• Andrea Murray

The Weekly ETF Roundup: w/e November 6, 2020 – VanEck to Further Expand in China


This is a weekly newsletter of what we have seen in the world of ETFs and thought was interesting. If you like what you read, feel free to spread it around.


Fund Launches and Updates


AJ Bell has launched a responsible growth fund that is comprised of environmental, social and governance ETFs. The 12 ETFs that make up the responsible growth fund are all tracking MSCI indices and has an annual management charge of 0.15% with an ongoing charge figure (OCF) capped at 1%.

Its largest holdings include the iShares MSCI USA SRI UCITS ETF with 15% weighting ahead of the Xtrackers ESG MSCI Emerging Markets UCITS ETF and the UBS MSCI World Socially Responsible ETF (hedged to GBP) with 13% weighting each. Link

A new Xtrackers ETF offering access to the most liquid companies on the Tokyo Stock Exchange is now trading on Xetra and Börse Frankfurt. With Xtrackers Nikkei 225 UCITS ETF, investors participate in the performance of the Japanese benchmark index. In addition to the trading volume, the liquidity assessment also considers the volume-based extent of price fluctuations over the last five years. Link

Flows

A number of China government bond ETFs have captured significant inflows this as a result of attractive yields compared to developed market sovereign bonds and several flagship index inclusions. The $4.1bn iShares China CNY Bond UCITS ETF (CNYB) has seen $3.8bn inflows so far this year.

This is ahead of the Xtrackers Harvest China Government Bond UCITS ETF (CGB), the Goldman Sachs Access China Government Bond UCITS ETF (CBND) and the KraneShares Bloomberg Barclays China Bond Inclusion UCITS ETF (KBND) which have also seen positive flows this year. Link

During last week’s massive technology rally, a $9.8 billion triple-leveraged ETF tracking the Nasdaq 100 suffered its biggest-ever exodus. Traders yanked about $476 million from the ProShares UltraPro QQQ ETF (TQQQ) in the latest session for which Bloomberg has data, even with the exchange-traded fund heading toward its best week since April. Meanwhile, the $1.5 billion ProShares UltraPro Short QQQ ETF (SQQQ) -- which seeks results that correspond to three times the inverse performance of the Nasdaq 100 -- took in the most cash on record. Link


ETF investors piled into mid and small-capitalisation US stocks on Wednesday. A net $753m was poured into US Equity Small Cap exchange traded funds and $294m into their mid-cap peers, according to data from Morningstar. BlackRock’s iShares Russell 2000 ETF (IWM) alone took in a net $714m, while the SPDR S&P 400 mid-cap Growth ETF (MDYG) was the second most popular vehicle, amassing an additional $242m — increasing its assets under management by 18 per cent in a single day. In contrast, the large-cap iShares Core S&P 500 ETF (IVV) saw the largest net outflows, of $345m. Link

Noteworthy


CSOP Asset Management’s first exchange traded fund in Singapore has become the largest ETF domiciled in the city-state. The ICBC CSOP FTSE Chinese Government Bond Index ETF, which is benchmarked against the FTSE Chinese Government Bond Index, was listed on the Singapore Exchange on September 21 has since attracted more than $1bn in assets.


According to the ETF provider, institutional investors from abroad were “highly interested” in gaining exposure to Chinese government debt and has attracted investment from clients across the Asia-Pacific region — including Japan, Taiwan, South Korea, Australia and south-east Asia — as well as from US investors. Link


Global ETF analytics and data platform TrackInsight has appointed Anne-Valère Amo as Head of ETF Selection. Based in Geneva, Amo will be responsible for expanding and developing TrackInsight’s tailor-made institutional client offering related to ETF selection - including advisory, independent ETF due diligence and model portfolio solutions. Link

VanEck has submitted its application to establish a retail fund management business in China, becoming the fourth global manager to do so after Chinese authorities lifted restrictions on foreign ownership in April this year. Once approved, the licence will give VanEck direct access to the country's fast-growing $2.6tn retail fund market. The US manager, which runs video gaming and e-sports ETFs in the US, European markets and Australia, also aims to focus on thematic and sector exchange traded funds in China. Link


Advances in big data and artificial intelligence look set to expand the reach of thematic ETFs. These advances might partly explain recent improvements in their survival statistics. They still suffer a higher failure rate than the broader industry, but the differential is narrowing, perhaps because improved research and more focused marketing is improving their long-term outlook.

Periscope Capital, the hedge fund behind one of the most audacious uses of big data for a thematic ETF, believes it has cracked one way of using social media as a very effective tool. It uses machine learning and AI analysis techniques to scour social media — specifically Stocktwits and Twitter — as well as other online sources for positive mood statements about large-cap US stocks and selects those with the most bullish scores.

Jeremy Zhou, head of indexing at FactSet, a data provider and consultancy, said there was currently an “arms race” going on in the mining and use of big data for ETFs. Targeting buyers through social media is a logical next step, many believe. “I would believe with 100 per cent certainty that it’s something that can be done,” said Mr Wise. Link

Thank you for reading.


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