ETF TV News: Dan Barnes and Deborah Fuhr ETFGI discuss the focus on Megatrends

Dan Barnes Welcome to ETF TV News, I’m Dan Barnes. This is your weekly updates on the latest exchange traded products and exchange traded funds that have been launched. Joining me, of course, is Deborah Fuhr. Deborah, welcome to the show.

Deborah Fuhr Thank you.

Dan Barnes So, Deborah. Can you tell us which products are we seen coming to the market over the last seven days? What sort of trends are you seeing there?

Deborah Fuhr So we saw 27 new ETFs come to market last week in terms of being listed. 66 new cross listings. Month, we saw 84 products, 156 cross listings. So we’re up slightly from last year in January, where there are 82 new products that came to market. There were products from 13 issuers listed on nine exchanges. The US had six, Canada had 13, five in Europe, one in China and two in Japan. And I do think the focus really has continued to be on areas where investors would see it as megatrends or emerging themes of disruptive innovation, fintech, clean energy, ESG, innovation and health care would be the areas where we’re seeing products come to market.

Dan Barnes On the point about disruptive innovation we’ve seen ARK coming out with some products at MSCI haven’t we? Could you tell us about those?

Deborah Fuhr Yeah. So ARK and MSCI have partnered to create some new indicies, so Bank of Montreal has launched ETFs on these indices. So I think that’s quite interesting, because we’ve seen significant success in the products that Kathy Wood and her team have been running in terms of inflows. And so to be able to run index products on this basis is an interesting innovation for MSCI to move into that space. So clearly, people are interested in themes, they believe in this. They can talk about it. And for many, the industries and sectors don’t define where they want to invest as well as these thematic exposures do. I think we’ll continue to see products coming out in that space.

The other one is for the first time, we have a China star ETF available in the US, so those products, when they were listed in China and Hong Kong, received a lot of interest in terms of new assets. And so this will be interesting to see how the tone towards China is sitting in the US given Trump versus Biden. And where do investors feel they want to put money to work.

Dan Barnes Definitely. We’ve also seen some interesting products come to market from Fidelity, which are looking at the balance between equities and bonds in the portfolio that can potentially help investors manage risk and exposure.

Deborah Fuhr That is interesting. I mean, a lot of last year we heard people saying that the 60 40 portfolio was dead. And so one of the products they brought to market in Canada is a 60-40 portfolio. The other is an 85-15. So I think people want help just figuring out asset allocation and we are seeing products come to market that help people do that, whether it’s funds of funds or more thematic exposure. So I think that’s another trend where we see the growth in ETF model portfolios or mutual funds that are using ETFs as building blocks.

Dan Barnes Just on that point, about 60-40 and 85-15. 85-15, that’s 85% equity and 15% fixed income, isn’t it? What does that balance achieve?

Deborah Fuhr Well, it’s definitely riskier. So typically you would say to someone who’s younger, they probably should have more money in equities. And as you get older, you move more of your money into fixed income would be the typical mindset. I do think, though, that for many investors they are thinking about living and working longer and they’re also thinking about, ‘maybe I don’t want to put my money into fixed income, but keep it invested more aggressively so I can pass it on to my children or grandchildren.’ So I think the thought about how to think about when and how to retire and how to pass money on is changing the way people are investing.

Dan Barnes Deborah thanks, that’s been really interesting.

Deborah Fuhr Thank you.

Published on February 1, 2021