ETF 20/20 : Exchange Traded Fund Monthly Report. Published: November 2017 Report Scope: Global

Transcription

1 ETF 20/20 : Exchange Traded Fund Monthly Report Published: November 2017 Report Scope: Global 1

2 Key Highlights Our monthly ETF 20/20 report briefly summarizes recent Exchange Traded Fund (ETF) trends globally. It uses data from the First Bridge ETF database that includes all global ETPs. Global ETF assets grew by 2.9% in October 2017 to $T MSCI and S&P Dow Jones announced important changes to the widely followed GICS (Global Industry Classification System) that they jointly maintain. This will result in a change in the sector into which widely held stocks like Time Warner, Disney and possibly even Facebook & Google are classified. This is very significant for ETF investors, since many of the largest sector ETFs in the world follow the GICS system. There were 31 new ETF listings in the US and over 180 outside the US (including cross- listings) in October US large cap equity ( SPY ) was the best performing of 6 ETFs representing the major asset classes in the trailing 1 month through November 17, In the US large cap equity space, growth ( RPG ) outperformed traditional cap weighting and low volatility in the trailing 1 month through November 17, About Us First Bridge provides ETF data and analytics to reputed institutional clients. Our ETF data sets include daily ETF holdings, global ETF product & smart beta classifications, historical distributions and risk metrics. Our clients include asset managers, financial software providers and research firms that use ETF data as a critical input into their systems & workflow. We often provide high touch services to our clients in the form of ETF data sets customized to their needs with related support. The First Bridge team combines deep expertise in the Indexing & ETF domain with skills in statistical programming and data visualization. support@firstbridgedata.com Phone: (650) Web: 2

3 Global ETPs: Landscape Snapshot Global ETF assets grew by 2.9% in October 2017 to $T The table below provides a detailed breakdown by ETF category, and is a summary from the First Bridge ETF data and analytics platform. ETF / ETP Type Assets ($M) - Oct '17 Assets ($M) - Sep '17 1. Bonds 1.1 Broad Market 235, , Corporate 260, , Municipal 29,537 28, Treasury / Sovereign 158, , Inflation Protected 53,188 52, Specialty / Other 65,913 61, Commodities & Metals 2.1 Diversified Commodities 15,619 15, Agricultural 2,219 2, Energy 8,264 8, Gold & Metals 105, , Other US Equity Exposure 3.1 Broad Market & Size 1,005, , Dividend & Fundamental 109, , Factor & Thematic 72,903 66, Sector & Industry 338, , Growth / Value 319, , Quant Strategy & Other 9,871 9, Global/Ex- US Equity Exposure 4.1 Broad Market & Regional 819, , Country Specific 554, , Dividend & Fundamental 95,058 92, Factor & Thematic 103,354 98, Sector & Industry 89,123 86, Quant Strategy & Other 2,466 2, Multi- Asset & Other 75,011 74, Inverse / Leveraged 72,857 73, ETP Listed in Israel* 31,900 31,408 All Globally Listed ETPs 4,634,842 4,501,592 Source: First Bridge Data and individual ETF Sponsors; ETF data as of October 31, 2017 * The Global Equities category includes both International (ex- US) and Global (US + International) ** Asset breakdown by exposure type not available for ETFs listed in Israel 3

