This week’s newsletter brings you all the diversification, opening with the views of WallachBeth’s senior strategist, Ilya Feygin, who is well placed to see what institutional investors in the US want from ETFs.
Part of what they want is access to disruptive innovation through the medium of the ETF, such as those offered by ARK or Direxion, he says. “There is a minimum of 10,000 variations of growth and value and these ETFs provide exposure to disruptive innovation which people like,” he says. “These are equities than can go to the moon and that’s want people want.”
Other winning subjects for the diversified ETF industry are, those perennial favourites, ESG and crypto, and we have a little example of each in this week’s newsletter, with an interview with ETC Group’s Bradley Duke who details their impressive asset raise, from a standing start last June, to over USD1.5 billion, all in bitcoin and its crypto siblings. “We didn’t expect it to grow as quickly as it did,” he says, modestly.
More diversification comes this week with our interview withDavid LaValle, CEO of index provider Alerian, which had its feet firmly in the Master Limited Partner (MLP) sector but after acquiring S-Network Global Indexes in 2020, and in terms of its own intellectual property, has expanded into offering indices based on everything from Space to (with extraordinary market timing) Black Swan events.
HAN-GINS’ Anthony Ginsberg is so keen on diversification that he has overseen the introduction of new indices and names for his HAN-GINS Cloud Technology UCITS ETF (SKYY) and HAN-GINS Indxx Healthcare Innovation UCITS ETF (WELL).
Turning to ESG, we have a round-up of ESG launches and reports on asset growth this week, with BlackRock’s iShares Sustainable UCITS EMEA ETF range crossing USD50 billion in assets, with Q1 2021 inflows of USD10 billion almost tripling the pace of asset gathering in the same quarter of 2020, and UBS Asset Management’s Sustainable Development Bank Bonds UCITS ETF reaching USD1 billion in assets.
The UK’s first digital wealth manager, Nutmeg, which uses ETFs for its investment management, reported a record year this year, with assets reaching over GBP3 billion for 130,000 investors while Blackwater Search & Advisory published a report that found, oddly, that despite all the good news of assets flowing into the ETF industry, European mutual fund managers do not fear the rise of the new kids on the block, and do not see a business case for launching an ETF of their own.
Blackwater’s O’Riordan says: “When one looks at the success of ETFs, the temptation is to get distracted by their prosperity in the US and simply assume that Europe will follow in the same direction – it might be just a matter of time, but not necessarily.” He names several tailwinds that the European ETF industry faces, including the lack of tax relief experienced in the US, fewer self-directed investors and different fee models.
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Managing Editor, ETF Express
Companies in this issue
Blackwater Search & Advisory
CI Global Asset Management
UBS Asset Management