Hello there, again! It is good to be back to walk you through this week’s ETF Wrap.
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Top 5 gainers of the past week
AdvisorShares Pure US Cannabis
ProShares Bitcoin Strategy ETF
iShares MSCI Global Gold Miners
VanEck Junior Gold Miners ETF
ETFMG Prime Junior Silver Miners ETF
Source: FactSet, through Wednesday, Nov. 10, excluding ETNs and leveraged products. Includes NYSE, Nasdaq and Cboe traded ETFs of $500 million or greater
…and the bad
Top 5 decliners of the past week
ARK Genomic Revolution ETF
ARK Innovation ETF
ARK Fintech Innovation ETF
SPDR S&P Biotech ETF
iShares Biotechnology ETF
Goldman’s ARK Killers?
MarketWatch’s Christine Idzelis, who graciously looked after ETF Wrap last week, writes this week that Goldman Sachs Group
is launching three exchange-traded funds focused on secular growth trends, tilting into “themes of innovation and disruption.”
The Goldman Sachs Future Consumer Equity ETF GBUY, the Goldman Sachs Future Health Care Equity ETF GDOC, and the Goldman Sachs Future Real Estate and Infrastructure Equity ETF GREI, are actively managed and will trade on the New York Stock Exchange, according to a statement from the bank’s asset management group.
Katie Koch, co-head of the fundamental equity business at Goldman Sachs Asset Management, says the funds may help investors find bigger returns over the next decade, as the traditional portfolio comprising 60% stocks and 40% bonds is “very broken” and expected to produce smaller gains compared with the past 10 years.
The launch of the Goldman ETFs come as fund providers appear to be attempting to roll out challengers to Cathie Wood’s ARK Investment Manangement products, even as those ETFs face some headwinds.
Anti-Wood ETF hits
Speaking of Cathie Wood, on Tuesday, Tuttle Capital launched its actively managed short ARK ETF, which is known as Tuttle Capital Short Innovation ETF
As we’ve reported before, the fund will track the inverse of the flagship Ark Innovation ETF
and will be managed by Matthew Tuttle, CEO and CIO of Tuttle Capital Management.
The anti-ARKK fund was down 0.7% on Thursday after a 2.9% gain on Wednesday, according to FactSet data. The fund charges an expense ratio of 0.75%, which translates to an annual cost of $7.50 for every $1,000 invested, which incidentally is the same expense ratio as Wood’s ARK Innovation.
How are ETFs being used?
Citi researchers Scott Chronert and Drew Pettit offer a bullish outlook for ETFs, which have seen tremendous growth in 2021, as use cases for funds evolve.
The analysts say that the most common use for ETFs are unsurprisingly individual investors buying ETFs to get exposure to a broad basket of stocks, while institutions and hedge funds are increasingly using ETFs as hedging and tactical tools.
The folks at VanEck kicked off a so-called “green metals” ETF, which offers exposure to refiners, processors and recyclers of metals that are used in lower-carbon emission, or green, energy production.
The VanEck Green Metals ETF will trade on the NYSE’s Arca exchange and carries an expense ratio of 0.59%.
Its largest holdings include Freeport-McMoRan Inc.
and Glencore PLC
as well as Ganfeng Lithium Co. Ltd.
Hartford goes semitransparent
Hartford Funds has launched a semitransparent ETF, the Hartford Large Cap Growth ETF, an actively managed vehicle that markets its first entry into the world of semitransparent ETFs, which combine features of mutual funds and the tax-efficiency of traditional ETFs.
Semitransparent ETFs allow portfolio managers to manage their assets while lowering the risk that their strategies won’t be copied or front-run in the open market. Hartford explains its offering thusly.
In a press release, Vernon Meyer, chief investment officer at Hartford Funds, says the “new fund, which offers active equity management in an ETF wrapper, has the potential to be an attractive option for both financial professionals and investors.”
The fund will use the active equity ETF model created by Fidelity Investments.
Regulators started approving semitransparent ETFs back in 2019, with providers arguing they didn’t want competitors to be able to see the secret sauce to their performance. However, semitransparent ETFs, sometimes referred to as nontransparent ETFs, which offer some degree of secrecy for managers, have seen a relatively tepid start.
Read: What is a ‘nontransparent’ ETF, and why would anyone want to own one?
That could change, however, if more providers are willing to use the structure and investors are willing to give up some element of transparency, which has been one of the hallmarks of ETFs.
HFGO will trade on Cboe Global Markets Inc.
Cboe BZX Exchange, Inc. and will use the Russell 1000 Growth Index
as its performance benchmark.
Is there a spot bitcoin ETF on the way?
CNBC’s Bob Pisani writes that the Securities and Exchange Commission has until Nov. 14 to decide if it will approve a proposed VanEck Bitcoin ETF that is a spot bitcoin proposal that is nearing a 240-day maximum review period by the regulator. The odds are looking dim for that spot ETF and Pisani makes the case that any ETF directly linked to bitcoin is a long way off.
Tell us what you think.
Meanwhile, ProShares Bitcoin Strategy ETF
the first futures based bitcoin ETF, has seen its assets grow to $1.4 billion from $570 million when the fund made its debut around mid-October.
ESG gains traction
A recent note from the folks at DataTrek highlights that investing based on environmental, social and governance, or ESG, is gathering momentum. On top of that, a number are outperforming the benchmark S&P 500 index on a year-to-date basis, notes DataTrek’s Jessica Rabe.
The iShares MSCI USA ESG Select ETF
was up 26.5% in the year to date, the iShares ESG MSCI USA Leaders ETF
was up 28.25%, and the iShares MSCI KLD 400 Social ETF
was up 28.5% so far in 2021. That compares with a 24% gain for the S&P 500 and a 17.6% gain for the Dow Jones Industrial Average
Rabe notes that on average, those funds, even factoring the iShares ESG Aware MSCI USA ETF
up 23.7%, are outperforming the S&P by more than 3 percentage points YTD.
Rabe cautions, however, that ESG isn’t the only reason why these funds are outperform and advises that investors pore over the composition of the funds, which can have heavy tech weightings. They also tend to own a lot of the same top names.
SUSA (iShares MSCI USA ESG):
, Alphabet Inc.
Total weight: 19.4 pct
SUSL (iShares ESG MSCI USA Leaders): MSFT, TSLA, GOOG/L, NVDA, Johnson & Johnson Total weight: 29.3 pct
DSI (iShares MSCI KLD 400 Social ETF):
MSFT, TSLA, GOOG/L, NVDA, Home Depot Inc.
Total weight: 27.8 pct
ESGU (iShares ESG Aware MSCI USA):
MSFT, AAPL, Amazon.com Inc.
TSLA, GOOG/L Total weight: 21.9 pct
Good ETF Reads
Nuveen’s Growth ETF
has a mysterious $200 million flowing in every day like clockwork (Bloomberg)
Investors Throw Cash at Any ETF With ‘Inflation’ in the Name (Bloomberg)
Bitwise Is Latest to Nix Bitcoin Futures ETF Plan Over Costs (Bloomberg)