, began trading on the Nasdaq exchange on Friday under the ticker BTF. Link

Grayscale filed to convert their bitcoin fund into an ETF. Link


VanEck Bitcoin Strategy ETF is on deck and expected to have lower fees than its peers. It plans to use the ticker XBTF and will begin trading (today perhaps?) on the Cboe BZX Exchange. The fund will only invest in cash-settled bitcoin futures traded on exchanges registered with the CFTC. Expense ratio is 0.65%. Link


Additional launches last week:

Source: Link


Flows

Investors are dumping gold for cryptocurrencies as inflation picks up. More than $10bn has been pulled from the biggest gold ETF this year according to Bloomberg data. Link


Pent-up demand for the first U.S. Bitcoin exchange-traded fund drove assets held in the investment vehicle to more than $1 billion in just two days. The ProShares Bitcoin Strategy ETF (ticker BITO) ended Wednesday with $1.1 billion under management after trading volume topped $1.2 billion. That’s the quickest that an ETF has reached the $1 billion mark, Bloomberg Intelligence data show. Link


Noteworthy


The European Securities and Markets Authority has developed new obligations for product disclosures under the SFDR. As part of the proposals, ESMA said two new SFDR product categories should be created for funds that have an environmental objective.


Article 8, which classifies products that promote ESG characteristics, will create a new subset for products that “make sustainable investments with an environmental objective”. In addition, Article 9 will also be split into a subset for products that have an environmental objective. Under the new requirements, Article 9 products will be required to report on their environmental objective to highlight how they have impacted the environment. ESMA said the new disclosure standards will take effect from June 2022. Link

After numerous rumours around a potential merger or acquisition with Invesco or UBS, State Street has finally come out and said there are no plans to relinquish its asset management arm. The executives, speaking during the company’s third-quarter earnings call, declined to comment on reports that the manager had been in dealmaking talks with rivals about its fund business. Instead, they underscored how important the unit was for the company. Still sounds like a wait and see scenario. Link


An endless amount of articles last week on the Bitcoin futures ETFs so a quick recap of what happened for the few who may have been on holiday and missed it.


The first U.S. Bitcoin futures ETF started trading on the NYSE last Tuesday and due to its immediate popularity, trading volumes, and near recording breaking inflows of over $1bn in assets, almost hit its limit of futures contracts. After only two days of trading, the Proshares Bitcoin Strategy ETF owned nearly 1,900 contracts for October, and CME rules cap the number of front-month contracts one entity can own to 2,000.


On Friday, Valkyrie launched their own versions of a futures-based bitcoin ETF to less fanfare but as we know that was to be expected given ProShares achieved that first mover advantage on Tuesday. The third product from VanEck is expected to begin trading and will be listed with a much lower expense ratio of 0.65%. It will be interesting to see if that lower fee strategy works in terms of gathering volume and assets as the 3rd in line. Also, with expensive-to-run futures contracts, how far can a potential price war go? Link Price war reading here.


And finally, Invesco has dropped its plans for a competing futures-based product. Although the launch of the Invesco Bitcoin Strategy ETF has been dropped, they said they will continue to work in partnership with Galaxy Digital to offer investors a full shelf of products with exposure to this transformative asset class, including pursuing a physically backed, digital asset ETF. Link

The hotly anticipated launch of a bitcoin ETF in the US leaves the UK out of step with some other major markets in maintaining its blockade on retail access to exchange-traded crypto funds. US regulators follow Canada and European nations such as Germany and Sweden in giving the green light to ETPs linked to cryptocurrencies. But access to this type of fund for UK retail investors remains blocked by the Financial Conduct Authority, which has said it would not authorise a fund that has exposure to crypto until it is satisfied with integrity of the underlying market. The UK restrictions on these funds, which have attracted billions of dollars of investment in other jurisdictions, highlights the debate over whether the FCA’s reluctance to approve regulated vehicles for crypto investment results in retail investors turning to riskier avenues to access popular digital assets.

Link

Additional interesting reads:


European ESG funds found not to charge higher fees Link

GICS tweaks to impact ETFs -- Pending changes to the GICS classification of stocks within the data processing and outsourced services subindustry could shake up three of the largest US sectors. Link


Crypto cash and carry trade offering big upside for some Link


According to new research from SigTech, 70 per cent of institutional investors believe demand for custom portfolio solutions will increase strongly. 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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