Welcome to Issue 4 of Exchange Traded Fridays for the week ending 13th August 2021.
EDIT: Sorry about the delay! I had an accident last night that meant I ended up in the emergency room this morning - see the ETFtracker Instagram page for photos if you're curious. Minor fracture but it is my dominant (left) hand so that's meant delays with various things this morning. Thanks to the awesome crew at St Vincent's in Sydney for ther help though!
Next week onwards these will be in your inboxes in the morning!
Rest of the original newsletter starts here
Olympics are over and as we all wonder what to watch next, at least we have the latest ASX data to go through.
Locally, its anniversary month as it was August 2001 when the first ETFs hit our shores. 20 years in the making to get to where we are now with over 200 funds and $116.5 billion in FUM. It was also a week of climate news with the IPCC report coming out showing Australia is likely to see a 1.5 degree increase in temperature in the next decade. A lot of articles focused on this ETFs in the news so another bumper week of action for investors.
Globally, we see talks about bitcoin ETFs again with futures making a play and the rise of active ETFs continues with more of those listing in the US than passive. It's a change we're likely seeing here too.
Before we begin, we need to show you this video from the crew at Open Markets. We love our hip hop and combining that with market updates is just fantastic. Although this came out last week on LinkedIn, it's still worth a watch (and repeat watch) - check it out on YouTube too.
What's in this newsletter?
Listen or Watch
Articles - Local
Articles - Global
Chart of the week
Listen or Watch Before we go further, if you'd prefer to consume all this content in more convenient forms of media, we've launched the Exchange Traded Fridays podcast and it's also on YouTube.
You can also access the podcast directly on our website here: https://www.etftracker.com.au/podcasts
The Weekly Wrap
Articles - Local
ETFtracker - July 2021 Market Update - With the latest data out from the ASX, we've crunched the numbers and have an article exploring the insights here. Headlines include FUM growing to $116.5 billion, overall returns were down on previous months but still positive at 0.9% and July also saw the most ESG related ETFs being traded than ever before. Explore the article as well as app and more on ETFtracker.
ASX - 20 years of ETFs - infographic and facts/figures out from the ASX showing what 20 years of growth has had on the ETF markets here since the first product hit our shores back then. A great read for ETF/historian buffs out there.
ETF Securities - ETF Monitor week ending 6th August - Top highlights were Aussie tech and precious metals. ATEC was the top performing ETF across the market last week, returning 8.9% on news of the Afterpay takeover deal and precious metals declined last week with GOLD falling 3.5% amongst others.
BetaShares - Start your…batteries: the impact of electric vehicles on ESG - In this article, BetaShares Chief Economist, David Bassanese goes through the transportation game when it comes to ESG investments and the pivot of large automakers to a greener way of doing things. Check out more on this ESG transition in the article.
Australian Financial Review special
A big week of ETF articles in the AFR to coincide with the 20th anniversary of ETFs hitting our shores. It was a heavy week of ETF focused articles which is awesome for the content but as you need a subscription to read them, those without may miss out. Luckily, we do a read through of this in podcast and video format so you can catch some insights there.
AFR - Dented home ownership dreams drive Millennials to ETFs - in this article they look at the influx of new retail investors diving into ETFs as opposed to direct home ownership as well as a number of factors driving that including the continued popularity of ETFs amongst Australian investors, growth in the underlying value of these ETF holdings and the conversions of closed ended to open ended funds
AFR - How wealth advisers powered Australia’s ETF boom - this article puts credit where credit is due in the growth of ETFs and how the adviser community recommending this type of product has increased to 60% according to BetaShares surveys (from only 27% in 2010). Restrictive licenses and approved product lists made it hard to invest in ETFs but many new operating models now allow for this and the upward trend looks set to continue. Whilst there are detractors, the key will be around cutting through the noise and jargon according to eInvest 's Camilla Love. Time will tell but from what we can see in the data, momentum is on their side.
AFR - Active ETFs primed for explosive growth - In this article the AFR chats with Andrew Campion (GM of Investment Product at the ASX) talks about the influx of active ETFs that will be coming into the market and the positive potential for this type of product. From finfluencers to fund managers, others weigh in and the consensus is that the pros will outweigh any cons
AFR - Perennial sustainable fund to double by Christmas - in this article the AFR team look at Perennials Better Future Trust which also trades as an ETF (ticker IMPQ). The fund run by Damien Cottier and Emilie O'Neill is well placed to tackle the climate issues especially with the most recent IPCC report on rising temperatures for Australia's coming decade.
AFR - Thematic ETFs help complement core equity holdings - this article looks at the megatrends gaining in popularity like clean energy, healthcare, technology and more. The best themes play out over many years according to Ben Johnson (Morningstar Director of Global ETF research). The article goes through some things to look for when looking for thematic investments and also the things to look out for as well such as lack of diversification and liquidity risks. Well worth a read for thematic investors
AFR - Industry Insight: Twenty years of ETF growth on ASX - this article, this time written by Andrew Campion at the ASX in relation to the 20th anniversary of ETFs coming to Australia. A couple of factoids are in there about the growth of ETF investing since the first one launched here all that time ago and how the next generation of investors (18 to 24 year olds) are set to lead to continue the outstanding growth we've had to date. The stage is set.
