Americas ETP News
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Debuts in active ETFs surge as US investors' appetite grows
December 31, 2021--More than half of the exchange traded funds launched this year are actively managed
About 60 per cent of the nearly 500 ETFs that launched in the US in 2021 are actively managed, according to data from Morningstar Direct. This marks the first year that more active ETFs were launched than index-tracking ETFs, data up to December 15 show.
Among them are ETF debuts from managers including Putnam Investments, Harbor Funds, Alger and Gabelli, as well as the first active ETFs from Nuveen and BNY Mellon.
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Source: FT.com
Infrastructure Capital Advisors Launches ICAP, New Actively Managed Equity Income ETF
December 29, 2021--Infrastructure Capital Advisors ("InfraCap"), a leading provider of investment management solutions that seeks to meet the needs of income-focused investors, is today announcing the launch of the firm's newest Exchange-Traded Fund ("ETF"): the InfraCap Equity Income Fund ETF (NYSE Arca: ICAP).
ICAP is an actively managed ETF overseen by portfolio manager and InfraCap Founder & CEO Jay D. Hatfield. ICAP will primarily invest in equity securities of companies with a strong track record of paying dividends during normal market conditions.
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Source: Infrastructure Capital Advisors
Should Passive Investors Actively Manage Their Trades?
December 29, 2021--Abstract
Using novel daily holding data for exchange-traded funds (ETFs), three types of ETFs are identified that adopt distinct approaches to rebalancing their portfolios, which generates meaningful return heterogeneity. First, 56% of ETFs track public indices that pre-announce their rebalances, and they trade entirely on reconstitution days at closing prices.
Their large, uninformed trades pay 67 bps in execution costs, a figure that is three times higher than what is paid in similar-sized institutional trades. Second, 7% of ETFs spread out their trades across 10 days and save 34 bps per trade or 7.3 bps per year. Third, 37% of ETFs use self-designed indices to avoid pre-announcements of rebalancing stocks and save 30 bps per trade. The alternative rebalance schedule leads to a tracking error of 10.6 bps per year and an information ratio of 0.69. For a $2 million retirement account that accrues over 30 years, the transaction cost savings rise to $29 thousand at retirement.
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Source: papers.ssrn.com
Simplify Asset Management's Innovative Lineup of Exchange-traded Funds Passes the $1 Billion Asset Threshold
December 28, 2021--In just over a year, firm has debuted numerous first-of-their-kind ETF offerings, solving major portfolio challenges for advisors and investors
Simplify has also dramatically expanded its leadership team, adding investment industry luminaries such as Harley Bassman and Michael Green
Simplify Asset Management ("Simplify"), an innovative provider of Exchange Traded Funds ("ETFs") designed to solve today's most pressing portfolio construction challenges, is today celebrating the fact that the firm's ETF lineup has surpassed the $1 billion assets under management ("AUM") threshold.
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Source: Simplify Asset Management Inc
Some Non-Transparent ETFs Face a Tax Hit
December 23, 2021--The actively managed exchange traded fund space has become more lively with the addition of non-transparent ETFs, but with the year coming to an end, some of these new non-transparent offerings face year-end capital gains distributions.
Analysts and executives warned that a lack of redemptions from non-transparent products, along with their limited ability to use custom baskets in tax management, have caused several non-transparent ETFs to pass along year-end capital gains distributions, the Financial Times reports.
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Source: yahoo.com
The BAD Investment Company Launches Flagship ETF
December 22, 2021--The large cap fund is designed to offer exposure to companies operating in the betting, alcohol and drug (pharmaceutical) industries.
The BAD Investment Company is pleased to announce the launch of the BAD ETF (NYSE: BAD).
The indexed, large cap fund is designed to offer investors equally-weighted exposure to the B.A.D. market segments-betting (casinos, gaming, and online gaming operations); alcohol/cannabis (alcoholic beverage manufacturing and distribution and/or cannabis cultivation and sales); and drugs (pharmaceutical and biotechnology product development and manufacturing)- by providing investment results that closely track the performance, before fees and expenses, of the EQM BAD Index (BADIDX).
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Source: The BAD Investment Company
Fund companies have issued a raft of fee cuts to close the year.
December 21, 2021--Fee compression in asset management is accelerating at the end of the year.
On Friday, Vanguard said it would cut fees on 17 funds, including nine ETFs, following Dimensional Fund Advisors'announcement that it would cut fees on 47 mutual funds and three ETFs last week.
Not to be outdone by its two competitors, Schwab yesterday announced that it would cut fees on five fixed income ETFs from 0.05% to 0.04%, a one basis point (bps) reduction.
The five Schwab funds receiving the fee cuts are as follows:
Schwab Short-Term US Treasury ETF (SCHO);
Schwab Intermediate-Term US Treasury ETF (SCHR);
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Source: citywireusa.com
ISS ESG Licenses U.S. Diversity Index for NYSE-Listed ETF
December 21, 2021--ISS ESG, the responsible investment arm of Institutional Shareholder Services Inc. (ISS), today announced that V-Square Quantitative Management has licensed the ISS ESG U.S. Diversity Index for its inaugural ETF launch, the V-Shares US Leadership Diversity ETF, which began trading on the New York Stock Exchange today under the symbol VDNI.
Based on ISS ESG's unique Director and Named Executive Officers datasets, the ISS ESG U.S. Diversity Index (ISSDIVUT) is the first index to select constituents exhibiting both broad ethnic and gender representation for board directors and named executive officers (NEOs). Constituents are selected from a universe of large, mid, and small capitalization US companies.
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Source: insights.issgovernance.com
Two APs Are Better Than One: ETF Mispricing and Primary Market Participation
December 20, 2021--Abstract
Exchange-traded funds (ETFs) depend on arbitrageurs to correct deviations between a fund’s price and its fair value. ETFs have designated brokers, or authorized participants (APs), who have a unique right to create and redeem ETF shares, and who can thus trade on ETF mispricing without risk. Using novel regulatory filings, we provide the first description of the US ETF-AP network.
It has a dense core and a sparse periphery, and the observed creation/redemption volumes are highly concentrated. The level of mispricing in a US equity ETF is negatively related to the fund’s network diversity, especially during times of high market volatility. Funds that share more APs exhibit stronger mispricing comovement. We theoretically show that diverse networks help mitigate the effect of shocks to AP-specific arbitrage costs. We highlight the importance of AP balance sheet usage costs in ETF markets by exploiting ETF short-selling halts and the Federal Reserve's purchases of bond ETFs in 2020.
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Source: ssrn.com
SEC Demands Chinese Firms Bolster Risk Disclosures for Investors
December 20, 2021--Chinese companies trading in the U.S. must disclose more about the risks they can pose for investors, according to new guidance from the Securities and Exchange Commission.
The firms need to make more specific and prominent disclosures to comply with federal securities laws, the SEC's unit in charge of reviewing corporate filings said Monday. The agency also said that special purpose acquisition companies, or SPACs, should disclose whether their sponsors or majority of executives are based in China, or whether a merger target is located there.
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Source: bloomberg.com
