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1) Drop the Jargon and Focus on Simplicity, Participants Say

NAPA  |  8/30/2021

Because… We recommend Empower’s latest white paper, “Less jargon, more clarity,” as financial terms seem to have become a hindrance for people to gain more financial knowledge. According to the research, 44% of survey respondents believe commonly used financial terms make them hesitant to talk about money. The percentage went from 33% for Baby Boomers and 43% for Gen X to 52% for Gen Y and 61% for Gen Z. Sometimes investors are reluctant to read prospectuses or other marketing materials because technical language confuses them. Invesco also pointed out in its 2021 Defined Contribution Language Research that plan participants can have a hard time understanding even the most basic terms used to describe their plans. Therefore, it is imperative for marketing professionals to come up with better communication strategies. Identifying terms that may overwhelm average investors and replacing them with simple and more direct language would help improve communications considerably.

2) ARK to Debut the Transparency ETF

SEC Filings  |  8/31/2021

Because… ARK Space Exploration & Innovation ETF (ARKX), which was launched on March 30, 2021, already amassed $627 million as of June 30, 2021. Many wonder if the newly filed Transparency ETF will get off to a fast start too. ARK Invest has been an advocate of transparency. It offers six actively managed transparent ETFs and two index ETFs. Its active ETFs had average assets of $8.2 billion as of June 2021. Excluding the young ARKX, the average assets of the five older active ETFs increases to $9.7 billion. ARK is now taking its support for transparency to a new level: launching a transparency-themed ETF.  According to its prospectus, the fund will track an index that measures the performance of approximately 100 companies that receive high scores for transparency based on a proprietary scoring methodology. It’s also interesting to know that the fund has an ESG-tilt, as it excludes such industries as alcohol, banking, chemicals, confectionary, fossil fuel transportation, gambling, metals, mineral, natural gas, oil, and tobacco. However, after these industries are screened out, will the fund have too much overlap with ARK’s existing offerings that focus on disruptive technologies?

3) SPY Reaches $400B in AUM

ETF.com  |  9/1/2021

Because… While SPY, the first ETF in the U.S., has earned bragging rights for topping $400 billion, it cannot rest on its laurels as its rivals are catching up. iShares Core S&P 500 ETF (IVV) and Vanguard S&P 500 ETF (VOO), which track the same index as SPY, had $306.9 billion and $256.9 billion, respectively, as of September 2, 2021. SPY grew 36% from June 2020 to June 2021, while IVV and VOO increased their assets by 47% and 57%, respectively. IVV and VOO’s growth rates in the past three years were also higher than that for SPY. SPY experienced net redemptions of $2.6 billion in 1H21 and $25.7 billion in 2020. In comparison, IVV absorbed $12.6 billion and $6.6 billion in the respective periods. VOO raked in even more assets: $26.9 billion and $21.4 billion, respectively. Since IVV and VOO charge only 0.03%, less than one third of SPY’s 0.0945%, cost-conscious retail investors may continue to flock to these cheaper options, which may further slow SPY’s growth.