The rapid growth rate of ETFs in Europe is now surpassing that of the U.S.

21Shares launches the world’s first Solana ETP, and active managers have an advantage over passive funds when it comes to ESG, according to the Financial Times.

Fund Launches and Updates

 

EUROPE

21Shares is launching the world’s first Solana exchange-traded product, ticker ASOL, and is listing on Switzerland’s primary stock exchange, SIX.

The 21Shares ETP will give investors exposure to the high-throughput Solana blockchain and track the performance of its SOL token with each unit of the ETP backed by 0.667 SOL at launch with a base fee of 2.5% per annum. The Solana ETP structure is physically collateralized, segregated and replicates 1:1 the tracking of the crypto asset. Link

Amundi has launched the Amundi Index Barclays US Gov Inflation-Linked Bond UCITS ETF (DR) – Hedged EUR (C) which gives investors access to fixed-rate coupon and US dollar-denominated US government bonds with inflation protection. The ETF has been listed on Xetra and Börse Frankfurt. Link

First Trust has launched a European equity opportunities ETF that captures recent initial public offerings. The First Trust IPOX Europe Equity Opportunities UCITS ETF (FPXE) is listed on the London Stock Exchange with a total expense ratio of 0.65%. Link

Purpose Investments and HANetf have teamed up with their recent launch of the Clean Energy ETF, ticker ZERO, which will access the S&P Global Energy Selector index and according to the article, is Europe’s first ETF to offset the carbon dioxide and other greenhouse gas emissions of related investments. This is a pure play index focused on 30 companies and is listed on the London Stock Exchange. Link

ASIA

Asia, Global X Japan has launched the Global X Japan Games & Animation ETF which tracks the Solactive Japan Games & Animation Index and provide investors with access to Japanese video gaming, esports, and animation companies.

The Global X Japan Games & Animation ETF started trading on the Tokyo Stock Exchange. Link

AMERICAS

In Canada, Horizons ETFs announced the launch of the Horizons Global Semiconductor Index ETF, ticker CHPS. Units of the ETF began trading Tuesday on the Toronto Stock Exchange last week. Link

Additionally, Horizons ETFs is launching two exchange-traded funds that give investors exposure to lithium and hydrogen. The Horizons Global Lithium Producers Index ETF (ticker HLIT) and Horizons Global Hydrogen Index ETF (ticker HYDR) make their Toronto Stock Exchange trading debut Wednesday. Link

Canadian digital-asset manager 3iQ’s bitcoin ETF started trading on Nasdaq Dubai on Wednesday. Link

In the U.S., Amplify ETFs announced the launch of the Amplify Cleaner Living ETF (NYSE: DTOX), an index-based ETF investing in companies focused on the increasing consumer preference for cleaner products and services across a variety of industries. Link

BlackRock’s iShares is preparing to liquidate a slate of seven smaller ETFs with combined assets of about $107m. The iShares ETFs set to close, their tickers, and their most recent asset values, according to Morningstar, are as follows: Link

iShares Factors US Blend Style ETF (STLC) ($6m);

iShares Factors US Mid Blend Style ETF (STMB) ($6.5m);

iShares Factors US Small Blend Style ETF (STSB) ($7.3m);

iShares Currency Hedged MSCI Mexico ETF (HEWW) ($722,000);

iShares Adaptive Currency Hedged MSCI EAFE ETF (DEFA) ($6.7m);

iShares International Preferred Stock ETF (IPFF) ($76.2m);

iShares Russell 1000 Pure US Revenue ETF (AMCA) ($3.6m)

Engine No. 1 is launching an ETF with $100 million in assets, Transform 500 ETF, ticker VOTE. The new ETF will invest in the 500 biggest U.S. stocks and seeks to differentiate itself from similar portfolios by trying to change corporate behavior through annual voting on ESG proposals. VOTE’s annual expense ratio will be 0.05. Link

First Trust Advisors has launched the First Trust Indxx Medical Devices ETF (MDEV), which seeks investment results that correspond generally to the price and yield of an index called the Indxx Global Medical Equipment Index. Link

Robinson Capital Management, LLC, an independent investment advisor specializing in alternative fixed income strategies, announced the launch of the Robinson Alternative Yield Pre-Merger SPAC ETF (ticker: SPAX). The ETF is actively managed and is the first ETF to invest primarily in pre-merger SPACs. Link

Janus Henderson announced the launch of the actively managed Janus Henderson U.S. Real Estate ETF (JRE). The fund seeks to provide access to real estate securities driving the future of the sector, which may include cell towers, data centers, gaming REITs, cold storage, and more, without bias toward style, property type, or market cap. Link

WisdomTree launched the WisdomTree U.S. Growth & Momentum Fund (WGRO) on Thursday. It’s the issuer’s first ETF to specifically combine these two factors. The fund lists on the Nasdaq and carries a 0.55% expense ratio. Link

In Brazil, Blockchain investment firm QR Capital’s bitcoin (BTC, -3.33%) exchange-traded fund started trading on the Brazil stock exchange. Link

Flows

Great Bloomberg article last week highlighting the rapid growth of ETFs in Europe which are now grower at a faster rate than the U.S. due to ESG and fixed income ETF adoption as well as a large number of digital asset ETPs.

