U.S. ETF Holdings Hit $4.66 Trillion
Updated: Feb 28
European markets were finally up last week after two straight weeks of losses. The FTSE 100 increased +2.42%, the FTSE 250 was up +4.17%, whilst the Stoxx Europe 600 saw an increase of +2.08%. The DAX was also up for the week with a positive return of +2.94%.
U.S. equities were up +2.49% and the CSI 300 increased with a slight gain of +0.31% for the same period.
The CBOE Volatility Index dropped -9.20% from the previous week closing at 22.21 points.
WTI Crude oil closed last week at $41.22 a barrel, with an increase of +2.36%.
ETF Launches and Updates
Amundi launched a new short-term US government bonds ETF with currency hedging on Xetra and Börse Frankfurt. The Amundi Prime US Treasury Bond 0-1 Y UCITS ETF DR - Hedged EUR (C) gives investors the opportunity to invest in US dollar-denominated government bonds issued by the US Treasury. The annual TER is 0.07 per cent.
DWS has launched the new Xtrackers II ESG EUR Corporate Bond Short Duration UCITS ETF. The Euro-denominated ETF tracks the Bloomberg Barclays MSCI Euro Corporate Sustainable & SRI 0-5 Year Index. The fund has a TER of 0.16 per cent. Listing will be on the London Stock Exchange, Xetra and the Switzerland’s SIX exchange.
HSBC Global Asset Management has launched a new ETF offering access to investments with low CO2 emissions. The HSBC Developed World Sustainable Equity UCITS ETF enables investors to invest in sustainable companies from industrialised countries worldwide. The focus is on companies with a high ESG rating that contribute to a low-carbon economy and demonstrate low fossil fuel consumption. The annual TER is 0.18 per cent. Source: ETF Express
UBS Asset Management has launched four equity ETFs offering put or call options on US and European stocks. Listed on the SIX Swiss Exchange, the UBS ETF US Equity Defensive Put Write SF UCITS ETF (SPXPW) and the UBS ETF US Equity Defensive Covered Call SF UCITS ETF (SPXCC) have total expense ratios of 0.29%.
The UBS ETF Euro Equity Defensive Put Write SF UCITS ETF (E50PW) and the UBS ETF Euro Equity Defensive Covered Call SF UCITS ETF (E50CC) have total expense ratios of 0.26%. Source: ETF Stream
WisdomTree has changed the underlying index for their fund, the WTI Crude Oil ETC (CRUD), from the Bloomberg WTI Crude Oil Subindex Total Return index to the Bloomberg WTI Crude Oil Multi-Tenor Excess Return index.
WisdomTree and Bloomberg collaborated for the updated index so it could be more resilient to extreme conditions in the WTI crude oil market. The index aims to track the performance of an equal-weighted basket of three WTI crude oil future contracts and is rebalanced monthly. Source: ETF Stream
Flows and Performance
In the U.S.
SPDR Gold Shares, ticker GLD, has become one of the world’s biggest owners of gold, surpassing even the central banks of Japan and India, as investors have scrambled to buy the precious metal and pushed it to record highs. The size of the fund’s holdings has climbed to 1,258 tonnes. On Monday and Tuesday alone, it added another 15 tonnes. It has posted a 33 per cent return this year that has helped lift its value to more than $80bn. The size of the fund puts it among the ranks of major central banks as shown in the graph below. Source: FT
U.S. real estate-focused ETFs logged $2.07 billion of net outflows in July, as investors moved money out of real estate-focused funds in favor of gold- and bond-focused funds, according to data from ETF.com. Net outflows for the real estate ETFs totaled roughly $5.06 billion YTD through July 31. In comparison, fixed income-focused ETFs collected $25.4 billion of net inflows in July while inflows for the commodities sector totaled $7.8 billion.
The SPDR Gold Trust logged the largest net inflows of any U.S. ETF, at $3.73 billion for July, followed by BlackRock Inc.'s iShares Core U.S. Aggregate Bond ETF and iShares iBoxx USD High Yield Corporate Bond ETF with net inflows of $3.48 billion and $2.77 billion, respectively. Source: S&P Global
U.S. listed ETFs hit a record this past week of $4.66 trillion in assets passing the pre-pandemic peak.
We just passed the first trading week of August, a month some say is known for being an underperformer for risk assets. So far, August has started off well so time will soon tell how markets and ETFs will perform this month. Source: Bloomberg
Last week the Financial Conduct Authority announced measures addressing the liquidity mismatch in open-ended property funds which may potentially drive flows out of the sector in favour of property investment trusts and ETFs. The FCAs plans will bring a halt to the waves of suspensions in IA UK Direct Property recent years, which included the implementation of a notice period of up to 180 days for consumers redeeming investments.
Charles Incledon, Client Director at Bowmore Asset Management, said the changes would mean "a lot of financial advisers will just stop recommending open-ended property funds to their private clients… there will be some disruption, but there are alternatives and the change should present an opportunity for investment trusts and ETFs to come up with a proposition that works. Source: Investment Week
Growing Swiss Market
Analysis of industry data by HANetf show assets in ETFs listed in Switzerland increased by 42.5 per cent in 2019. The analysis also reveals the number of new ETFs listed on the SIX Swiss Exchange for the same period was 50 per cent higher than previous years.
HANetf believes growth in Switzerland’s ETF market could increase even further because the country’s strong reputation for political and economic stability is particularly appealing in the current global environment, and this will attract more international money. Source: ETF Express
In the US
Banks have already liquidated or delisted a near-record number of ETNs this year, while product launches remain sharply down from 2019. Extreme swings spurred by Covid-19 have rocked the prices of notes tracking oil and volatility, in particular. All in, 33 ETNs have delisted or liquidated this year, just short of the record 37 in 2018, according to data compiled by Bloomberg. The total market value of ETNs has shrunk to $3.9 billion from $7.3 billion in January. Source: Bloomberg
Fund in Focus
It is impossible to ignore the fact that Gold prices and Gold related ETPs have appeared in the news almost daily for weeks now. This week, instead of highlighting just one ETF, we are providing a chart of Europe listed Gold ETFs. Please note that the HANetf The Royal Mint Physical Gold ETC Securities is the newest product and was listed on the 19th of February – whilst the performance data for the other products are from the beginning of the year.
Fund Performance and Flows (data sourced from ETFLogic)
Top 3 Best Weekly Performers in the UK
WisdomTree Cocoa +5.93%
Lyxor MSCI World Industrials TR UCITS ETF – Acc (USD) +4.30%
Lyxor MSCI World Information Technology TR UCITS ETF – Acc (USD) +4.29%
Top 3 Worst Weekly Performers in the UK
WisdomTree Brent Crude Oil 1x Daily Short -3.01%
iShares Barclays GBP Index Linked Gilts UCITS ETF -1.42%
WisdomTree Short USD Long GBP -1.14%
Top 3 Weekly UK Inflows
iShares USD Short Duration Corp Bond UCITS ETF USD (Acc) +$90.7m
iShares USD Treasury Bond 1-3yr UCITS ETF USD (Acc) +$81.7m
iShares Treasury Bond 0-1yr UCITS ETF USD Accumulation +$51.3m
Top 3 Weekly UK Outflows
WisdomTree WTI Crude Oil – GBP Daily Hedged -$82.5m
iShares FTSE 250 UCITS ETF GBP (Dist) -$27.2m
ETFS Gold Bullion Securities -$10.1m
*Fund in Focus or any portion of this newsletter are informational only and not intended to provide recommendations of any kind.