Major Moves June: All Fall Down For Active ETFs
Thursday, July 1st, 2010ActiveETFs | InFocus writes:
With the major US indices going down hard into month-end, the actively-managed ETFs on the market were not spared. The S&P500 dropped 5.38% over the month of June, marking a drop of a nearly 12% for Q2, 2010. As would be expected, most Active ETFs on the US market lost money in June, both in terms of value and net flows as investors pulled back and curbed their risk appetite.
However, the market activity was almost overshadowed by other major “game-changing†developments in the Active ETF space. We had many more new issuers come to the party and throw their hats into the ring through new filings for actively-managed ETFs, while others built on their bases and registered new products. These issuers included Emerald Rock Advisors, Dreyfus, Cambria Investment, DoubleLine Funds (the full list of new filings in June can be found at the bottom of this article) and most significantly BlackRock iShares. iShares’ filing for Active ETFs has created big waves as it is by far that largest issuer in the ETF industry and had previously not indicated too much interest in this space. They have also reportedly been pushing the SEC for an Active ETF with reduced disclosure, a development that could make a huge difference to the level of comfort active managers behind these structures.
With iShares’ filing, now each of the big 4-5 ETF issuers in the US – iShares, Vanguard, State Street and PowerShares, all either already have Active ETFs on the market or have filed to launch them in the future. Another major development came from Huntington Asset Advisors that filed to launch an Active ETF but more significantly, also indicated that it plans to roll one of its existing mutual funds into the new ETF. We had first heard of the possibility of mutual fund conversion from Grail Advisors that is still in talks with several undisclosed fund companies to convert their mutual funds into Active ETFs, but Huntington has been the first to announce a clear intention to convert. The announcement has re-sparked a lively debate on the benefits and downsides of mutual fund conversion.
Fund Flows:
(Click each table to enlarge)
Take note that we’ve started including WisdomTree’s Dreyfus currency income ETFs in our Active ETF Database, which has increased the number of US ETFs under coverage to 26, with a total asset base of $2.11 billion as of June 30th. Nearly each and every ETF in the list experienced a drop in assets with the direction of change again being largely dictated by changes in MINT’s assets. MINT lost $124 million in the month of June, coming off a stellar May when it gained $595 million. WisdomTree’s Dreyfus Emerging Currency Fund also lost $103 million bringing its asset base down to $312 million. One of the noteworthy gainers was the iShares Diversified Alternatives Trust (ALT: 49.75 0.00%), which gained $13 million in assets, despite having received a lot of negative press in the last few weeks from the likes of John Bogle who criticized the complexities of ETFs like ALT. PIMCO’s two municipal bond ETFs, SMMU and MUNI, were also able to gain some traction.
In Canada, the picture was slightly different, with overall assets increasing marginally primarily due to the Horizons AlphaPro Seasonal Rotation Fund (HAC), managed by Don Vialoux, picking up $3 million in assets. AlphaPro also filed to launch 3 more Active ETFs in Canada which should give it more variety in its product line-up.
Head to our Active ETFs Database for a more dynamic listing of all Active ETFs.
New Entrants and Filings:
1. Grail Advisors partnered with DoubleLine Capital, lead by the renowned Jeffery Gundlach, to file for an emerging market bond ETF – direct link
2. AdvisorShares partnered Cambria Investments to launch a Global Tactical strategy – direct link
3. Huntington Asset Advisors filed to launch a rotation and an ecological strategy, while also announcing plans for mutual fund conversion – direct link
4. BlackRock iShares filed documents to bring Active ETFs to the US – direct link
5. Horizons AlphaPro filed to launch 3 new Active ETFs in Canada – direct link
6. Dreyfus filed to launch Active ETFs – direct link
7. AdvisorShares files for two Active ETFs with Emerald Rock Advisors – direct link
Disclosure: No positions in above-mentioned names.
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