Defined outcomes or Buffered ETFs have really hit their stride over the last few years, especially so in the US, where firms such as FT Vest, Innovator and Allianz to name a few, have really carved out a niche in this space. Figures from Morningstar have it that the sector has grown from $200m in 2018, to north of $22bn now. That’s impressive growth.

Humans fear loss more than gains, so it is clear to see why these strategies would appeal to investors. But, why is it that it only appears to be taking off in the US and not in Europe or Asia?

The product development engagement in Europe is conspicuously quiet for these products. Why is that? Do European or Asian investors have greater risk appetite than their US counterparts, or is this a sector of the market that has yet to take off outside the US?

Fund Launches and Updates

 

 

EUROPE

 

HSBC Asset Management has launched a new ETF in Europe providing exposure to the global real estate sector while adhering to the carbon reduction goals of the Paris Agreement. The HSBC FTSE EPRA Nareit Developed Climate Paris Aligned UCITS ETF (HPNA) is listed on the London Stock Exchange with a TER of 0.30%.

 

Having spent years bashing synthetic ETFs, it seems iShares have had a change of heart with the launch of a global equity synthetic ETF. The iShares MSCI World Swap UCITS ETF (IWDS) is listed on Euronext Amsterdam with a TER of 0.20%.

 

Invesco has slashed the fees of four equity and bond ETFs as it looks to boost demand. The reductions are:

 

Invesco Russell 2000 UCITS ETF (RTYS) from 0.45% to 0.25%,

Invesco MSCI Japan UCITS ETF (MXJP) from 0.19% to 0.12%,

Invesco Euro Cash 3 Months UCITS ETF (PEU) from 0.16% to 0.09%

Invesco Euro Government Bond UCITS ETF (EIBB) from 0.10% to 0.07%.

 

HANetf continues to prune its range with news that they are set to merge its global airline and travel industry ETFs. In a shareholder notice, the white-label ETF issuer said the $3.9m US Global Jets UCITS ETF (JETS) will merge into the $18m Travel UCITS ETF (TRYP). The merger, subject to shareholder approval, will take place on 19 April.

 

SIX has invested in index provider BITA in a move to expand the firm’s global benchmark platform and existing joint projects.BITA said it will use the investment to improve the functionality of its infrastructure and continue to expand into other markets.

 

Galaxy Digital will introduce crypto ETPs in Europe “in a matter of weeks,” the CEO of its European operations said. Galaxy Digital teamed up with asset manager DWS last April to develop ETPs designed to give Europeans access to digital-asset investment through traditional brokerage accounts.

“We partnered with DWS and will, in a matter of weeks, be launching new ETPs in Europe,” Leon Marshall said on a panel at Blockworks’ Digital Asset Summit 2024 in London

 

Moneyfarm has partnered with BlackRock to offer equity and bond ETFs on its Italian brokerage platform.The partnership will see over 100 BlackRock ETFs across all major core equity exposures made available on the retail platform.

 

AMERICAS

 

iShares debuted the iShares Energy Storage & Materials ETF (IBAT) during the week. The fund tracks the STOXX Global Energy Storage and Materials Index and has an expense ratio of 0.47%. It lists on the Nasdaq stock exchange.

 

FT Vest launched two more buffer funds on the Cboe BZX Exchange. The FT Vest U.S. Equity Buffer & Premium Income ETF – March (XIMR) and the FT Vest Dow Jones Internet & Target Income ETF (FDND). XIMR offers exposure to the price performance of the SPDR S&P 500 ETF Trust (SPY) while also seeking to provide annual income over the one-year outcome period of 7.6% before expenses and has an expense ratio of 0.85%.

The FT Vest Dow Jones Internet & Target Income ETF (FDND) combines exposure to the performance of the First Trust Dow Jones Internet Index Fund (FDN), with an income strategy that looks to provide income that represents at least the annual dividend yield of the Nasdaq-100 Index plus 8%. The fund has an expense ratio of 0.75%.

 

ProShares joined the options strategy trend with the launch of the ProShares Nasdaq-100 High Income ETF (IQQQ), which tracks an index that reflects the performance of a daily covered-call strategy on the Nasdaq-100 Index. The intention is to provide exposure to the performance of the Nasdaq-100 and generate high levels of income. IQQQ has an expense ratio of 0.55% and lists on the Nasdaq stock exchange.

