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ETF Market Update: CoinShares, Vanguard, Strategy Shares, Defiance ETFs


ESG ETFs are still the investment of choice for many it seems. Intelligence from Bloomberg Intelligence indicated a record first quarter for ESG ETFs, bearing out findings from other data providers like TrackInsight’s ESG Observatory. Bloomberg said ESG ETFs saw net inflows of $54bn, which is staggering when you consider that was 60% of the total flows into the ESG ETF universe total in 2020.

Bloomberg is arguing that these flows are cyclical, and that the money is chasing performance. This could be problematic for the investor, as many of the underlying themes are much longer term in nature. Climate change is not going to go through cycles. It’s here and it’s not going away. Clean energy was noted as one hot sector for ETFs in January, but while it might be deemed as cooling off a bit in the ETF world, our own intelligence indicates demand for good clean energy opportunities remains fervid.

CoinShares reports record volumes in cryptocurrency ETPs

ETF manager CoinShares has been sitting at the centre of the storm of volatility swirling around the cryptocurrency markets at the moment. It reported record trading volumes 19 May – some $490m in its ETPs swapped hands in one trading session. This smashed as previous record set on 22 February. CoinShares operates two cryptocurrency ETP trading platforms, XBT Provider and CoinShares Physical. Ethereum and Bitcoin look like they were the favourites in May. Many bigger investors seem to prefer to use ETPs to trade cryptocurrencies and CoinSshares has the infrastructure and liquidity to shoulder a massive amount of trading activity at the moment, which should also make for efficient pricing. Note that UK residents are still banned from investing in ETPs using onshore trading accounts due to FCA edict.

Vanguard Global Corporate Fixed Income ESG (V3GP)

Vanguard said this week it was launching the Vanguard ESG Global Corporate Bond ETF. It is designed to be what Vanguard is calling “a core building block” for investors who need a bond allocation inside a larger ESG-focused portfolio. It is a corporate fixed income ETF with built in ESG screening on the corporate debt. The underlying index is the MSCI Global Corporate Float-Adjusted Liquid Bond Screened Index. The index cuts out companies that are involved in arms, non-renewable energy, vice products, and what are described as “companies involved with controversies related to the UN Global Compact Principles.” Issuers with ESG Controversy Scores from MSCI are excluded.

Strategy Shares Gold-Hedged Bond ETF (GLDB)

Fund manager Strategy Shares unveiled its Gold-Hedged Bond ETF, which is basically a portfolio of investment grade corporate bonds, hedged with a gold overlay. The fund has been launched to address specific investor needs – i.e. for corporate bond yields but with a degree of protection against anticipated inflation challenges ahead. Strategy Shares recognised that investors were looking for income – something you can’t get from bullion – but with the value-retaining characteristics of gold. The ETF is aiming to give investors the best of both worlds. Launch of the ETF looks timely with increasing concerns that there is too much money sloshing around in the financial system.

Defiance ETFs Next Gen Altered Experience ETF ($PSY)

Readers may known Defiance ETFs as the fund manager which brought us the first hydrogen stocks ETF play in the US market. Now they are tapping into another strong area of interest with an ETF tracking an index of companies in the expanding field of psychadelics. These are next generation medicines which are being pioneered for treatment of mental illnesses. The underlying index contains listed companies involved in the cannabis and ketamine R&D space as well. The index has been developed by BITA GmbH. Among key holdings in the ETF are Charlottes Web Holdings (CWEB.CN), Aurora Cannabis Inc (ACB.CN) and Corbus Pharmaceuticals Holdings (CRBP).

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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