Displaying items by tag: ETFs

(New York)

Passive funds have seen a meteoric rise since the Financial Crisis, with AUM soaring by trillions. But within that huge growth, what have been the best returning passive funds? Financial Planning produced a slide show presenting the twenty best. The top performing funds list is dominated by the big three providers—BlackRock, Vanguard, and State Street, who also have 82% of all passive AUM. The top five returning funds are the SPDR S&P Biotech (XBI), Invesco Dynamic Pharmaceuticals ETF (PJP), the First Trust NYSE Arca Biotech ETF (FBT), the Invesco Nasdaq Internet ETF (PNQI), and the First Trust Dow Jones Internet ETF (FDN).

FINSUM: Looks like biotech and tech stocks had a great decade (nor surprise there). The rest of the top twenty is similarly dominated by tech and healthcare, but consumer stocks, defense, and semiconductors also show up.

(New York)

We do not cover Bitcoin very much, but we thought it would be worthwhile to give an update today, especially as advisors may have some clients who are very interested in the area. Most are aware that the cryptocurrency has plunged from late last year, but had been enjoying a minor rally of late. That has come to end abrupt end though, capped off by another SEC rejection/delay of a Bitcoin ETF. The SEC delayed a decision on a new Bitcoin ETF until the end of September, which sent the market plunging ~8%. Bitcoin is now trading around $6,500, way down from its $20,000 peak.

FINSUM: This newest Bitcoin delay is more worrisome as it was the most promising proposal on the table. The proposal, in part from top ETF provider Van Eck, was to actually hold Bitcoin instead of Bitcoin futures, which one would think would alleviate some of the SEC’s worries. We think this will eventually make it through, and when it does, Bitcoin might become a more mainstream asset class.

(San Francisco)

Here is some good news for mutual fund investors. While many ETFs have been absolutely hammered by the selloff in FANG shares, many mutual funds have largely evaded the losses. According to Goldman, the average large cap mutual fund is underweight three out of four of the FANGs. Mutual fund managers had frequently grown uncomfortable with the FANGs’ soaring valuations, and as such, many had trimmed their exposure.

FINSUM:Some of the benefits of active management (and the downside of passives) are really exemplified in this data. A win for mutual fund investors.

(New York)

Everyone knows mutual funds have been on the decline and ETFs on the rise as active management gives way to the rise of passives. However, new data throws a wrench into that narrative—hedge funds are surging in popularity. Hedge funds now account for 28% of all alternative asset demands among investors, just one point shy of private equity, and way up from 12% a year ago. The catch is that hedge funds don’t really look like themselves anymore, with new fund structures, such as separately managed accounts and lower fees, that make them more useful for investors. Co-investing is another big growth area, where major investors invest alongside hedge funds in specific deals.

FINSUM: So hedge funds have surged in popularity, but they are not hedge funds, in the same sense, as before. Further, fees are down, with the average being a management fee of 1.45% and a performance fee of 17%.

(New York)

Every investor knows ETF have surged in popularity. However, one the big questions of major importance in the industry is “who owns them?”. The answer is, mostly, investment advisors. There has been a major shift in the ETF industry since the Crisis, as ETF consumption by Investment Advisors has surged as AUM in that area has grown. What’s more, that holding is rocketing year on year, with total AUM ownership in the segment growing by around $400 bn between 2016 and 2017. Brokers, by contrast have seen their total share of ETF ownership plummet, from 16% in 2007 to just 2.2% now.

FINSUM: Retail still owns the majority, but investment advisors have been the major growth driver for the segment and their influence is widening considerably.