Wednesday , March 3 2021

ETF Wrap: Chicken and Egg, the record year of ETFs and a commitment to infrastructure

What just happened?

Of all the details of the real bonkers of the last 10-12 months, there is one in particular that stands out.

Early last fall, when the euphoria of the vaccine faced the concern that something might go wrong with the deployment, and how the relief at the end of the long presidential race gave way to fears that it would not be decided on Nov. 3, MarketWatch published a series of stories aimed at helping investors protect their portfolios from major shocks.

“Just Launched: An ETF Made for Black Swan Moments Like These,” which highlighted an options-based ETF, the Simplify US Equity PLUS SPYC convexity fund,
ran in early September. On October 1, we tracked “Anything Can Happen:“ Why the Hottest Investment Trend is Playing Safe, ”which considered a range of products designed to mitigate high upside risks. or downward.

Fast forward five months or so and stop thinking about it. Not only were the elections contested, but they became shockingly violent. The launch of the vaccine has not only been wrong, but has gone so badly that a public health official has warned. “Perpetual Infection” for most of 2021.

And what have the markets done? In the months following the publication of that first story of the “Black Swan,” it was certainly an arbitrary moment, except that it was shortly after a small correction, until the close of business on Wednesday, the S&P 500 SPX,
increases by almost 13%. Bond yields and oil prices have jumped, as have commodities, all normal signs of a growing economy.

It’s a bit disconcerting: a variation of the old narrative of “the economy is not the stock market,” down to the thousandth power. Katie Martin, a columnist for the Financial Times, described this week as “a boiling frog moment”.

“Investors are adept at ignoring the signs of the extraordinary,” he wrote. As we said last week, time will tell.

Thanks for reading, as always.

Various stock products
  • ETFs had a record year, according to Morningstar data released year-round on Wednesday. Revenues were $ 502 billion, with taxable bond ETFs picking up most of any group in the category, nearly $ 195 billion. Mutual funds recorded a record $ 289 billion exits in 2020, although its total assets of $ 18.2 trillion at the end of the year were still more than triple that of total ETF assets.

  • Vanguard announced Tuesday that it would launch an actively managed short-term bond fund with the lowest management fee in the category. As reported by MarketWatch, existing funds, such as the JPMorgan Ultra-Short Income JPST ETF,
    they are often used as cash management tools.

  • What is the best way to play on ETFs for the new Biden administration? Many analysts have recommended infrastructure funds believing that tax spending will boost this sector. But what fund, specifically? An Informal Twitter bet between two of the mayors of ETF-land and the ETF PAVE Global X US Development Infrastructure Development
    The election of Todd Rosenbluth, against the FlexShares STOXX NFRA Global Infrastructure Index Fund,
    Dave Nadig’s favorite. So far this year, PAVE has risen 7.3%, while NFRA has gained 2.3%. However, they are the first entries.

Is there an ETF for this?

Last June, amid riots following the assassination of George Floyd, MarketWatch created a unique fund. The Impact Shares NAACP Minority Empowerment ETF NACP,
is the only financial product that explicitly addresses racial inequality, based on contributions from the National Association for the Advancement of Colored People to select actions by companies that follow certain principles, such as site diversity labor market, collective bargaining policies, community development initiatives and more.

Recently, then an impulse from a family analyst, it seemed like a good time to update the fund. We spoke with Marvin Owens, who was previously the NAACP’s liaison with the fund. In November, Owens joined Impact Shares staff in a newly created position.

“My goal is to really start living the Impact Shares mission, which is an engagement platform,” Owens said. He plans to work with investors, social advocacy organizations, and corporate America, “not only to grow assets under management, but also to demonstrate the concept that capital can be used to create social change.”

Here’s a small test: NACP returned 26% in 2020, surpassing the S&P 500, which gained 18.4%.

Owens says this type of return helps give investors an understanding that “you don’t have to give up returns to make an impact.”

There is still work to be done to attract investors ’dollars. When MarketWatch first covered the fund, an agreement was reached that once the assets reached $ 20 million, it would begin sharing revenue with the NAACP. (As of this writing, the assets are just over $ 21 million). This has been renegotiated and the fund will now remit commissions once it reaches $ 100 million.

Owens refers to the asset collection puzzle in terms that are familiar to many ETF observers: like a “chicken and egg” problem. Institutional investors want the funds to have reached certain benchmarks before considering the possibility of investing, but it is often difficult to get there without investors with large pockets.

However, Owens is not surprised. The fund reaches its three-year anniversary, which is one of the goals investors often want to see, he said. “We’re really in a way of going out and talking to people, being in the market, representing the fund and raising their profile.”

Read below: Rachel Robasciotti there is no such thing as a “passive” investment in an America so deeply marked by racism

Visual of the week

Thank you for kindness of Statista; original found here.

Weekly rap
The 5 best winners of last week

Global X Cannabis ETF POTX,


ETFMG Alternative Harvest ETFMJ


THCX cannabis ETF,


Amplify Seymour Cannabis ETF CNBS,


Global X MSCI Nigeria ETF NGE,


Source: FactSet, until the close of trading on Wednesday, January 20, excluding TNCs and leveraged products

The top 5 losers last week

iShares MSCI Global Silver Miners ETFSLVP


ETFMG Prime Junior Silver Miners ETF SILJ,


Global X Silver Miners ETF SIL,


United States Natural Gas Fund LP UNG,


ETF Global X Gold Explorers


Source: FactSet, until the close of trading on Wednesday, January 20, excluding TNCs and leveraged products

5 most important entries from last week

iShares Core Total USD Bond Market ETF IUSB,

$ 2.9 billion

iShares MSCI EAFE Value ETF EFV,

$ 2.352 billion

Financial Select Sector SPDR FundXLF

$ 1.74 billion

iShares Core MSCI Emerging Markets ETFIEMG

$ 1.34 billion

SPDR Dow Jones Industrial ETF Trust DIA,

$ 1.27 billion

Source: FactSet, until the close of trading on Wednesday, January 20, excluding TNCs and leveraged products

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