4 Key ETF Related Developments Changes to GICS sector classifications On November 15, 2017, MSCI and S&P Dow Jones announced important upcoming changes to the widely followed GICS (Global Industry Classification System) that they jointly maintain. This will result in a change in the sector into which widely held stocks like Time Warner, Disney and possibly even Facebook & Google are classified. This is very significant for ETF investors, since many of the largest sector and industry ETFs in the world follow the GICS system. A change in the GICS methodology will result in a corresponding change in the holdings of any index- based sector ETFs that follow this system. 1. Broadening of Telecommunication Sector to Communication Services The GICS structure currently classifies all companies into 11 sectors, which in turn contain industries and sub- industries. One of these sectors (Telecommunication Services) has narrowed over the years due to the consolidation among telecom firms, becoming just ~2% of the S&P 500. Further, the boundary between the firms which create & deliver content and that provide telecom services has eroded over time. In response to this, the media industry is being moved out of the Consumer Discretionary GICS sector (into which it currently falls) and will be combined with the Telecom Services GICS sector. In addition, certain Internet companies currently classified under the Technology GICS sector may also be moved into this expanded Communication sector. As a result the new Communication Services GICS sector will combine telecom, media and select Internet firms. The announcement did not specifically identify the firms that will be moved to this new sector. Since stocks like Time Warner and Disney are classified into the media industry, they will move to the new Communications sector. What is less definite is the fate of stocks like Facebook, Google, Twitter and Snapchat. The announcement specifies that search engines, social media platforms and firms that rely on pay- per- click advertising will also be included in the new sector. This would indicate that these stocks could also be moved into Communication Services, which would be a very significant change for investors in Technology Sector ETFs that currently hold these stocks. Amazon and Apple are unlikely to be impacted and will likely continue in the Consumer Discretionary & Technology sectors respectively. 2. Discontinuation of the Internet Software & Services Sub- Industry According to the announcement, the Internet services sub- industry in the Technology sector has become too large and diverse for index construction and analysis. It spans firms that range from social media platforms to those that provide Internet related infrastructure. In response, the existing Internet Software and Services industry and sub- industry are to be discontinued. Instead, a new sub- industry called Internet Services & Infrastructure will be created. Firms that provide services such as data centers, cloud networking and storage infrastructure will be classified into this sub- industry. As mentioned earlier, Internet firms like social media and search firms will likely be moved into the new Interactive Media & Services Industry group in the Communications Services sector. Since these are major modifications to GICS, the changes will be implemented in a phased manner. A select list of large cap firms that are impacted by these changes will be announced in January The actual changes will be effective in September

5 October 2017 ETF Launches US There were 31 new ETF listings in the US in October The new listings are summarized below (this is a subset of our complete regularly updated ETF list). Table: October 2017 ETF Launches in the US US Equities Type of Exposure Sponsor Tickers US Large Cap Fossil Fuel Free Change Finance Expense Ratios (in bps) CHGX:US 75 US Large Cap - Market Cap Weighted Schwab SCHK:US 5 U.S. Mega- Cap Multi- Factor Principal Financial USMC:US 12 Bernstein US Proprietary Stock Picks Bernstein BERN:US 50 AI Powered Proprietary Model - Active ETF Managers Group AIEQ:US 75 Reputed US Brands Global X LOGO:US 48 Quant Based Contrarian Value Strategy Principal PVAL:US 29 Price Momentum Financial PMOM:US 29 US Value Momentum Blend USAA ULVM:US 20 US Small Cap Value Momentum Blend USVM:US 25 Biblical Themed Large Cap Inspire Investing BIBL:US 35 Quant Based Value Strategy - Tail Hedged Aptus Capital FTVA:US 79 Global or Ex- US Equities China ESG KGRN:US 79 Krane Shares Emerging Markets Consumer Technology KEMQ:US 79 Bernstein Global Proprietary Stock Picks Bernstein BRGL:US 65 Global Factor Opportunities - Active Virtus VGFO:US 49 EM High Dividend Volatility Weighted VictoryShares CEY:US 50 Ex- US Value Momentum Blend Emerging Markets Value Momentum Blend USAA UIVM:US 35 UEVM:US 45 5

6 Type of Exposure Sponsor Tickers Target Date / Multi- Asset Expense Ratios Signal based Equity/T- Bill Re- allocation Van Eck LFEQ:US 59 Multi- Asset fund benefiting from Republican policies - Active Multi- Asset fund benefiting from Democratic policies - Active Multi- Asset fund benefiting from US tax reform Bonds EventShares GOP:US 75 DEMS:US 75 TAXR:US 85 US Aggregate Invt Grade Bond - ESG Nuveen NUBD:US 20 Multi- Sector US Bonds Columbia Management DIAL:US 00 Investment Grade Muni Bonds - Active MMIN:US 30 Index IQ Intermediate Term Muni Bonds - Active MMIT:US 30 Short- Term Bond - Active USTB:US 35 USAA Intermediate- Term Bond - Active UITB:US 40 USD High Yield Corporate Bond Blackrock USHY:US 22 Intermediate Corporate Bonds - ESG Sage Advisory GUDB:US 35 ETF List: Data as of October 31,

