ETF TV News Dimensional Fund Advisor entered the ETF industry last week launching its first ETFs

Dan Barnes Welcome to ETF TV News, I’m Dan Barnes, and today we’re giving an update on the latest ETFs  issued over the past week. Joining me is Deborah Fuhr of ETFGI. Deborah, welcome back to the show.

Deborah Fuhr Thank you.

Dan Barnes So tell us, I think we’ve seen 23 new ETFs launched over the past week. Can you tell us what types of ETF we’re seeing?

Deborah Fuhr When we look at new listings what we’ve seen are 18 products came out in the US. Canada had four, one in Brazil, six in Europe, and four in China. One of the significant new set of launches came from Dimensional Fund Adviser. So historically, they have been an active mutual fund manager. They have decided to launch two transparent, actively managed ETFs in the US, which I think is interesting because you know that recently, in the US, we’ve seen the advent of non-transparent or semi-transparent. They’ve gone for full transparency, and so they did a core US and a core International, they expect to launch an EM product in December. And then the most interesting thing is, come 2021, they are planning to convert six mutual funds into ETFs with assets of about 20 billion US dollars. So this would put them into the ranks of the top 20 ETF issuers globally. And I think it also makes it easier for retail investors to get access to Dimensional’s products and they will be lowering fees. So I think that’s probably the biggest news that broke in the past week.

Dan Barnes That’s really interesting from Dimensional. Changing the model and giving access to retail investors potentially creates multiple opportunities for the investors, depending upon the ETFs. But it’s also an indicator for the rest of the industry as to the direction of travel and the expected outcome from very traditional, long-only asset managers.

Deborah Fuhr Yeah, I think that was the impact we thought the semi- and non-transparent, active model would have is allowing a lot more, seeing a lot more traditional active managers to come to market. But I think what we have seen is with the growth in assets in ETFs and the preference for moving to digital, that clearly the ETF wrapper works really well for all types of investors. And we have another new issuer in the US, we have another new issuer in Canada. So we are seeing new issuers come to market. I think the other trends that we’ve seen over the week is more movement along the innovation, so the four ETFs that came to market in China are all based on the STAR 50 Index, which is the NASDAQ for China, so innovation. We’ve also seen social products come to market, one smart beta product, a little bit on the dividend side and then some commodities. So I think we’re seeing a continuation of the trends that we’ve seen earlier in the year play out. And I think this is going to be a significant year for new launches, when we think about the fact that we’ve had two months at the start of the year, where no one was doing much of anything.

Dan Barnes It’s interesting to hear about the commodities, I mean, we have seen both on ETF TV and then our sister show, Primary Markets TV, a number of new issues in the ESG space, in the tech space and of course, the pharma space, all of which are capturing the sort of ‘zeitgeist’ for investors who seek growth in those over the next year. Commodities though, are perhaps slightly different?

Deborah Fuhr Well, I think gold has had a fabulous year this year, because many people were concerned that printing all this money through the stimulus was going to cause inflation, and others were seeing it as a safe haven. So I still think that there are people who are curious as to what’s going to happen going forward with COVID-19. The vaccines look promising, but there is still concerns, Brexit is happening very soon. So I think there’s still a bit of uncertainty in terms of how quickly vaccines get out there, how many people take them, and how quickly we can go back to some form of normality.

Dan Barnes Deborah, that’s been great. Thank you very much.

Deborah Fuhr Thank you.

Published on November 24, 2020