How to create a $2bn ETF business in one easy step

If you want to hit the ETF market with a bang then converting nearly $2bn worth of mutual fund assets is a good way to do it (as Eagle Capital did last week). Indeed, it is becoming a very popular means of entering the ETF market in the US but so far untried in Europe and Asia.

But why is that? Operationally it’s a challenging process for sure but aside from that, a conversation is like giving the finger to the mutual fund structure and European and Asia managers are not just there yet.

Still its early days when it comes to this strategy and no doubt there will be a manager who will be tempted by the carrot of getting from A to B in the shortest time possible.

Fund Launches and Updates

EUROPE

21Shares has expanded its cryptocurrency range with the first ETF offering exposure to toncoin with staking rewards. The 21Shares Toncoin Staking ETP (TONN) is listed on the SIX Swiss Exchange with a TER of 2.50%.

BlackRock has launched its first active equity ETFs in Europe.The iShares World Equity High Income UCITS ETF (WINC) and iShares US Equity High Income UCITS ETF (INCU) are listed on Euronext Amsterdam and Deutsche Boerse with a TER of 0.35%.

UBS has launched three new ETFs on Deutsche Boerse, Six Swiss Exchange and Euronext Milan. The UBS ETF MSCI Canada ESG Universal LCS UCITS ETF (CAESG), UBS ETF S&P 500 Climate Transition ESG UCITS ETF (CT5G), UBS ETF EUR Ultra-Short Bond ESG UCITS ETF (SHORT)

New crypto white label firm Issuance.Swiss has launched three crypto ETPs offering exposure to ethereum, solana and cardano with staking rewards. The Figment Ethereum Plus Staking Rewards ETP (ETHF) and Figment Solana Plus Staking Rewards ETP (SOLF) are listed on the SIX Swiss Exchange with total expense ratios (TERs) of 1.5% and the Cardano Staking ETP by Liqwid (CASL) on the SIX Swiss Exchange with a TER of 1.5%.

Global X ETFs has announced that the firm has surpassed USD1 billion in assets under management (AUM) in Europe. The firm writes that this critical milestone highlights the firm’s rapid expansion in Europe.

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AMERICAS

BlackRock has launched a new active ETF, the BlackRock U.S. Industry Rotation ETF (INRO). INRO seeks positive industry exposure by utilizing a rotation strategy that allows the fund to recalibrate asset exposure to better reflect the index’s assets. It has a net expense ratio of 0.42%.

Eagle Capital Management has launched its first ETF by converting a separately managed account (SMA) into a public fund with $1.8 billion in assets. The new Eagle Capital Select Equity ETF will build an actively managed portfolio of quality stocks that the management team believes are overlooked by the market and in which it has a high level of conviction. The ETF has a 0.80% management fee. Eagle has used the services of Goldman Sachs' ETF Accelerator platform in converting the SMA to an ETF.

Morgan Stanley Investment Management added two new ETFs to their range. The Eaton Vance Total Return Bond ETF (NYSE Arca: EVTR) and the Eaton Vance Short Duration Municipal Income ETF (NYSE Arca: EVSM) were both converted from existing mutual funds into the ETF wrapper. The funds represent the first such conversions from the issuer and brings the AUM of the issuer to over $1 billion.

VanEck added two new moat ETFs to their lineup – the VanEck Morningstar Wide Moat Value ETF (MVAL) and the VanEck Morningstar Wide Moat Growth ETF (MGRO). Both funds seek exposure to companies with good valuation and a wide moat rating and charge a net expense ratio of 0.49%.

Invesco?has expanded its suite of GARP (Growth at a Reasonable Price) ETFs with a new fund focused on US small-cap equities. The Invesco S&P SmallCap 600 GARP ETF (GRPZ US) has been listed on NYSE Arca with an expense ratio of 0.35%.

More than two months after the launch of ten spot bitcoin ETFs, another one has joined the race. Trading under the ticker DEFI, asset manager Hashdex’s Bitcoin Futures ETF – which had been trading as a futures-based fund on the New York Stock Exchange since 2022 – was renamed and converted into the Hashdex Bitcoin ETF and now operates as a spot bitcoin ETF.

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ASIA

Hong Kong’s financial regulator, the Hong Kong Securities and Futures Commission (SFC), is likely to allow in-kind creations and redemptions for spot bitcoin ETFs in the second quarter of this year, according to a report from Bloomberg Intelligence. The move could potentially pave way for a massive investor base across China to enter the crypto market.

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Flows

ETFGI reports assets invested in cryptocurrency ETPs listed globally have reached a major new milestone of $69.39 billion at the end of February seeing a 358.9% increase from $15.12 billion at end of 2023.

• The first quarter of spot bitcoin ETF trading has concluded, with the eleven SEC-approved offerings enjoying roughly $12.1 billion in total inflows.
• Blackrock's IBIT has been the biggest winner up to this point, accumulating $13.9 billion in flows since trading began in January.
• GBTC is a key outlier with flow data, seeing $14.7 billion of outflows due to the relatively high fees associated with the offering

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Podcast

Exchange Traded People

A podcast series focused on exploring the career journey of industry leaders within the ETF and Digital Assets space. Get to hear their personal story and be inspired. Link

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ETF Success Stories Our newest podcast where we explore the stories behind companies who have achieved success in the ETF ecosystem, trying to uncover what led to that success.

Guests to date include Bondbloxx, 21.co, HANetf, VanEck Europe. Link

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Noteworthy

The more than 60% rally in bitcoin in the first quarter was driven mainly by the approval of spot ETFs, the impending reward halving and an appetite for increased risk in financial markets, broker Canaccord Genuity said in a research report.

BlackRock CEO Larry Fink said an ether ETF would still be possible even if the U.S. Securities and Exchange Commission designates the cryptocurrency as a security, which would increase the regulatory scrutiny around the second-largest digital asset.

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Movers and Shakers

All quite this week on the people front

From behind the Desk

Have you got the best job in the world? If your answer is yes, then high fives all round. But, if it’s a firm no, then that is a serious problem for you. You might think this is an easy statement to make but you should not be spending your time in a job that does not fulfil you. What is the point? “I have commitments” or “this job pays well for what I do” are thoughts you will end up regretting. Time is less abundant than you think, so treat it preciously.

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Don’t forget registration for ETF Streams ETF Ecosystem Unwrapperd 2024 is now open. Click the link here

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ABOUT US

Blackwater is a leading global ETF Consulting, PR, Content Creation and Talent Management firm. We are specialists in helping companies find the best strategy to enter and navigate the ETF marketplace, enhance their reputation, craft innovative and engaging targeted ETF content and source the very best of talent across the ecosystem.

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If you would like to discuss any of the above then please reach out at [email protected]