The Weekly ETF Roundup: w/e October 30, 2020 – Massive Outflows Prior to U.S. Election
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, please feel free to share with your colleagues.
Fund Launches and Updates
Amundi has launched a new ETF focused on Japanese shares with an ESG slant on Xetra and Börse Frankfurt. The Amundi Index MSCI Japan SRI UCITS ETF provides exposure to the value development of shares of medium-sized and large Japanese companies which stand out due to their good environmental and social awareness and impeccable corporate governance. Link
State Street Global Advisors has launched a new ESG-focused corporate bond SPDR Exchange Traded Fund focused on Xetra and Börse Frankfurt. The SPDR Bloomberg SASB US Corporate ESG UCITS ETF provides investors with access to fixed income, US dollar-denominated, investment-grade corporate bonds, which generally have an ESG rating. Link
Tabula has launched the first ETF in the market that provides exposure to both realised and expected inflation in a single index. The Tabula US Enhanced Inflation UCITS ETF (TINF) combines a TIPS portfolio with exposure to US inflation expectations. Link
Investors pulled money out of U.S.-listed ETFs this week amid a steep sell-off in global equities. The S&P 500 tumbled to nearly 10% off its all-time highs ahead of the high anticipated U.S. elections next Tuesday. On net, $4.7 billion came out of ETFs, led by a $4.3 billion outflow from U.S. equity ETFs. The SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust (QQQ) were among the biggest asset losers of the period, with redemptions of $4.2 billion and $1.6 billion, respectively. A similar trend occurred in 2016 prior to the election but the on the opposite trade. Over $1bn of assets went in the ProShares -1x S&P 500 ETF, ticker SH, and approximately all of those assets were redeemed after post-election jitters subsided. Link
Exchange traded fund investors are shunning European banks and flocking to their US counterparts, ignoring valuations that have plunged to their lowest in decades. The sector last month sank to its lowest level on record as the Stoxx Europe 600 Banks index spiralled below its 1992 nadir. Outflows are significant, $350m from European bank ETFs at the end of September while U.S. bank ETFs have had inflows of over $1bn so far this year. Link
The US Securities and Exchange Commission opened the door to more leveraged exchange traded funds on Wednesday as it passed new regulations governing the use of derivatives in the retail-friendly products. The securities regulator, in a 3-2 vote, said ETF providers which abided by certain requirements could now offer products with up to 200% leverage without seeking prior approval from the SEC. The question now is, with only ProShares and Direxion as the real players in this space, are other firms willing to enter the ring? Link
After the recently agreed sale of its shareholdings in Borsa Italiana to Euronext for €4.3 billion, the London Stock Exchange is expecting to complete its acquisition of Refinitiv by the end of Q1 2021. Link
The race to zero on Wall Street is so competitive that some of the biggest asset managers are creating cheaper knockoffs of their most popular exchange-traded funds. Invesco was the latest firm to create a copycat of one of its own ETFs. Earlier this month, it launched the Invesco Nasdaq 100 ETF, a near carbon copy of the biggest tech-focused ETF in the world, the Invesco QQQ Trust. Both funds track an index of the 100 biggest Nasdaq stocks -- but there is one glaring difference between the ETFs: fees. Link
Last week, Bloomberg announced a new streamlined workflow between BSKT its primary market solution for ETFs and Brown Brothers Harriman. This is the first real-time solution that provides authorized participants a single interface for ETF order taking and negotiating ETF baskets within the U.S. Link
Hong Kong’s CSOP Asset Management has rolled out its first master-feeder cross-listed exchange traded fund in partnership with Beijing-based Yinhua Fund Management, making available the second suite of products in the scheme that links Hong Kong and China ETF markets. Link
Fund in Focus
Bloomberg recently noted that the MSCI Emerging Markets Index was up about 3.5% in October, compared with a 1.4% slump in the MSCI All-Country World Index. The rapid recovery seen in China and the weaker dollar have also encouraged the bulls. This brings us to our fund in focus -- the ComStage MSCI Emerging Markets UCITS ETF, TER 0.14%. The fund replicates the performance of the underlying index synthetically with a swap and has 402m GBP assets under management.
Thanks for reading.