• Andrea Murray

The Weekly ETF Roundup: w/e October 16, 2020 - A week of crystal ball predictions


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


Amundi switches S&P 500 ETF to ESG index. Effective 9 October, the Amundi S&P 500 ESG ETF (S500) has $904m AUM making it the second largest S&P 500 ESG ETF on the market behind the $1bn UBS S&P 500 ESG ETF (5ESG). Link

Quikro has launched the first ETF in Europe offering exposure to digital infrastructure and connectivity industries with the help of white-label ETF platform HANetf. The Digital Infrastructure and Connectivity UCITS ETF (DIGI) is listed on the London Stock Exchange with a total expense ratio (TER) of 0.69%. Link

Flows


Morningstar predicts European ETFs to hit EUR1 trillion in assets before end of 2020. European ETFs attracted inflows of EUR28.8 billion in the third quarter of 2020 and now stand at EUR948 billion AUM.


Equity ETFs netted EUR17.1 billion. ESG ETFs saw a big rise in demand to 29 per cent of the flows in the third quarter.


Thematic ETFs raked in EUR2.2 billion. Assets in Thematic ETFs now sit at a record high of EUR15.2 billion. Link


So far this year, record inflows to bond funds total $170 billion, compared with $154 billion in all of 2019, according to data compiled by Bloomberg. Link



Globally, ETF inflows surge 40% as investors ploughed $488.2bn into ETFs in the first nine months of the year compared with $349bn in the same period in 2019, according to ETFGI. Link

Potential global ETF asset growth trajectory – a graph published in 2018 by Blackrock which was spot on for 2020 global ETF AUM levels.



Gold-backed ETFs in Saudi Arabia experienced strong inflows this year. From January to September 2020, ETF holdings in the kingdom recorded net inflows of 0.5 tonnes valued at $28.9 million. The year-to-date inflows represent 91.9 percent of assets under management. Link


Mutual funds across all asset classes received only half of their usual monthly inflows in September, as growing uncertainty prompted UK investors to direct money into savings accounts rather than riskier investments. Link


Mega-Flows rotate through world’s biggest tech ETF. The $146 billion Invesco QQQ ETF has seen an average of $1.5 billion per day in flows over the past month. Speculation that the ETF is being used as a hedging vehicle, while some say that renewed appetite among retail investors is fueling the flows. Link



Noteworthy


BlackRock plans huge expansion in Brazilian ETF market and aims to cross-list up to 100 overseas funds by end of March. There are currently only 19 equity ETFs listed in Brazil even though the country is Latin America’s largest investment hub. Link


JPMorgan is looking to offer Asian institutional investors a range of ESG exchange traded funds, as well as thematic and sector-based ETFs. The US-headquartered fund manager has yet to list any pure ESG or thematic ETFs in any market. Link


Hong Kong or Shanghai? ETF Stream published an article highlighting the huge disparity in performance between Hong Kong and Shanghai-listed companies and warned investors to check which index their chosen ETF tracks before investing. Buyer beware as they say but ETF issuers should also make an effort to pro-actively educate the less savvy on these nuances. Link


ESG funds forecast to outnumber conventional funds by 2025. According to PwC research, ESG funds are expected to increase their share of the European fund sector from 15 per cent to 57 per cent and are forecast to reach €7.6tn over the next five years. Link


Vanguard struggles to replicate US ETF success in Europe. Vanguard has yet to replicate the roaring success they have in the US amid a concentrated ETF range, a lack of ESG ETFs and a smaller retail market in Europe. Link


Similar to the “passive vs. active” debate which is thankfully no longer a constant headline, you also cannot have a fair U.S. vs Europe comparison. The client base is completely different never-mind the fragmentation issues here. And Vanguard is not the only American firm with extreme success in the States but has failed to capture the same asset growth in EMEA, e.g. First Trust. You just cannot replicate 100% of your business model in other countries.


Fund in Focus


GraniteShares, which offers 3x short and 3x leveraged ETPs on UK and US stocks, reported a record week of trading. On Tuesday 6 October, turnover was £1,185,819.28 in the 3x long Rolls Royce ETP (3LRR) on London Stock Exchange and by Friday the daily volume hit £4,784,934.28. Link


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