ETF TV News #64 Jan Van Eck discusses Social Sentiment Investing and Bitcoin ETFs

Dan Barnes Welcome to ETF TV News – your updates on newly issued securities in the exchange traded funds and notes space. I’m Dan Barnes. Joining me today is Jan Van Eck, CEO of VanEck. We’re going to discuss social sentiment, investing and bitcoin ETFs in the US. And, of course, Debbie Fuhr. Jan, Debbie, welcome to the show.

Jan Van Eck Thank you.

Deborah Fuhr Thanks.

Dan Barnes Debbie, if I can start with you. Can you give us a quick update on the numbers of newly issued exchange traded funds over the previous week?

Deborah Fuhr Last week we had 25 new ETF listed, 13 cross listings, 18 firms listed new products. They are on seven exchanges, 14 were in Asia Pacifics, so we’ve seen a lot of new listings in Asia Pacific this year, seven were in the US and four were in London. We’ve been cleaning the data and it looks like the ETF industry globally will hit a new record of 8.3 trillion, which is up from 8.06 at the end of January. The net inflows for the month are a 139 billion, which is an all time record, beating November 2020, which was 132 billion. And last month we saw 83 billion coming in. So year to date we’re at 222 billion of net inflows. This is a really significant growth in both assets and flows, which follows on from a very strong year last year.

Dan Barnes That’s great. Jan, can I ask you, first of all, what is social sentiment and what is the investment opportunity it represents?

Jan Van Eck For those of you don’t know VanEck and our ETF lineup: what we try to do is offer kind of interesting value-added exposures to different markets, we’re known for our Fallen Angel High Yield fund, which basically buys bonds after they’ve been downgraded, and that’s been a top performer. And also we have a Wide Moat strategy for Morningstar equity research, which puts that into an index, and that’s performed really well, too. There’s been academics and hedge funds and Wall Street people that have analyzed all the message volume on social media platforms like Reddit, StockTwits, Twitter, of course. And there is a gentleman out of Toronto, Jamie Wise, who basically sucked up all those messages, categorized them into positive or negative, and then came up with a large cap strategy to follow those stocks.

Deborah Fuhr The other place where you’ve been innovative is you’ve been trying for a while to launch a Bitcoin product. You refiled again in December, we saw CBOE last week put in their S-1 filing. Can you talk to us about what you see as the outlook for a Bitcoin ETF in the US?

Jan Van Eck Well, I think in the big picture, Deborah, we are certainly hoping that the US finally does say yes. As you know, Canada approved a retail Bitcoin fund last year and now we have ETFs in Canada, and our colleagues in VanEck has launched an ETN in Europe that tracks Bitcoin and that’s been working exactly as advertised. So our feeling is that the industry has addressed the SEC’s issues of custody and they call it market manipulation, but I think the depth of the market and having good pricing signals is really important and we think those problems have been solved. However, it’s really up to the SEC, as you know.

Deborah Fuhr And who do you think will be the primary users of the Bitcoin ETF? I mean, we haven’t seen that much embracing here in Europe of institutional investors in those products.

Jan Van Eck Yes, it’s actually interesting, the take up on our ETF. I mean, it’s been good, but it hasn’t been kind of a breakthrough. I think institutions are very slow to take on Bitcoin. We have been talking to Dan Tapiero, who got an endowment in the US to invest early, I think a year or two ago, so it’s a slow process. But listen, I think the regulatory infrastructure for ETFs is just super strong, right? Exchanges provide liquidity, the websites don’t go down and typically, exchanges don’t go down. There’s a depth of market makers and people can hold it in their traditional securities account, which is really a big convenience, so I think those are the factors. Listen, Coinbase, which is going public, already has 43 million clients in the US, so there are a lot of people who buy Bitcoin already. It’s not hard to buy if you have a smartphone, but I think it will extend the market and it’s better to have it as a regulated instrument. But there’s no clear visibility from the SEC.

Deborah Fuhr Yeah, those are actually points that Som Seif made, when he was on the show a week ago and he talked about how he positioned it that way to the regulators in Canada. And clearly, we’ve seen significant inflows into his products, much more than we’ve seen in Europe. So maybe North America is the place to be for these types of products.

Jan Van Eck You know, I think the UK also is a little ambivalent because it hasn’t approved the fund for retail distribution. People are erring on the side of caution when it comes to regulatory things with crypto, obviously, because of the money laundering concerns around the asset class and just the fact that the infrastructure is new. So everyone is definitely on the conservative side of the boat, but, you know, that’s to be understood, I think.

Deborah Fuhr Well, thanks a lot for joining us. That’s a great update on what’s going on.

Jan Van Eck Thanks, Debbie. Dan, it’s good to see you.

Dan Barnes Debbie, turning back to you, can you give us a bit of color on some of the new issues we saw over the previous week?

Deborah Fuhr If we look at what came to market last week, we saw target income, structured outcome, a number of ESG products, a number of thematics. We had factor and some more China Stock Connect. The other thing to note is last week we had the first listing of an ETF from Alger doing an active, non-transparent product on mid-cap 40. And FlexShares here in Europe launched their first two ESG factor ETFs.

Dan Barnes So then looking ahead, what else is coming up in ETF News?

Deborah Fuhr So March 9th marks the 31st anniversary of the listing of the first ETF, and that was in Canada, not the US. The US is actually three years behind. The other thing that is happening on March 10th this week, we will see the requirement of all funds to be reporting based on the EU Sustainable Finance Disclosure Regulation (SFDR), whether their funds are classified as article 6, 8 or 9. That really indicates the level of ESG they are in terms of just providing transparency about ESG, being focused on it, or having that as an objective. And then regulatory approval was granted to Guinness Atkinson to convert two of their mutual funds into ETFs, so this will be the first conversion. 30 million dollars in assets scheduled to happen on March 26, and dimensional advisors received approval to convert six mutual funds with 26 billion dollars in assets, and they plan to do that on June 11th, so there’s a number of regulatory things happening out there.

Dan Barnes Thanks very much, Debbie.

Deborah Fuhr Thank you.

Published on March 9, 2021