ETF TV News: New Bitcoin ETP from VanEck; uptick in APAC new issues

Dan Barnes Welcome to EFT TV News, I’m Dan Barnes. We’re going to be looking at the newly issued exchange traded products over the past week. Joining me is Deborah Fuhr. Deborah, welcome back to the show.

Deborah Fuhr Thank you.

Dan Barnes Now, last week, we saw an exchange-traded product, which was based on Bitcoin, which I think is one of the first issuances in such products. Can you tell us a bit about that?

Deborah Fuhr Yes. Last week, VanEck launched their first Bitcoin or crypto product. They’ve been trying to do this in the US for a number of years. We have had 19 other crypto products listed in Europe for some time now. Europe is the only place where regulations allow for these types of products. I would say it’s really important for investors to understand what the actual underlying is, because clearly there’s products on Bitcoin, Ethereum, there’s baskets, some of them could be holding futures, others could be holding physical. Understanding where it’s being custodied is all very important as well as the cost. So I think the expectation is the SEC is going to have a new chairman, Clayton said he would be stepping down at the end of the year. With a new government coming into place in the US, there’ll be new commissioners coming on board. So clearly the US, at least in the short run, is not going to move forward on allowing the launching of crypto ETPs. It might happen at some point in 2021, but I think this is big news. VanEck is well known across the ETF industry globally and having them come into this space is an important first.

Dan Barnes What other trends have you seen over the past week, because we’ve seen some new issues in the Asia Pacific as well, haven’t we?

Deborah Fuhr Yeah, so I would say this was a week where we’ve seen listings coming, in India, Korea, Singapore, Indonesia and Japan. So clearly some of those markets haven’t had many listings this year. If we look at Canada, we had five new ETFs coming out from Manulife, and they’re all active. And that is a space where we have to remember that Canada, the home of the first ETF ever, just over 30 years ago, active has been allowed since the very beginning because ETFs are regulated like mutual funds. So they have non-transparent available and always have done, so active ETFs account for about 23% of all the assets. And when we look at the products coming to market, active is still a space where many of the issuers are bringing out new launches. So these are building block approach to investing from Manulife. So I think this is an interesting expansion of their product set.

Dan Barnes In terms of the actual underlinings for the products, are we still see ESG commodities very strongly?

Deborah Fuhr Yes, so this past week in the commodity space, WisdomTree did a bunch of leveraged and inverse commodity products on the London Stock Exchange. We also saw a few others come to market. ESG saw five new launches, two thematics, and we also saw a new China bond product, so remember, come 2021, Chinese bonds will be going into the mainstream indices. And so for those that try to track or beat benchmarks, having exposure to Chinese bonds will be important. It’s the second largest bond market and we need to think about the weights and the ability to gain exposure to those markets.

Dan Barnes There seems to be some interesting feedback on some defaults from state-owned enterprises in China over the past week, and there have been some government meetings there to reassure investors that any misbehavior won’t be tolerated. But I think exposure to the fixed income markets in China will be an interesting theme going forward next year, and with those funds going into indexes, of course, do you expect to see new exchange traded products launched, which will support those after the new year?

Deborah Fuhr Yeah, I would definitely expect that we’ll see more products come to market in the new year. The Chinese bond market is very large. Many asset managers and asset owners follow the benchmarks and so they’ll need to get that exposure. So I think we’ll see more launches coming from ETF issuers around the world to cover this segment.

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

Deborah Fuhr Thank you.

Published on December 1, 2020