7 October 2017 ETF Listings Global There were over 180 new ETF listings outside the US in October 2017 including cross- listings. The table below summarizes them by asset class with a breakdown by sponsor. Type of Exposure Sponsor Number of Listings Expense Ratios (in bps) Blackrock BMO AM Cathay Deutsche Evolve Funds US Equities First Trust Invesco Powershares 6 35 KIM 1 50 Lyxor State Street 1 35 Sygnia 1 20 Vanguard 2 7 Amundi Ashburton Investments 1 45 Blackrock Global / Ex - US Equities BMO AM Cathay Commerz Bank 8 25 Deutsche Deka ETF

8 Type of Exposure Sponsor Number of Listings Expense Ratios (in bps) Evolve Funds 1 60 Franklin Templeton 3 55 Hanwha AM 1 23 Horizons 1 80 Invesco Powershares 1 65 Lion Phillip 1 50 Lyxor Mitsubishi 1 25 Global / Ex - US Equities Morgan Stanley 4 N/A Pinnacle Investments 1 N/A Premia Partners 2 50 RBC 1 29 Samsung 2 30 State Street 1 30 Sygnia Van Eck 2 50 Vanguard Blackrock Bonds BMO AM 1 55 BNP Paribas 1 40 Evolve Funds Group 2 85 First Asset 1 60 Invesco Powershares

9 Type of Exposure Bonds Sponsor Number of Listings Expense Ratios (in bps) Lyxor 1 10 RBC Vanguard Commodities & Metals Nordea Bank AB Blackrock 1 19 Crypto- Currency XBT Preferred Stock Invesco Powershares 2 50 Van Eck 2 41 ETF Data Source: As of October 31,

10 Performance of Key Asset Classes & Strategies US large cap equity ( SPY ) was the best performing of 6 ETFs representing the major asset classes in the trailing 1 month through November 17, Key Asset Classes - 1 Month Total Return 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% % % % US Large Cap (SPY) Emerging Equity (EEM) Gold (GLD) US Bonds (AGG) US Small Developed Cap (IWM) Equity (EFA) % In the US large cap equity space, growth ( RPG ) outperformed traditional cap weighting and low volatility in the trailing 1 month through November 17, US Equity Strategies - 1 Month Total Return 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% S&P 500 Pure Growth (RPG) S&P 500 Pure Value (RPV) Low Volatility (SPLV) S&P 500 Equal Weight (RSP) S&P 500 (SPY) Large Cap Dividend (DLN) Data source: First Bridge Data ( Data as of November 17,

11 More First Bridge ETF Resources ETF Book - ETF Investment Strategies (McGraw- Hill): ETF Analytics Dashboard: ETF Daily Holdings: First Bridge maintains granular data sets for all globally listed ETFs, with key metrics. For more information, support@firstbridgedata.com 11

12 Important Disclaimers First Bridge Data LLC does not intend this guide to provide investment advice, and the information provided in this guide is not and should not be considered investment advice. First Bridge Data LLC shall not be liable for any actions or decisions made based on the information provided in this document, and the reader assumes all risk associated with any investment decision made based on information contained in this document. First Bridge Data LLC is not a registered investment advisor or broker, and does not recommend specific securities, funds, or investment strategies, nor does it advocate the purchase or sale of any individual investment vehicle. Discussion or references to specific securities or investment products in this book should not be considered endorsements or offers to buy or sell those products. The past performance of a mutual fund or exchange- traded fund (ETF), security, or investment strategy cannot guarantee its future performance. First Bridge Data LLC has no obligation to update this document or to correct any errors or omissions that might be contained in this document. First Bridge Data LLC disclaims all warranties of any kind, expressed or implied, and hereby disclaim and negate all other warranties, including without limitation implied warranties or conditions of merchantability, fitness for a particular purpose, or non- infringement of intellectual property or other violation of rights. First Bridge Data LLC does not guarantee the completeness, accuracy, or timeliness of any data in this document, including any data sourced through third- party content providers. Neither First Bridge Data LLC nor its employees, third- party content providers, nor any person through whom the First Bridge Data LLC makes this document available, shall be liable for any direct, indirect, incidental, punitive, special, or consequential damages (including, without limitation, attorneys fees), whether in an action of contract, negligence, or other tortious action, that result from the use of this book. Neither First Bridge Data LLC nor its content providers shall be liable for any punitive, special, indirect, or consequential damages arising from or relating to the foregoing, whether in contract or tort or otherwise, even if First Bridge Data LLC has been advised of the possibility of such damages. 12