Fuse Blog

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1) BlackRock ETF Doubles in Days to $2 Billion on Commodities Boom

Bloomberg  |  6/8/2021

Because… Increasing assets of more than $1 billion over a couple of days is nothing but extraordinary. iShares GSCI Commodity Dynamic Roll Strategy ETF (COMT), which was launched in October 2014, had $564.2 million at the end of March 2021. But the assets ballooned to $2.3 billion as of June 8, 2021. Strong performance likely attracted investors. COMT generated a YTD return of 23.88% and one-year return of 41.58% as of May, outperforming S&P 500’s 12.62% and 40.32% in respective periods. Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF, the largest broad market-based commodity ETF, also grew from $4.2 billion to $6.2 billion during the same period. Many investors invest in commodities because of their function as a portfolio diversifier, inflation hedge, volatility dampener, and return enhancer, but commodity exposure is not for the faint-hearted. Since commodity investing typically involves selecting and replacing futures contracts, educating investors to ensure they understand the commodity structure will make a fund provider stand out from its peers.

2) Target Date Funds: A ‘Time Bomb’ in a Retirement Tool for the Masses?

ThinkAdvisor  |  6/8/2021

Because… The validity of target-date funds (TDFs) has been controversial for a long time. We believe the concept itself has its merits. TDFs are designed to provide unsophisticated investors with maximum diversification, professional investment management, and the convenience of one-stop-shopping. Plan sponsors have the fiduciary responsibility to perform due diligence before they put TDFs on their menu. TDF managers and retirement plan advisors should assist plan sponsors in the selection process and supply comprehensive, detailed fund information to ensure plan sponsors make sound decisions. While plan participants need to decide whether they want to invest in TDFs, they do not usually have the skills or desire to perform attribution analysis. TDFs are supposed to simplify the investment process for average investors. Plan sponsors should be responsible for choosing investment options that could satisfy the needs of plan demographics and offering investor education to improve their knowledge and understanding of TDFs. Addressing concerns and challenges is a positive step, but some Issues like performance variations and asset allocation differences are not unique to TDFs.

3) Invesco Files for Two Crypto-Linked ETFs

SEC Filings  |  6/9/2021

Because… The significant bitcoin price drop since April and the SEC’s delay in its approval of a bitcoin ETF have not prevented fund sponsors from diving into the crypto frenzy. Besides Invesco, Volt Equity filed two days ago for an actively managed Bitcoin Revolution ETF. In May alone, we saw two launches and four filings of bitcoin-focused funds. Simplify Asset Management rolled out the U.S. Equity PLUS GBTC ETF (SPBC), which expects to invest up to 15% of net assets in bitcoin via the Grayscale Bitcoin Trust (GBTC). Bitwise Crypto Industry Innovators ETF made its debut in mid-May. First Trust is teaming up with SkyBridge Capital to introduce a Bitcoin Strategy Fund. Cboe Vest Financial filed for the Bitcoin Target Volatility Strategy Fund, while ProFunds is also preparing for an actively managed bitcoin strategy fund. Stone Ridge is planning for the launch of NYDIG Bitcoin Strategy Fund II. While we expect more fund sponsors to follow suit, we advise them to take extra precaution because of the volatile nature of the asset class.