The first $500 billion in assets took the European ETF market about 16 years to grow, the second $500 billion took more than three years. Eighteen months later, the next milestone is already in sight. Europe’s ETPs in total now stand at $1.475 trillion.

Taiwan-listed exchange traded funds investing in domestic equities saw their highest-ever monthly net inflows in May pushing the country’s total ETF assets to NT$1.82tn ($65.5bn).

The interest in ETFs contrasted with the performance of Taiwan’s equities mutual funds, which saw their combined assets shrink for the first time since October last year. Link

Noteworthy

CoinShares announced an exclusive partnership with the largest platform for German-speaking financial and investment news, finanzen.net.

As a result of the partnership, CoinShares will be the sole provider of physically-backed crypto products on the newly launched investment platform finanzen.net zero which launched on June 5, 2021 with zero trading fees. Link

The U.S. Securities and Exchange Commission has postponed a decision on yet another bitcoin ETF, this time from Valkyrie Digital Assets. The SEC had to decide whether to approve the Valkyrie Bitcoin ETF by June 26, but it has now extended the review period for another 45 days to August 10. Link

Some analysts believe that active managers have an edge over passive providers when it comes to ESG fund management, according to the FT.

One of the main reasons they state is that while passive investors can engage with the companies they invest in via shareholder voting, active managers had additional leverage because they could choose to “walk away”.

Active managers could also add value to ESG-related strategies by “interpreting trends in the underlying data and from their due diligence interviews”.

In addition to this, active managers are able react straight away when a controversy arises, such as the problems at Boohoo last year. In contrast, ETFs and passive products have to wait until the index committee reviews its index constituents before it can implement changes.

Data from Refinitiv Lipper show active strategies accounted for 83.7 per cent of all European ESG-related assets under management and 74.1 per cent of flows in 2020. Link

A capital gains tax hike proposed by the Biden administration could be the next accelerant for an even faster shift from mutual funds to ETFs in the U.S.

The proposal is expected to impact the wealthiest investors and given the desire to avoid sometimes double-digit taxable distributions from mutual funds, experts anticipate these clients will turn to ETFs which are in most cases, more tax efficient.

Nearly half a trillion dollars flowed out of US mutual funds last year, according to industry body the Investment Company Institute, while almost the same amount flowed into ETFs. Link

State Street plans to generate significant new business from asset managers’ and institutions’ ardour for digital assets and blockchain by focusing on back-office services for cryptocurrency ETFs.

A newly created digital assets division, which we mentioned in last week’s newsletter, will focus on cryptocurrency, central bank digital currency, blockchain and tokenisation.

State Street, BNY Mellon, and US Bank are among the fund custodians that plan to dive into cryptocurrency and digital assets administration. Other global custodians, such as Citi and JPMorgan, are reportedly exploring how they can support the asset class. Link

Leverage Shares is attempting to tap the boom in retail investing with the launch of the world’s first unleveraged physically backed single-stock exchange traded products.

The ETPs provide investors in UK and elsewhere in Europe the opportunity to buy fractional shares. The funds invest directly in the underlying company and were launched at $5 per share with hopes to attract European retail market investors. Link

The fee war that has affected most areas of the industry has yet to reach thematic ETFs and are proving to be somewhat of a gold mine for issuers in Europe, according to ETF Stream.

The ongoing fee war is one area that gets constant attention from both investors and the media so having the cheapest ETF available in a category can be a strategic way of attracting assets.

According to data from Bloomberg Intelligence, the average fee of thematic ETFs launched in Europe this year has been 0.61%, the highest level in five years, as issuers look to cash in on the huge returns on offer and the unique nature of the market. Link

Very interesting interview with Jim Atkinson of Guinness Atkinson which was the first firm in the U.S. to convert two smaller mutual funds into ETFs back in March.

He addresses the difficulties of the process but also future plans for additional conversions due to high client demand for the ETF wrapper format. Link