1) 5 Lessons From Wood’s ‘ARKK’
ETF.com | 12/6/2021
Because… We would like to add a few other lessons from ARKK. First, many retail investors still chase performance. ARKK gained 152.8% in 2020, ranking in the top 1% of Mid-Cap Growth funds. This year through December 10, however, the fund lost 22.75%, lagging all peers in the same category. The fund’s quarterly sales peaked in 1Q21 when it garnered $7.1 billion. Its inflows dropped significantly to just $208 million in 2Q21, and investors yanked $2.2 billion in 3Q21. Second, investors care less about expense ratios when funds outperform. Investors embraced ARKK after it generated a triple-digit return last year, even though its expense ratio of 0.75% is higher than the category average of 0.58%. Third, an attractive fund can help improve an investment boutique’s visibility and brand. ARK Invest was largely unknown to investors before 2020. Its assets accelerated to $38.6 billion from $3.2 billion as of 2019, thanks in no small part to ARKK’s rapid asset growth to $19.4 billion from $1.9 billion.
2) American Century Files for Three Responsible ETFs
SEC Filings | 12/8/2021
Because… American Century already offers three actively managed semi-transparent ESG ETFs: the $161.7 million Sustainable Equity ETF, the $6.9 million Sustainable Growth ETF, and the $24.7 million Mid Cap Growth Impact ETF. The filing of three additional ESG ETFs—Avantis Responsible U.S. Equity ETF, Avantis Responsible International Equity ETF, and Avantis Responsible Emerging Markets Equity ETF—indicates the firm’s commitment to the field. As of the end of September, BlackRock dominated the ESG ETF space with 56% market share. It was the largest player among both active and passive ESG ETFs. In the passive space, it had $60.6 billion of assets, with seven other ETF providers having ESG assets between $1.0 billion and $9.0 billion and 10 holding assets ranging from $100 million to $1 billion. In the active area, BlackRock, with $1.9 billion of assets, was the only ETF sponsor with more than $1 billion of assets. Seven others had assets between $100 million and $500 million. Therefore, it is relatively easier for an ETF manager to become a leader in the active ESG arena, especially for international and emerging markets exposure.
3) Asset Manager Websites Wield Big Influence on Advisors’ Decision to Invest, J.D. Power Finds
J.D. Power | 12/9/2021
Because… The latest J.D. Power study validates the importance of a fund firm’s web site. While such criteria as easy navigation, fast page load, visual appeal, and unified feel are essential, fund firms should clearly convey their unique investment approach or a distinctive business principle to the public. Many times, firms’ mission statements or introduction of investment process are still too generic to create a lasting impression. The lack of emphasis would be particularly detrimental to small and mid-sized firms. Websites should also give a reason for investors to return. Fund firms tend to follow the herd in terms of content development. They provide the same educational materials and cover the same topics as other fund sponsors. While firms do not need to shun hot topics in order to stand out from the competition, they may gather feedback and suggestions from investors with regard to the most interesting subjects, the most effective ways of engaging them, as well as any problems they have encountered. A solid understanding of investor needs would likely help fund firms design a more attractive site.