ETF Inflows & Outflows
Performance Leaders & Laggards
Source: ETF Action; flows and performance data as of 11/9/23; performance data excludes leveraged and inverse products
Weekly ETF Reads
Capital Group bets big on fully transparent active ETFs by Ari Weinberg
“Our entrance and the growing relevance of active management in the ETF vehicle shows that the benefits of the structure are relevant to multiple styles of management and asset classes.”
Quant Giant Dimensional’s Pivot to ETFs Reaps $100B Payoff by Katie Greifeld
“ETFs are the opposite of exclusive but that’s where all the fish are biting.”
Investors Embrace Active ETFs, Shun Stock Picking by Gabe Alpert
“Many ETFs raking in cash aren’t traditional stock-picking funds that seek to outperform the market.”
Sizing the Massive Spot Bitcoin ETF Opportunity by Matt Kunke & Brian Rudick
“Only 12% of financial advisors currently recommend bitcoin to clients according to the Digital Asset Council of Financial Professionals, but a full 77% say they plan to do so if and when a U.S. spot bitcoin ETF becomes available.”
The ‘Mother Of ETFs’ Is Bullish On Bond ETFs by Paul La Monica
“The premise behind BondBloxx is that you should have choice in the same way that you do in equities.”
These Funds Offer a Way to Lock In High Bond Yields by Jack Pitcher
“Bond funds that cycle through holdings to keep their average maturity date steady can leave investors more vulnerable to moves in rates.”
Should CalPERS Fire Everyone And Just Buy Some ETFs? by Meb Faber
“They would save hundreds of millions a year on operating costs and external fund fees.”
Like a Swiss Army knife, ETFs seen as a multiuse tool by Kathie O’Donnell
“There’s so many use cases for ’em.”
ETF Tweet of the Week
The spot bitcoin ETF watch continues! Bloomberg’s James Seyffart explains that a small window is now open where the SEC could issue 19b-4 approval orders. The consensus is the SEC will batch approve spot bitcoin ETFs because the agency wants to avoid being perceived as playing kingmaker in what will be an extremely high stakes and absurdly competitive market. Issuing 19b-4 approval orders during this current window would help keep the SEC on the path towards batching-up all existing spot bitcoin ETF filings to launch at the same time. This window will close on November 17th because there are several issuers who filed later than the others. Those later filings will enter a public comment period, at which point the SEC simply isn’t going to approve them until that period is over (early January). Therefore, the SEC would not be able to include those issuers in any batch approval process (assuming the SEC is ready and wanting to move forward soon) and explains why this current window is potentially meaningful.
It is important to note these 19b-4 approval orders would be for rule changes that allow spot bitcoin ETFs to list and trade on their respective exchanges. The SEC would still need to approve each issuer’s registration statement (S-1, or S-3 in Grayscale’s case), which is much more important to actual launch timing and likely to come at a later date. Batching the 19b-4 approval orders is more optics than anything, but optics are extremely important in this particularly high-profile situation.
New Research note from me today. We still believe 90% chance by Jan 10 for spot #Bitcoin ETF approvals. But if it comes earlier we are entering a window where a wave of approval orders for all the current applicants *COULD* occur pic.twitter.com/u6dBva1ytD
— James Seyffart (@JSeyff) November 8, 2023
ETF Chart of the Week
CNBC notes that ETFs’ market share relative to mutual funds is now nearly 30%, up from 13% a decade ago. How did this happen?
A quick look at the numbers courtesy of Strategas’ Todd Sohn:
Over the last 10 years, nearly $2.2 trillion has flowed out of equity and fixed income mutual funds. Meanwhile, roughly $4.3 trillion has flowed into equity and fixed income ETFs.
That’s a $6.5 trillion(!) swing, most of which has come on the equity side. That is how you grow market share.
The reasons for the shift to ETFs have been well-documented: lower costs, tax efficiency, intraday trading, transparency, greater choice, etc. Add to that a tidal wave of traditional mutual fund managers now embracing the ETF wrapper and I expect the 30% ETF share to rapidly increase.
Source: CNBC’s Greg Iacurci
