Home Financial products U.S. ETF pace launches double in two years

U.S. ETF pace launches double in two years


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Fund stores have pumped ETFs at a breakneck pace so far this year in an attempt to capture some of the massive inflows in commodities.

Exactly 200 ETFs launched in the United States during the first half of 2021, compared to 131 during the same period last year and 100 between January and June 2019, according to data from CFRA Research. The 2021 figures include six Guinness Atkinson and Dimensional Fund Advisors mutual funds that have been converted to ETFs. Data for previous years excludes products that have since been closed.

New types of investors have turned to ETFs, which have pushed new providers into the market, analysts say. Fund houses were producing a wider range of ETFs to attract such clients, they noted.

While some of the newer products may not be available in the long term, many quickly built up significant assets, said Todd Rosenbluth, director of ETF research at CFRA.

“Even with $ 6.5 billion in listed ETF assets in the US, we also expect more innovative, low-cost products to hit the market in the second half of 2021 and new investors and Advisors discuss the benefits of ETFs, ”Rosenbluth wrote in his review of first half sales and launch data.

This article was previously published by Ignites, a title owned by the FT group.

In previous years, established ETF providers have led product development. However, this year some of the biggest mutual fund managers have left their mark.

New entrants include Putnam, Alger and Gabelli Funds, which each made their ETF debut using a non-transparent methodology, which protects an ETF’s portfolio from the broader market, thus allowing active fund managers to operate without reveal their “secret sauce”.

In May, Putnam deployed four strategies using Fidelity’s portfolio protection methodology, and Alger and Gabelli launched ETFs that use Precidian Investments’ ActiveShares system.

Dimensional, which debuted as an ETF in November 2020, converted four of its mutual funds to ETFs in June. These ETFs held $ 28.7 billion in assets as of July 6, according to the group. American Century, meanwhile, launched six active ETFs this year: one non-transparent asset and five that disclose portfolio holdings on a daily basis.

Fidelity has also grown its family of ETFs with nine launches this year, including four actively managed equity mutual fund clones, a series of transparent active fixed income funds, and several income and environment-focused products. , social and governance.

Establishing a product and track record was key to laying the groundwork for future asset growth, especially in emerging areas such as active, thematic and ESG strategies, said Matthew Bartolini, head of SPDRs Americas research at State Street Global. Advisors.

The strong sales in areas such as active management are largely due to products launched a few years ago that have built up track records. Active ETFs attracted $ 7 billion in net investment in the first half of 2021, according to State Street.

Still, managers also hope to boost growth by lining up important assets for new ETFs. Some stores have released new ETFs with key investors, Rosenbluth said. For example, several institutions, including the California State Teachers’ Retirement System and Sura Asset Management, invested from day one in BlackRock’s US Carbon Transition Readiness ETF (LCTU). The fund, which started in April with $ 1.2 billion in assets, held $ 1.4 billion as of July 6.

Some 16 ETFs launched this year already have more than $ 100 million in assets, according to CFRA data.

But it’s not just the fund giants that are fueling the surge in ETF debut. Part of the boom can be attributed to the proliferation of defined-return ETFs or volatility hedges, which typically originate from groups. Vendors, including Innovator Capital Management, First Trust, Pacer and TrueShares, have launched 54 such products that aim to provide safeguards against downside risk to equity investors, according to FactSet data.

Investors and manufacturers may be drawn to the risk mitigation, said Lois Gregson, senior analyst for ETF analysis for FactSet. However, market watchers had given no indication that a big slowdown was likely to be within reach, she said.

Markets had also shown an affinity for certain stocks that played on the themes of technological disruption, post-pandemic consumer behavior and advancement in healthcare, fueling a proliferation of thematic equity ETFs, said Gregson. . A total of 51 thematic equity products launched in the United States between January and June, according to FactSet data.

Thematic ETFs are how the industry says, “we’re trying to bring in a new kind of investor,” said Gregson.

The development of ETF products is not expected to slow down in the second half of 2021.

Dimensional plans to convert two more mutual funds to ETFs in the fall and this week announced plans to launch four active bond ETFs.

T Rowe Price also intends to debut on bond ETFs in August. In addition, the United States Securities and Exchange Commission could give the green light this year to the harvest of cryptocurrency ETFs under development. At least a dozen stores have announced their intention to launch such ETFs.

* Ignites is a news service published by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends. Trials and subscriptions are available at ignites.com.

Interested in ETFs?

Visit our ETF Hub for investor insights and insights, market updates and analysis, and easy-to-use tools to help you select the right ETFs.

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