Dan Barnes Welcome to ETF TV News, I’m Dan Barnes. Joining me now is Deborah Fuhr, and we’re going to give you an update on the ETFs which was launched over the past week, trends and numbers on those issues. Deborah, welcome back to the show.
Deborah Fuhr Thank you for having me.
Dan Barnes So it looks like Christmas has come early as we’re seeing a huge number of newly issued products coming to market over the past week?
Deborah Fuhr Yeah, I would say that’s definitely true, but maybe stepping back a little bit, if we look at the end of November, we’ve seen the ETF industry reach a new record of 7.62 trillion dollars. This is really significant in terms of asset growth, partially driven by the market going up. But we’ve had 670 billion dollars of net new assets. So that’s creation’s versus redemption. So net new money going into the ETF industry. So this has been a very good year for the ETF industry, busting myths about how they would perform, but increasingly being embraced by all types of investors using them around the world.
Dan Barnes Now, obviously, over the last week, we’ve seen two very big tech IPOs in the US markets; that’s Airbnb and DoorDash. Are we seeing tech ETFs coming to market with the same sort of enthusiasm?
Deborah Fuhr So, yes, there’s four new issuance around a Hong Kong, Hang Seng TECH product, HSBC Lion, and CSOP did a leveraged and inverse product. We’ve also seen disruptive technology coming out of Mirae. We’ve seen others bring out tech-focused products. And I think related to that, in some cases, is ESG, right? So looking at products that are going to benefit the environment or the way we work, I would say those are probably two of the biggest themes that we’ve seen. And then another would be Vangard coming out with some life strategy products; so products that are going to give you a different amount of equity exposure, either 20, 40, 60, 80, so, really packaging up solutions. A model portfolio is something we think will be very important going forward.
Dan Barnes You mentioned the Hang Seng TECH Index there, and we have seen a lot of new securities being issued in the Asia-Pacific region, including in Hong Kong. What’s the geographic distribution of issuance of ETFs right now?
Deborah Fuhr So if you look at where they’re listed, we saw 11 new products come to market in the US, one in Canada, 15 in Europe and six in Asia Pacific. But it doesn’t always mean that the products being launched in the US are just exposure to the US market or it’s the same for Europe, because HSBC launched here the Hang Seng TECH product. So you find that investors globally want to be able to get exposure to different geographies, the thematics, the ESG. And I should mention the other interesting launch this week was a move towards ESG in the fixed income space, so Legal & General, bringing out five new ESG fixed income products. Clearly, Europe continues to lead, accounting for about 53% of all the assets and ESG. And I think that will continue, and it doesn’t mean just Europeans use those products, because we know UCITS is sold around the world.
Absolutely, and of course, typically for retail investors, it’s harder to get access to the IPOs, pre-IPO-prices certainly, but also to bonds as they’re newly issued. Often you have to trade in size to get access to those new issues. So are ETFs providing access to retail investors, and to markets which perhaps they might otherwise find quite challenging?
Deborah Fuhr That’s definitely the case. I mean, if you think about whether it’s getting exposure to bonds, whether it’s getting exposure to physical gold like central banks own, whether it’s getting exposure to mainland China or other emerging markets, it’s not just the access, but the minimum investment side is typically like 100 pounds, right, so most people can invest that kind of money. So that is one of the unique things about ETFs; it’s the only democratic product out there where you find hedge funds, pension funds, financial advisors and retail access to the same products at the same annual cost. And right now, the asset weighted annual cost across the ETF industry is about 21 basis points. So very low cost.
Dan Barnes That’s great. Deborah, thanks very much.
Deborah Fuhr Thank you.