1) Vanguard Announces Plans to Launch Two New Active Bond Funds
Vanguard | 7/29/2021
Because… Vanguard already has a large market share within Taxable Bond. Its mutual fund assets of $1.1 billion, which tripled assets of the second largest asset manager, PIMCO, accounted for about a quarter (24.5%) of the asset class total. Earlier this year, Vanguard launched Total International Bond II Index Fund at the end of February, which has grown its assets to $66.6 billion in a short five-month period. More than half (51%) of Vanguard’s Taxable Bond mutual fund assets resided in Intermediate Core Bond, based on Morningstar data. In Intermediate Core-Plus Bond, Strategic Advisers was the largest provider with $99.7 billion as of June, followed closely by TCW with $97.5 billion. In Multisector Bond, PIMCO dominated the space with $148.8 billion of assets. Lord Abbett was a distant second with $24.9 billion. The introduction of Vanguard Core-Plus Bond Fund and Vanguard Multi-Sector Income Bond Fund has filled important product gaps and enhanced actively managed Taxable Bond fund offerings for the firm. Meanwhile, each could become a strong contender in these two asset categories.
2) Fees Slashed on 25 iShares Funds
ETF.com | 7/30/2021
Because… While iShares is still the largest ETF provider, its sales have lagged Vanguard by a wide margin. The firm pulled in $122.1 billion last year, accounting for 61% of Vanguard’s ETF sales of $201 billion. The percentage dropped to 53% in 1H21 when it posted net inflows of $91.1 billion, compared with Vanguard’s $173.3 billion. Vanguard generated much stronger YTD sales than iShares in two major asset classes: U.S. Equity and Taxable Bond. In U.S. Equity, Vanguard raked in $82.4 billion, whereas iShares absorbed $26.0 billion. In Taxable Bond, Vanguard raised $44.2 billion, compared to iShares’ $12.8 billion. Although iShares had a slight edge in International Equity, Sector Equity, and Municipal Bond, it was unable to beat its archrival in overall sales. Since funds that received a fee reduction are mostly sector or thematic ETFs and their expense ratios were trimmed by a mere one to three basis points, the fee cut won’t likely help iShares catch up with Vanguard in the second half of the year.
3) Tuttle Capital Management Files for the Short ARKK ETF
SEC Filings | 7/30/2021
Because… If there is a Rotten Tomatoes review site for the fund industry, this newly filed ETF may deserve a “Rotten” rating. According to its SEC filing, the fund “is an actively managed exchange traded fund that attempts to achieve the inverse (-1x) of the return of the ARK Innovation ETF (the “ETF”) for a single day, not for any other period, by entering into a swap agreement on the ETF.” The fund is trying to capitalize on the attention ARK Innovation ETF (ARKK) has received. It is unprecedented that a fund’s objective is to bet against another unaffiliated ETF. If ARKK rebounds from its recent slump, investors would lose by investing in this fund. If ARKK stumbles, this fund would profit from a peer’s fall from grace, which does not seem ethical. What value does it add in the long term if its success is tied entirely to another fund’s performance? In addition, the fund charges 0.75%, which is really high considering all the portfolio manager does is to enter swap contracts.