• Andrea Murray

Yet Another Thematics Opinion Report



A recent report from Investors Chronicle is certainly not favourable on thematic ETFs. A slew of new ETF products in Europe and a slow week in the U.S. This will be our last newsletter before August break – enjoy your summer holidays!

Fund Launches and Updates

EMEA

21Shares has expanded its ‘crypto winter’ range with the launch of the 21Shares S&P Risk Controlled Bitcoin Index ETP (SPBTC) and the 21Shares S&P Risk Controlled Ethereum Index ETP (SPETH). Both ETPs are listed on the Six Swiss Exchange with total expense ratios of 2.50%. ETF Stream

Amundi has converted another ETF on one of the major equity indices into its ESG equivalent. The €44m Amundi FTSE MIB UCITS ETF has been renamed Amundi Italy MIB ESG – UCITS ETF DR, TER of 0.18%. Breaking Latest News


DWS has launched the following four thematic ETFs: the Xtrackers MSCI Fintech Innovation UCITS ETF (XFSN), the Xtrackers MSCI Genomic Healthcare Innovation UCITS ETF (XGEN), the Xtrackers MSCI Next Generation Internet Innovation UCITS ETF (XNGI) and the Xtrackers MSCI Innovation UCITS ETF (XNNS).


All four are listed on the Deutsche Boerse and London Stock Exchange with total expense ratios of 0.35%. ETF Stream

HSBC Asset Management has added the following three new ETFs which are tradable on Xetra and via Börse Frankfurt: the HSBC Europe Sustainable Equity UCITS ETF, the HSBC FTSE EPRA NAREIT Developed UCITS ETF, and the HSBC MSCI China UCITS ETF. ETF Express


Invesco has launched the Invesco Quantitative Strategies Global Equity Low Volatility Low Carbon UCITS ETF and has been listed on the London Stock Exchange, Deutsche Börse Xetra and the Borsa Italiana.ETF Strategy


State Street Global Advisors (SSGA) has expanded its Paris-aligned benchmark (PAB) climate range with the launch of the SPDR MSCI Emerging Markets Climate Paris Aligned UCITS ETF (SPF7). Listed on the Deutsche Boerse, Borsa Italiana, the London Stock Exchange and Euronext Amsterdam, the fund has a TER of 0.23%. ETF Stream


THE AMERICAS

A first for Cathie Wood as her firm plans to shut down its $12m ARK Transparency ETF (CTRU), which launched at the end of last year. Bloomberg


According to an SEC filing, Capital Group has unveiled plans to bolster its actively managed ETF line-up with the addition of three new strategies. The company launched its first suite of six active ETFs on the New York Stock Exchange in February and plans to add to the range with three new strategies: the Capital Group Municipal Income ETF, the Capital Group US Multi-Sector Income ETF and the Capital Group Short Duration Income ETF. Financial Times

Very quiet on the launch front in the States but Old Mission’s morning note on Monday mentioned that Innovator ETFs will be coming out with a short Tesla ETF this week following AXS.

ASIAPAC

HDFC Asset Management has announced the launch of its two funds – HDFC NIFTY Next 50 ETF and HDFC NIFTY 100 ETF. HDFC NIFTY Next 50 ETF and HDFC NIFTY 100 ETF funds offer a way to gain exposure to the Indian large cap space. Financial Express

Flows


According to a report by Investors Chronicle, although thematic ETFs enjoyed strong returns and inflows earlier in the pandemic, they have come since crashed down to earth. Demand for such products has wilted, with flows into thematic ETFs across Europe amounting to €0.6bn (£0.5bn) in the first quarter of 2022, the first quarter since 2019 where they attracted less than €1bn. That reflects some dire performance: to cite some of the hardest hit, the VanEck Crypto and Blockchain Innovators Ucits ETF notched up a brutal paper loss of 74 per cent in the first half of 2022, while the ETC Group Digital Assets and Blockchain Equity UCITS ETF was down 67.7 per cent over the same period.


The report goes on to point out that a good number of other funds have nursed losses of at least 30 per cent over that time — from a sample of about 50 thematic ETFs, just five have ended this six-month period in the black. Financial Times

Noteworthy


Schroders has bought a minority stake in Forteus, an investment manager focused on digital assets, to explore issuing digital tokens to investors. The FTSE 100-listed asset manager, which oversees £731.6bn on behalf of customers, said that the deal is part of a push by Schroders to develop research in the sector and to form a strategy for tokenisation. “We’ve seen peak mutual fund,” said Schroders chief executive Peter Harrison in an interview.


He noted that money was shifting from mutual funds to personalised portfolios, adding that this would increase with the growing adoption of ledger technology.


“This deal is not about cryptocurrencies. It’s about how do we get tokenisation mainstream.” Financial Times


The Trackinsight Global ETF Survey 2022 polled 347 professional investors globally with the aim of shedding light on the concerns of ETF investors globally. The team at ETF Strategy put together a nice summary – we have listed a few highlights below:


ETF Market Overview

Global ETF assets increased from $7.6 trillion to $9.8trn over the course of 2021, while the number of ETFs worldwide surged by a massive 1,457 to reach 8,099.


Approximately two-thirds of respondents invest more than 40% of their total portfolios in ETFs while a little more than half have over 60% invested in the vehicle.


Equity remains the most represented asset class in ETF allocations with an overwhelming majority of respondents (90%) declaring to have some exposure to stocks through ETFs.


Active ETFs

While a little over 40% of all respondents still do not have any allocation to actively managed ETFs, Trackinsight notes that this proportion has decreased sharply since 2020 when it was as high as 70%.


Thematic ETFs

With 300 new launches, 2021 was a very dynamic year for thematic ETFs. The now 800-strong ETF segment broke through $250 billion in assets at the end of the year, representing a 300% increase in just two years. More than 60% of respondents declared holding over 5% of their portfolio in thematic ETFs compared to just short of 40% in 2020.


ESG ETFs

While sustainability has clearly become a growing matter of interest for the general public, only half of the survey’s respondents currently invest in ESG ETFs.


Crypto ETFs

Crypto asset ETFs have already been adopted by around half of the investors surveyed, however, crypto ETFs represent a small portion of portfolio assets with two‑thirds (67%) who are invested allocating less than 20% to the segment. ETF Strategy

Additional reads:

European ETF market share is still half of the global average despite innovative products ETF Stream


Clearstream creates settlement failure and efficiency tools ETF Stream


The $33 billion Energy Select Sector SPDR Fund sees short sellers unwind positions Bloomberg


BTG Pactual and BlackRock partner on distribution of FIA ETF BDR Fund ETF Express


In Case You Missed It:



A man who has lived on cruise ships for more than 20 years can no longer walk in a straight line on land. Really?!


Mario Salcedo – known in the cruise community as Super Mario – has been moving between Royal Caribbean ships for more than two decades, claiming he is the 'happiest guy in the world'.


He used to work in finance for a multi-national corporation, but he sacked it in age 47 and began a new life at sea.


In an interview Salcedo said, "Adopting cruise ship life is simply escaping from reality…you're basically exiting the world as you know it on land and saying I don't want to be a part of that anymore." LADbible


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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