1) State Street Cuts Fees to 0.04% to Grab More Bond ETF Flows
Bloomberg | 12/1/2021
Because… SSGA garnered $46.2 billion in the first three quarters of the year, compared with Vanguard’s $253.6 billion. Within Taxable Bond, SSGA collected $11.2 billion in the first nine months, compared with Vanguard’s $66.2 billion. On the fund level, Vanguard’s three Corporate Bond ETFs are much larger than their SSGA counterparts, and their ability to bring in new assets is stronger too. For example, SPDR Portfolio Short Term Corporate Bond ETF (SPSB) garnered $529 million this year through September and $765 million in 2020, accounting for 7% and 11% of its assets at the end of two respective periods. Meanwhile, Vanguard Short-Term Corporate Bond ETF raked in $6.3 billion this year and $9.8 billion last year, representing 15% and 27% of its assets as of September and last December, respectively. SSGA’s new fees, which are one basis point lower than those for comparable Vanguard ETFs, will unlikely lure existing Vanguard shareholders to SSGA, but may appeal to other cost-conscious investors who choose to add corporate bond ETFs to their portfolios.
2) Fidelity Investments Canada ULC launches Fidelity Advantage Bitcoin ETF and Fidelity Advantage Bitcoin ETF Fund
CNW | 12/2/2021
Because… When the SEC rejected another two spot bitcoin ETF applications from VanEck and WisdomTree in the past two weeks, Fidelity fled north of the border for the launch of a physically backed bitcoin fund. Canada is now home to 23 crypto ETFs from seven managers. It boasts not only the world’s first physically settled bitcoin ETF, Purpose Bitcoin ETF (BTCC), but also the cheapest bitcoin ETF, CI Galaxy Bitcoin ETF (BTCX). Fidelity Advantage Bitcoin ETF (FBTC) has the same expense ratio as BTCX’s 0.40%. Both are cheaper than BTCC, which is priced at 1%. Four days ago, Invesco listed a Physical Bitcoin ETP (BTIC) on the Deutsche Boerse. In Europe, 37 crypto ETPs had a total of $11.4 billion of assets, according to TrackInsight. Outside Canada and Europe, Australian regulator also gave the greenlight to crypto ETFs at the end of October, which could bring pension funds to the crypto market. The SEC’s delay in approving spot bitcoin ETFs may lead more firms to list their own products in foreign markets.
3) BNY Mellon’s Pershing to Acquire Optimal Asset Management
BNY Mellon | 12/2/2021
Because… After BlackRock, Vanguard, JP Morgan, Morgan Stanley, PGIM, and Franklin Templeton each bought a direct indexer, the acquisition of another direct indexing provider by a large financial institution does not come as a surprise. Financial firms are using direct indexing as a new source of attracting a wider range of investors and generating more revenue, although it has been around for years. The opportunity to offer a greater degree of customization, technological advances that facilitate fractional shares trading, and commission-free purchases on brokerage platforms have made direct indexing more accessible to the investor community. According to a joint study by Oliver Wyman and Morgan Stanley, the direct indexing market is expected to grow from $350 billion in assets in 2020 to $1.5 trillion in AUM by 2025. But critics argue that direct indexing is just another form of active management. We believe it is still early to predict how the approach will evolve. The level of adoption by the lower end of the wealth spectrum will be determined by the investor demand for personalized solutions and whether the strategy can help them outperform existing products, namely ETFs and mutual funds.