AFR - How to cash in on clean energy juggernaut - In this article, the focus is on the various ESG types of ETFs on the Aussie markets that track climate and clean energy thematics from CLNE to ERTH and more.
Articles - Global
ETF Stream - Do not overlook India ETFs - in this article the focus is on Indian equity ETFs as the country stages a recovery from the wave of Covid-19 it has had to deal with. Whilst the ETFs mentioned in the article are mostly overseas based, there are ways to trade the Indian play locally with IIND and NDIA being 2 of them.
ETF Stream - China's heavy hand in emerging market ETFs - This article looks at the different quirks that investors need to be aware of when looking at Chinese equities such as whether they are A-Shares or H-Shares and way to play the Asian equity space without the outsized influence of China.
SEC chair Gary Gensler made seemingly positve comments about the potential for bitcoin futures ETFs which would offer more protection for investors should they go ahead. This may lead to a swathe of new filings given that with the existing number (we've shown in previous newsletters).
Financial Times - ETFs set to overtake mutual funds as passive vehicle of choice - ETF assets/funds under management reaches $8.7 trillion and nearly up to the lvel in passive mutual funds. The gap is $132 billion an was $623 billion at the end of 2019. You can see gap close in chart form too in this article and it just goes to show how the ETF vehicle continues to get more popular.
Bloomberg - Superstar Fund Managers Are Launching ETFs. Are They Worth the Price? In this article, they explore the rise of actively managed ETFs with 156 launched compared to just 77 passive ones. The article also goes through some things to consider with active ETFs.
Bloomberg - Gensler Gets Wish as Bitcoin Futures ETF Filings Land - similar to the Financial Times story but this time accessible if you have a Bloomberg subscription. If you remember the image from tweet of the week from a few newsletters ago (see below) we showed at the time the current state of Bitcoin filings... well, prepare for more given this news.
ausbiz - 11th August - Are biotech ETFs a buy? - a deep dive into ACDC and how that could benefit from the Biden administration stimulus plans in the US. ACDC is more than just US companies and Kanish Chugh from ETF Securities explains those in more detail. They finish up with their biotech play, CURE. The downturn we're seeing could change as the underlying companies have had strong turnarounds and there are potential catalysts this time too. More in the video. 5mins
ausbiz - 10th August - Investors continue to pile into the ETF market - ETFtracker got to make an appearance this week (see below) with our ETF market update showing the continued growth across the whole ETF market ($116.5 billion in FUM) as well as which groups did best in July (Domestic Property, Infrastructure and Commodities). We also highlighted how ESG related ETFs saw their biggest month of transactions ever. Additionally, Andrew Geoghegan of ausbiz refers to one of the AFR articles we mention above 6mins
ausbiz - 10th August - Stocks and ETFs to help fix the climate crisis - In this talk David Lane from Ord Minnett goes through the recent IPCC report with its warning for the damage climate change will have on Australia and they dive into the ESG leaders. 7mins
ausbiz - 9th August - What is this investment managers "No Brains" trade? - James Whelan, VFS Group - James goes through a number of opportunities including the IUMO momentum ETF and opportunities in Hong Kong with ByteDance now looking to list on the Hong Kong Exchange rather than the US (as with many other companies). This gives the potential for Asian focused trade which may come in handy given the drop in Chinese related stocks in recent weeks. 8mins
Tweet of the week
From Erich Balchunas, the senior ETF Analyst at Bloomberg, is this preview piece on the rise of active ETFs. More here: https://twitter.com/EricBalchunas/status/1425068666966712320
Chart of the Week
The most amount of ESG related ETFs were traded in July 2021 than any other previous months. This is due to not just the increase in number of ESG related ETFs (now 23) but also the growing popularity for this type of thematic. See more in the ETFtracker app and also the July 2021 ETFtracker update here.
Further ETF Education This piece comes from Magellan Group on the differences between active and passive ETFs - see more here (or even listen to the audio version: https://www.magellangroup.com.au/insights/active-etfs-and-passive-etfs-whats-the-difference/
ETFtracker App We have the main ETFtracker App you can access (below) as well as holdings analysis apps for ETFs from iShares, BetaShares and State Street. See the main ETFtracker app here: https://www.etftracker.com.au/the-app
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
In the forum we've started getting a few messages about portfolio reviews as well as reviews of individual ETFs and have been using the data insights from the ETFtracker app to answer some of these. For example, we showed via the forum an animated image of how to use the comparison feature to look at property related ETFs (you can check out the full post here: https://www.etftracker.com.au/forum/portfolios-and-etf-analysis/djre-analysis-request
ETFtracker Socials - YouTube, Spotify, Instagram, Twitter, TikTok
We're on a few platforms (some more than others) so look up ETFtracker on your favourite platform for more.
Below is an example of our last YouTube video covering the last newsletter.