• Andrea Murray

Will the UK Finally Allow Crypto ETPs?



Rumour has it that the UK may finally publish guidance around stablecoin crypto products in coming weeks.

New U.S. entrant to the European market, Roundhill, officially listed its metaverse ETF on Xetra.



Fund Launches and Updates


EMEA


Amundi has moved nine climate-conscious passive products to track the MSCI SRI Filtered Paris-Aligned Benchmark indices. The indices tracked now follow a trajectory of a 7% absolute carbon emissions reduction on an annual basis and integrate an immediate reduction of 50% of carbon emissions compared with the investable universe. Link


CoinShares has launched the CoinShares FTX Physical Staked Solana ETP (SLNC) which will share staking rewards with investors. SLNC is listed on the Deutsche Boerse with a TER of 1.50% which has the potential to be offset by staking rewards. Link


ETC Group via HanETF has launched the ETC Group Physical Avalanche ETP (AVAL), the ETC Group Physical Cosmos ETP (ATME) and the ETC Group Physical Polygon ETP (MTCE). All three are listed on the Six Swiss Exchange and the Deutsche Boerse with total expense ratios of 1.95%. Link


HSBC Asset Management has delisted the HSBC MSCI South Africa Capped UCITS ETF (HZAR) due to its low $5.3m AUM. Link


Both Invesco and Amundi recently announced fee waivers on their Russia ETFs. Invesco said it would relinquish the 0.65% TER on the Invesco RDX UCITS ETF (RDXS). And ETF Stream reported yesterday that Amundi said it would also halt the 0.65% TER on both the Lyxor MSCI Russia UCITS ETF (RUS) and the Lyxor PEA Russie (MSCI Russia IMI Select GDR) UCITS ETF (PRUS). Link


JP Morgan Asset Management has expanded its range of China ETFs with the launch of the JPM RMB Ultra-Short Income UCITS ETF (JCST) and the JPM BetaBuilders China Aggregate Bond UCITS ETF (JCAG). Both are listed on the London Stock Exchange with total expense ratios of 0.28% and 0.25%, respectively. Link


Roundhill Investments announced the launch of the Roundhill Ball Metaverse UCITS ETF (METV) on the Deutsche Börse Xetra, TER of 0.59%. Link


SEBA Bank announced the listing of their digital asset based ETPs at Euronext.

SEBA Bank’s current ETP offering consists of single-coin tracker certificates with Bitcoin, Ether and Polkadot as underlying instruments as well as the multi-coin SEBAX® Crypto Asset Select Index. Link


THE AMERICAS


Dimensional Fund Advisors plans to reorganize an $8.4bn mutual fund into an ETF, the seventh such conversion for the Texas-based firm. A filing with the SEC shows plans to convert its Tax-Managed U.S. Marketwide Value II Portfolio into the Dimensional US Marketwide Value ETF. Link


ROC Investments LLC recently launched actively managed Return on Character ETF (ticker ROCI), which provides exposure to businesses led by “high character” CEOs. Among those who didn’t make the cut: Elon Musk and Mark Zuckerberg. Expense ratio 0.49%. Link


Full List of U.S. ETF Launches:


ASIA-PACIFIC


China International Capital Corporation Hong Kong Asset Management (CICC HKAM) announced the launch of a carbon futures ETF, the first of its kind in Greater China. The fund tracks the ICE EUA Carbon Futures Index which measures the performance of a long-only basket of European Union Allowance (EUA) contracts. Link



Flows and Trading Volume


In Canada, the Investment Funds Institute reported mutual fund assets totaled $1.997 trillion which is a decline when compared to January of 1.2%. On the ETFs side, AUM at the end of February stood at $317.1 billion which compared to January 2022 is an increase of 0.1%. In February, ETFs saw $4 billion in net sales, reflecting a slowdown compared to the $4.7 billion collected in the first month of 2022. Link


Global ETF issuers are looking to capitalise on the double-digit growth in active exchange traded fund assets among Asian institutional investors last year. Assets allocated to active ETF strategies last year in Asia Pacific ex-Japan stood at $51.25bn, a nearly 19 per cent increase from the $43.12bn in 2020, according to data from Brown Brothers Harriman. The territory’s first active ETF listed in June 2019 and there are now nine such ETFs listed on the territory’s bourse. Total assets are HK$3.2bn out of a total ETF market cap of HK$429bn, as of end-2021. Link


Noteworthy

ETF Stream reported that the UK government is expected to announce plans to regulate the cryptocurrency market within the coming weeks. We know not to hold our breath on anything government related, but the proposed new regulatory regime for crypto will focus on stablecoins, the less volatile type of cryptocurrency backed by more traditional asset classes such as gold or cash.


The regulation is still being finalised, but sources told the news outlet they are likely to be favourable to the crypto industry providing much-needed legal clarity. Link


More in the crypto world but this time in the US. Word on the street is that Grayscale Investments campaign to convert its $30 billion Bitcoin trust into an ETF could end with legal action. The SEC’s final deadline to rule on the application to convert the Grayscale Bitcoin Trust (ticker GBTC) into a physically-backed ETF is July 6. To date, the SEC has a growing list of rejections so it’s smart for Grayscale to prepare for a similar response.


CEO Michael Sonnenshein said that every day its flagship fund is not an ETF is a detriment to investors, arguing that the absence of spot ETFs forces investors into futures-based products. Fair point. Link


A small but substantial change may be shaking the bond ETF infrastructure to its core. The New York State Department Financial services is allowing insurers to label bond ETFs as individual bonds rather than as equity risk. Companies have issued lots of new debt setting records as record low interest rates have made it appealing.


This regulation could change the way the Fed and other regulators interact with bond markets, and could lead to the sort of efforts that saved the bond market in 2020. These will allow more bond products and increase inflows, but for insurers bond ETFs have more complications than a traditional single fixed income security and could provide difficulties in the future. Link



Additional reads


Congrats to all of the 2022 ETF Express Europe award winners Link

The VXX plot thickens with Barclays’ £450m structured notes loss Link

US ruling on bond ETFs raises a market risk Link


Chinese ADR delisting threat looms over ETFs -- more than 95% of one Invesco ETF is in Chinese ADRs and an iShares ETF is the largest holder of five facing delisting Link


Surge in end-of-quarter rallies driven by funds Link


Thematic funds gain traction in Asia Link




Disclosure: This newsletter consists of curated articles which we have read across the globe and while we can't include every ETF related news item, we would like to hear your thoughts on something we may have missed that you feel is important. All information is sourced from 3rd party media outlets, not our own material and should also not be viewed as financial advice.



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