Welcome to Issue 18 of Exchange Traded Fridays for the week ending 19th November 2021. In this week's local news we see a couple of AFR articles on ETF thematics and crypto as well as deep dive from on the new CRYP ETF. Globally we look at the SEC rejection of a spot bitcoin ETF, pending indice changes and liquidity is also in the spotlight. All that and more below.
What's in this newsletter?
Local ETF Articles
Global ETF Articles
Tweet of the week
Chart of the week
ETFtracker App Links
Listen or Watch
Articles - Local
AFR - Five ETFs tracking investment megatrends - In this article from Tony Featherstone, he breaks down a few of the thematic based ETFs that are out there such as CRYP, FTEC, SEMI, HGEN and CLNE. These cover things like blockchain, fintech, semiconductors, hydrogen and clean energy plays so worth checking out.
AFR - Crypto and thematic ETFs come with risks - Another article from Tony this time going through the risks that come with thematic (and crypto) ETFs. It mentions that head of BetaShares, Alex Vynokur reckons that thematic ETFs can get to $100 billion in FUM (from the $3.5 billion in those funds as of August 2021). This level of growth is being seen overseas too and it seems like thematic is starting to become as synonymous as single stock picking too. There is risk of underperformance though or being late to a trend that's passed its peak. Some great insights here as well from Kanish Chugh at ETF Securities, Chris Brycki from Stockspot, Andrew Macken from Montaka Global Investments, Roger Montgomery from Montgomery Investment Management and Arian Neiron of VanEck Australia.
The Firenance Guy - Crypto/Blockchain | BetaShares ASX CRYP (ASX:CRYP) ETF Analysis - A great analysis piece done by the well known blogger in the FIRE community on the BetaShares CRYP ETF. He goes through the objectives, holdings, considerations and advantages/disadvantages in this blog so if you're interested in learning more about this ETF, it's worth a read.
SmallCaps - ETFs allow small investors to keep up with the wealthy - In this article it shows how even smaller investors can get access to assset classes that were primarily the domain of the wealthy but thanks to ETF innovation and more and more themes coming to market, everyday investors can now feel the positive impact. One of these highilghted is privated equity and with the VanEck Global Listed Private Equity ETF (ASX: GPEQ) listing it will be another feather in the cap of what ETFs can bring everyday investors.
ETF Securities - Weekly Report - w/e 12th November - Per ETF Securities: "Newly listed crypto-related equity funds DIGA and CRYP topped the performance table last week, rising 14.6% and 8.4% respectively. These were followed by gaming fund ESPO and gold mining funds GDX and MNRS. Biotech fund CURE, robotics fund RBTZ and domestic property funds MVA, SLF and VAP were all amongst the week’s poorest performers."
Articles - Global
FX Empire - US SEC rejects the VanEck Spot Bitcoin ETF - In this article we see that the SEC rejected the attempt by VanEck to create a spot bitcoin ETF for US investors. The main concern has been around the potential for market manipulation in these markets whilst in Canada a number of bitcoin and ethereum based ETFs are already out in the open market.
CMC Markets - NERD ETF Poised for a rebound - In this article it breaks down the Chinese regulatory crackdown and its impact on NERD, the Roundhill Bitkraft eSports and Digital Entertainment ETF which tracks companies involved in gaming, hardware streaming networks and gaming leagues. There was worry that video gaming would be subdued as economies open up but this has been buoyed by the lifestyle changes that appear to be staying for many post-Covid lockdowns.
CoinDesk - VanEck to Launch Bitcoin Futures ETF ‘XBTF’ Next Week After SEC Rejects Spot Offering - Whilst rejected from a spot bitcoin ETF, VanEck is launching their version of a bitcoin futures ETF. Ticker symbol will be XBTF and it will trade on the CBOE.
ETF Stream - Liquidity issues under microscope as ETFs start to move underlying markets - Despite global popularity of thematic ETFs meaning that shares of companies in these niche areas of the market get bought up, when (not if) the trend reverses, the flows could have major negative effects on those company stocks. This article goes through this from a European perspective but it is certainly a global issue.
Financial Times - Major sector ETFs face risk of large tech companies being reclassified - with S&P Dow Jones and MSCI Indices launching a consultation that could see a potential revamp of their GICS (Global Industry Classification Standards) system, this means that some indices (especially those with banking stocks) could see falls in their weightings due to these shifts. Additionally, some ETFs will become more cyclical where they weren't before and it's worth keeping an eye on whether these changes take place.
