Investors should avoid looking exclusively at fund fees when selecting exchange-traded funds, according to a panel of industry experts who addressed an event held by HSBC Global Asset Management last week. The speakers explained that while choosing an ETF with a competitive fee structure is undoubtedly important, investors should not discount the tracking precision of the fund as ETFs which do not perform well by this second metric potentially run the risk of consistently lagging their underlying indices by a notable degree.
‘ ETF Industry News ’
The global bond ETF industry achieved its best quarter on record with $44.5 billion of inflows during Q1 2017, according to analysis by BlackRock. Stephen Cohen, head of fixed income beta at BlackRock, highlighted some of the global trends seen in the space since the start of the year, including strong appetite for investment grade credit, emerging market debt and Treasury bond funds.
ETFs and ETPs listed globally experienced record net inflows of $66.3 billion during March, according to research from ETF industry consultant ETFGI. The strong net gatherings marked the 38th consecutive month of positive net inflows within the space.
Lyxor has launched a new ETF, offering currency-hedged exposure to the Stoxx Europe 600 Index, on Deutsche Börse’s Xetra and Frankfurt exchanges. The Lyxor Stoxx Europe 600 UCITS ETF Monthly Hedged D-EUR (STXH) tracks the most liquid, large, mid and small-cap companies in European industrialised countries while minimising the effect of fluctuations between index component currencies and the euro.
Market maker Virtu Financial has announced it has entered into a definitive agreement to acquire KCG Holding. The deal, worth around $1.4 billion, has been unanimously approved by the directors of each company.
Direxion has lifted the temporary suspension on creation units for the Daily Junior Gold Miners Index Bull 3X Shares ETF (NYSE: JNUG) that had been in place since 13 April. The suspension and subsequent return to normal trading were linked to recent regulatory issues surrounding the MVIS Global Junior Gold Miners Index, which underlies JNUG, and the VanEck Junior Gold Miners ETF (NYSE: GDXJ), which tracks the same index.
VanEck has launched the VanEck Vectors JP Morgan EM Local Currency Bond UCITS ETF (EMLC) on the London Stock Exchange, offering exposure to bonds issued in local currencies by emerging market governments. Uwe Eberle, head of international business development and distribution at VanEck, commented: “Local emerging markets economies have hstorically had higher yields than developed markets and potential for currency appreciation. Additionally, local currency bonds tend to have a lower correlation to the US dollar and thus provide a great way to diversify a portfolio.”
The VanEck Vectors Junior Gold Miners ETF (NYSE: GDXJ) has become too big for its index, resulting in issuer VanEck and index provider MVIS Indices having to expand the coverage of the ETF’s underlying index to avoid breaching regulatory thresholds.
Toroso Investments and white label ETF platform Exchange Traded Concepts, have launched the ETF Industry Exposure & Financial Services ETF (NYSE: TETF), providing access to companies driving growth in the ETF industry. Mike Venuto, CIO of Toroso Investments, commented: “[The ETF] is aimed toward capturing not only the established leaders in each area, but also those firms that might be new to the space but are bringing exciting approaches that could resonate with investors and drive further growth of the industry itself.”
BNP Paribas has launched two new exchange-traded commodities on Deutsche Börse’s Xetra and Frankfurt exchanges, each providing exposure to the performance of Brent crude oil futures contracts. The ETCs offer a means of gaining relatively low-cost and convenient tactical exposure to crude oil, allowing investors to express their views on the market.