European ETF inflows continue their tear
This week the ESG launch race continues with a handful of new products including the HanETF pure play solar ETF. Swiss based Valour launched the world’s first ETP tracking the price of ADA and European ETF assets continue a 13 month roll of consecutive inflows.
Fund Launches and Updates
Amundi -another firm following the trend of switching to an ESG benchmark- announced that they will be changing the underlying indices on six of their fixed income ETFs to ESG. The ETFs will be classified under Article 8 of the Sustainable Finance Disclosures Regulation. Link
BlackRock is launching an ESG ETF targeting German equities. The iShares DAX ESG UCITS ETF (EXIA) is listed on the Deutsche Boerse with a TER of 0.12%. Link
All ESG this week apparently as Credit Suisse joins its European rivals in launching an environmental, social and governance ETF targeting German equities. The CSIF IE DAX 50 ESG Blue UCITS ETF (DXESG) is listed on the Deutsche Boerse and SIX Swiss Exchange with a total expense ratio of 0.12%. Link
Launched by HANetf, the first pure-play solar power ETF, the Solar Energy UCITS ETF (TANN), will list on the London Stock Exchange in June with a total expense ratio (TER) of 0.69% and tracks the EQM Global Solar Energy index. Link
Valour has launched its Cardano (ADA) ETP (VALOUR CARDANO SEK — CH1114178796) on the Nordic Growth Market (NGM) stock exchange. Valour is also anticipating the launch of Valour’s Polkadot ETP (VALOUR POLKADOT SEK — CH1114178770) on the NGM exchange later in the month. Link
In the U.S., ProShares launched the NASDAQ-100 Dorsey Wright Momentum (QQQA) ETF which is the first ETF focusing on 21 select NASDAQ-100 stocks identified as having the greatest potential to outperform. The fund is equal weighted and rebalanced quarterly. Link
Tuttle Capital Management has launched two new ETFs on the New York Stock Exchange, allowing investors to go long or short on post-deal SPACs.
The De-SPAC ETF (DSPC) and the Short De-SPAC ETF (SOGU) will focus on formerly private companies that have gone public after merging with a special purpose acquisition company, or a SPAC, also known as a blank-check company. Link
Flows
April 2021 marked the thirteenth consecutive month with inflows as assets under management increased to €1,124.0 bn at the end of April, where the European ETF industry enjoyed €16.3 bn of net inflows for the month.
European ETF inflows were driven by equity ETFs (+€10.0bn), followed by bond ETFs (+€5.2 bn), commodities ETFs (+€0.7 bn), alternative UCITS ETFs (+€0.2 bn), money market ETFs (+€0.2 bn), and mixed assets ETFs (+€0.1 bn). Link
Data from Trackinsight reveals that in the first 3 months of 2021, 87 new ESG ETFs were brought to market for a total of 758 ESG ETFs now available on exchanges around the world. Assets in ESG ETFs continued their upward growth trajectory with almost $57 Billion of new flows, to reach a new high of $264 billion in assets. Link
Noteworthy
Europe ETP launches are accelerating in 2021 as reflected by the first four months of the year — asset managers launched 135 new products in Europe, a higher number than the 113 for the US, according to CFRA.
Niche areas, such as smart beta, thematic and ESG, may garner more attention from issuers given they tend to generate more revenue from a smaller slice of assets. The group combines for 18.5% of industry assets but 21% of revenue. Link
70% of thematic exchange traded funds in Europe outperformed global equities in the year to mid-May 2021, according to a Morningstar report.
The best performers posted triple digit returns over this period. So where are the winners and losers? Link
Large-cap US stocks favoured by ETFs have underperformed the wider market in recent years.
Analysis conducted by StoneX looked at the constituents of the S&P 100 and found that since 2018, the stocks most owned by ETFs have tended to perform worse that those more lightly held by such funds.
Always someone out there writing up a negative report on ETFs, another recent one being thematics not outperforming their peers. Either way, the author of the report will be speaking at an upcoming ETF Stream event and we’re curious to hear more details on his findings. Link
In the U.S., Grayscale, one of the largest cryptocurrency fund managers, has declared it is trying to morph the bitcoin trust GBTC into an exchange-traded fund.
Grayscale’s CEO, Michael Sonnenshein, declared that morphing GBTC into an ETF would solve many of the inefficiencies that investors are experiencing now when it comes to pricing, a process he said they were 100% committed to doing.
Grayscale filed a bitcoin-based ETF proposal in 2016, being one of the first firms to do so. But it withdrew the following year, citing the absence of a clear regulatory framework to bring this product to the market, as the key reason for dropping it.
As mentioned in our video newsletter summary last week, there are now 9 different firms in the U.S. which have filed digital asset ETPs. Link
Ignites reported that Invesco is exploring the launch of a cryptocurrency exchange traded product becoming one of the largest ETF issuers entering a small with mostly smaller ETP issuers.
In the U.S., Invesco is seeing “increasing questions” from investors “around how best to access bitcoin-style investments”.
The Securities and Exchange Commission’s recent notice cautioning investors about the risks of bitcoin futures used in mutual funds could spell trouble for crypto ETFs awaiting the regulator’s green light.
The regulator has concerns about ETFs’ lack of capacity restrictions and the volatility of bitcoin itself, which, in their view, is susceptible to market manipulation and fraud and could impact its futures market. Link
Two Canadian futures based – bitcoin ETFs run by Horizons ETFs issued “market disruption” warnings during this week’s crypto turmoil.
Bitcoin tumbled by almost a third at one point on Wednesday in an abrupt lurch lower that triggered trading halts by the Chicago Mercantile Exchange. Link