Equity Mates - 5 mistakes to avoid when investing in ETFs - In this episode, Alec and Bryce from Equity Mates chat with John Caulfield from VanEck talks about some areas that ETF investors need to understand when looking at this sort of investment. This includes things like fees, looking under the hood, cognitive biases, emotional investing and using limit orders. 38mins
ausbiz - Investors are keen, but limited opportunities for hydrogen just now - 16th November 2021 - Per the show notes "Hydrogen has been around for a long time, but it is a fossil fuel here and now. So what makes hydrogen the buzzword now? Ord Minett's David Lane runs through the transition from 'grey' hydrogen to - eventually - being much cleaner thanks to blue and green technology." 7mins
ausbiz - Using active ETFs to play multiple thematics at once - 16th November 2021 - per the show notes "If you’re looking to play more than one thematic at a time, fund manager Eight Bays could what you’re looking for. According to Eight Bay’s director George Clapham, the fund can invest in as many as 15 US-based active ETFs at any one time, using the expertise of those running them to help generate portfolio alpha." 8mins
CNBC - ETF Edge - November 15, 2021 - In this episode of ETF Edge, Bob Pisani chats with Anna Paglia of Invesco, James Davolos of Horizon Kinetics and Dave Nadig of ETF Trends. They go through the bitcoin ETF rejections by the SEC with VanEck's offering being rejected and Invesco also pulling potential filings. The team also go through inflation and how to protect your portfolio against inflation as well as ESG and how demand for these environmental plays and technology plays often crossover with ESG ETFs. 23mins
The Australian Finance Podcast - Finfluencers and Social Investing with Dr. Natalie Hendry - Per the show notes from the team at Rask Australia "In this thought-provoking and reflective episode of The Australian Finance Podcast, Kate Campbell chats to Dr Natalie Hendry, a researcher at RMIT about her findings on how we learn about our personal finances through social platforms." A link to Dr Hendry's research is also shown here - Navigating uncertainty: Australian young adult investors and digital finance cultures.
Bloomberg Trillions - The Rise of the Anti-Woke ETF - 12 November 2021 - Per the show notes "A new batch of ETFs seeks to appeal to right-leaning investors who want an alternative to "woke" Corporate America and ESG activism. While political-themed ETFs aren't a new idea, they've never really managed to attract meaningful assets. With Americans more polarized than ever before, could this be the moment that these ETFs actually find an audience?" 37mins
Tweet of the week
Congratulations to BetaShares on reaching $2 billion in assets/funds under management with their leading ESG ETF (and the biggest on the ASX) in ETHI. https://twitter.com/BetaShares/status/1460831568289619974
Chart of the Week In this week's chart of the week we highlight the Holdings Comparison area of the ETFtracker app where the user has filtered for Australian Equities in the Small/Mid-Cap category. Where we have ETF holdings for them (6 below) we can see how similar some of them are as well as what the concentration is in their top 10 holdings. MVE is the highest with 30% of its ETF weight distributed in just its top 10 but the industry average across 180+ ETFs we track is 45% so there is definitely less concentration here for investors in the small/mid-cap space.
Further ETF Education ETFtracker's ETF Dictionary - This is our own education piece here with our own ETF Dictionary which is very much a data focused one that contains various terms used in our apps. These come from the ASX/Chi-X as well as other areas but it's worth a look if you want to understand what is in the app.
Access the ETFtracker App
Access to the newest version of the ETFtracker app is here: https://www.etftracker.com.au/the-app
ETFtracker Forum and ETF Investing Australia If you're not already a member of the ETFtracker Forum then please sign up - you can access conversations and share ideas amongst peers for free. Sign up is free: https://www.etftracker.com.au/forum
Over the last few weeks we've also been getting morer involved in the Facebook group/forum space and whilst we're often seen commenting on Equity Mates discussion group and others we're also helping to run a newly formed and fast growing one called ETF Investing Australia. Set up a few months ago by Chad Maurer, this group is specifically focused on Australian ETFs so if you're interested in joining a group like this to learn more about ETFs, follow the link here: https://www.facebook.com/groups/3010730665825769
ETFtracker Podcast and Videos Before we go further, if you'd prefer to consume all this content in more convenient forms of media, we've launched The ETFtracker Show as a podcast and video and Exchange Traded Fridays comes at the end of each week. Additionally, we've launched a series of interviews with various ETF market participants.
You can also access the podcast directly on our website here: https://www.etftracker.com.au/podcasts
If you're interested in financial news you should check out ausbiz (sign up HERE) which has so much FREE financial and business content that comes out every day and has made it easier to follow your favourite topics and market experts. We get to feature on there and you can check out our page (and give us a follow) here: https://www.ausbiz.com.au/expert/mark-monfort?expertID=179