July ETP launch review

Currency focused ETFs dominate June performance

This report aggregates newly launched funds in July and highlights the performance of the funds launched in June.

• 33 funds were launched in July, a 39% drop when compared to June.
• 26 funds were launched in the Americas, five in Europe and two were launched in the APAC region.
• BlackRock, Compass, Direxion, First Trust and PowerShares all tied with three new ETFs.

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July new listings

During the month of July, ETF issuers seemed to follow the more predictable trends of the market. 24 out of the 33 launched funds were focused on equity and 18 funds focused on either the United States or had global exposure. July seemed to demonstrate that issuers are taking a cautious approach to the market.

While indexed funds accounted for the majority of new launches, it is worth noting that five new actively managed funds were added in July. Actively managed ETFs continue to face hurdles competing with indexed funds due to higher fees and the fact that full disclosure of their holdings on a daily basis reveals the fund manager's strategy and hurts their ability to be competitive. This will be an interesting topic to watch as several firms are pushing the SEC for non-transparent ETFs and there may be a large spike in actively managed funds if this was to pass.

Exposure to emerging markets growth was limited with only two new funds providing access to China. Emerging markets as a whole saw outflows during the month of July.

June flows

The majority of inflows into funds launched in June went to equity ETFs listed in the Americas, totalling $1.3bn. Very small levels of funds went into the currency and fixed income funds that were added.

UBS led the US market with E-TRACS UBS AG FI Enhanced Large Cap Growth ETN which saw $537m in asset flows since its launch in June. The fund provides two times leveraged exposure to the Russell 1000 growth Index.

In Europe, HSBC ESI Worldwide Equity UCITS ETF brought in $483m since its inception, providing access to large cap global equity. The fund's top holdings include Wal-Mart, Exxon Mobil, and General Electric. While the majority of its exposure is to the United States, 32% of the fund is invested in Asian equities.

KStar Japan Leverage (H) ETF led APAC with $14.3m added over the past month and a half. The fund aims to provide two times the volatility of the TOPIX FFW Total Net Return Index.

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.