 

Avantis rolled out the Avantis Emerging Markets ex-China Equity ETF (AVXC), an actively managed fund covering emerging market equities that excludes China’s stocks. The fund has an expense ratio of 0.33% and lists on the Nasdaq stock exchange.

 

GraniteShares grew its offering of single-stock ETFs with the addition of three 2x leveraged ETFs. The three funds are tied to the stocks of Advanced Micro Devices, Amazon, and Microsoft and are as follows. Each fund has an expense ratio of 1.15% and lists on the Nasdaq stock exchange

 

ASIA

 

A new Taiwan equities high-dividend exchange-traded fund from Yuanta Funds, the market’s largest ETF provider, has raised about US$5.4 billion in five days, smashing the recent initial ETF fundraising record more than five-fold.

The new Yuanta Taiwan Value High Dividend ETF, which began trading on March 11, broke the initial fundraising record set by Uni-President Assets Management’s UPAMC Taiwan High Dividend Momentum ETF in early March.

 

 

A podcast series focused on exploring the career journey of industry leaders within the ETF and Digital Assets space. Get to hear their personal story and be inspired.

This week we hear from Nate Geraci, President of the ETF Store, Co-Founder of The ETF Institute and Host of ETF Prime podcast. Click HERE to listen to Nate.

 

Flows

 

Invested in the Europe ETFs industry reached a new milestone of $1.90 Tn at the end of February beating the previous record of $1.83 Tn at the end of January 2024, according to ETFGI assets.

Assets increased 4.2% YTD in 2024, going from $1.82 Tn at end of 2023 to $1.90 Tn.

Net inflows of $16.88 Bn in February 2024.

YTD net inflows in 2024 of $38.50 Bn are third highest on record after YTD net inflows of $41.91 Bn in 2021 and YTD net inflows of $40.98 Bn in 2022. 17th month of consecutive net inflows.

Bitcoin ETFs’ hot start seems largely driven by Retail investors.

According to Bloomberg Intelligence data shows that the average trade size for the biggest spot bitcoin ETF, BlackRock’s IBIT, hovers around $13,000, suggesting that a big chunk of its demand is coming from nonprofessional investors.

 

Noteworthy

 

BlackRock officially unveiled its tokenized asset fund on the Ethereum network on Wednesday.

The BlackRock USD Institutional Digital Liquidity Fund is represented by the blockchain-based BUIDL token, is fully backed by cash, U.S. Treasury bills, and repurchase agreements, and will provide yield paid out via blockchain rails every day to token holders, according to a press release. BlackRock also made a “strategic investment” in Securitize, the press release added, but the terms of the deal weren’t disclosed.

 

In an attempt to compete more with Ireland on the ETF front, Luxembourg plans to cut taxes for actively managed ETFs.

The Luxembourg government levies a subscription tax – taxe d’abonnement – of 5 basis points on retail mutual funds and 1bp for institutional shares classes, which is borne by investors. ETFs that track an index are exempt from the tax, but actively managed products are not. The action is intended to give Luxembourg “the right starting conditions” in the growing market for the products.

 

Hedge Funds are beginning to show interest in launching ETFs in Europe, according to Waystone.

From a distribution standpoint it makes total sense, but from a product strategy standpoint I’m not so sure. “Liquid Alts” or dialled down strategies have never really been that successful so why should this time be any different. Still, God loves a trier.

 

Last Thursday marked the one-hundred-year anniversary of the mutual fund structure.

Just think, how many other industries are out there that predominantly rely on a piece of tech that is one hundred years old. Incredible, right?

 

Movers and Shakers

 

 

Megan France has joined Capital Group as ETF Specialist.

Ambar Bajaj has joined Eagle Capital Management as head of ETF &Platform Distribution.

 

From behind the Desk

 

 

Easter is early this year which is no bad thing as it’s been an actioned packed Q1.

As the lines between work and play continue to blur its always worth taking time off, stop checking the emails and disconnect for a few days.

Work will always be there for you but family and friends may not so don’t lose sight of what’s really important.

 

 

 

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We are specialists in helping companies find the best strategy to enter and navigate the ETF marketplace, enhance their reputation, craft innovative and engaging targeted ETF content and source the very best of talent across the ecosystem.

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