• Michael O'Riordan

The Weekly ETF Roundup: w/e Sep 25 2020. Is Lyxor for sale?

Updated: Oct 5

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, then feel free to spread it around.

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ETF LAUNCHES AND UPDATES

Invesco launches Europe’s first bond hybrid. The Invesco Euro Corporate Hybrid Bond UCITS ETF (EHYB) is listed on the London Stock Exchange with an ongoing charge of 0.39%. Link

HSBC selects Ultumus for PCF calculation services Link

FLOWS & PERFORMANCE

2020 ETF Inflows in the US now the second largest ever. YTD inflows up to $332.5 billion, well ahead of the $197 billion seen at this time a year ago. YTD 2020's ETF inflows have now surpassed 2019's total inflows of $326 billion, Link

Vanguard attracted $113bn in net inflows in the year to the end of August, while its $4.4tn in long-term mutual funds bled $41bn ytd. Vanguard remains the industry’s best-seller for the month, hauling in $7.3bn in long-term fund inflows in August, nearly 40 per cent more than its closest competitor. But the company would have suffered net outflows for the month were it not for ETFs, which garnered $13bn in new cash. It's mutual funds, meanwhile, lost $6bn in August. Link

NOTEWORTHY


Is Lyxor for sale? Rumours have it that Société Générale is preparing a sale of its asset management business Lyxor as part of attempts to improve its finances following two quarters of losses. Reuters cites sources as saying that SocGen has hired Citigroup to handle the sale of Lyxor, which is likely to commence during the fourth quarter of this year.

One of the sources tells the news service that Lyxor could change hands for around $1bn (€847m) and that potential bidders in Europe and the US have been contacted. The list of contenders include Amundi, Europe’s largest listed asset manager, and listed German fund house DWS. Link


FTSE Russell has joined JP Morgan and Bloomberg in including Chinese government bonds in its flagship global index. Chinese government bonds will be included in the FTSE World Government Bond index (WGBI) from October 2021, pending confirmation at the index’s semi-annual review in March 2021. Link


Asset managers set to launch China’s first Star 50 Index ETFs. China’s securities regulator has given the nod to the first four exchange traded funds to track Shanghai Stock Exchange’s Nasdaq-style Star Market. China Asset Management, E Fund Management, Huatai-PineBridge Fund Management and ICBC Credit Suisse Asset Management received approval from the China Securities Regulatory Commission last Thursday for their respective of Star 50 ETF and feeder fund strategies, according to separate announcements made by the firms. Link


Performance of Smartbeta ETFs criticised. The folks at ETF Stream have taken a pop at the performance of smartbeta funds. Citing new academic research they claim smart beta ETFs have delivered above-average market returns of 2.77% a year prior to listing but once they go live this drops to a yearly underperformance of 0.44% despite claims these strategies can deliver alpha through a rules-based solution. Link

BMO to follow Vanguard and exit Hong Kong’s ETF market. BMO plans to exit from Hong Kong’s ETF market, and to offload its seven locally listed ETFs on to China AMC. BMO has struggled to raise substantial assets in any of its ETF strategies, amassing just HK$2.86bn ($369.4m) across its seven ETFs. Its largest Hong Kong-listed ETF, the BMO Asia USD Investment Grade Bond ETF, had assets of HK$1.7bn as of September 15, while its smallest, the BMO MSCI Asia Pacific Real Estate ETF, had just HK$8.4m. Link

Bloomberg poised to become third largest ETF index provider. A surge in demand for fixed income exchange traded funds looks set to turn Bloomberg into one of the top three index providers in terms of ETF assets tracking its benchmarks.

The 530 ETFs managed against Bloomberg indices now hold $725bn, according to ETFGI, giving the group a 10.4% market share and placing it just a whisker behind the $731bn of FTSE Russell. S&P DJ remains comfortably in first place, with assets of $1.8tn, a 25.9% market share, with MSCI in second at $938m, or 13.4%. Link

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