1) ProShares Launches Firm’s First Leveraged Thematic ETFs
ProShares | 1/21/2021
Because… ProShares, known for its leveraged and inverse ETFs, was the 9th best-selling ETF provider in 2020. Its intake of $7.8 billion more than quintupled its 2019 inflows of $1.4 billion. Its assets grew 36.5% from the previous year to $47.4 billion. The combination of the leveraged approach and thematic investing could come with both rewards and risks. On the one hand, strong performance can be amplified. One of the new leveraged thematic ETFs is focused on the cybersecurity industry. Four cybersecurity ETFs currently on the market generated very strong returns in 2020, ranging from ETFMG Prime Cyber Security ETF’s 40.8% to Global X Cybersecurity ETF’s 71.2%. Nasdaq CTA Cybersecurity Index, which the ProShares ETF is based on, gained 51.9% last year. Should cybersecurity stocks maintain their momentum, ProShares’s new fund could potentially have a triple-digit return. On the other hand, the risk can be elevated too. Thematic ETFs already carry higher risks than broad market-based ETFs. Doubling the daily exposure suggests that risks could be further enlarged.
2) State Street Global Advisors Announces Changes to SPDR ETF Lineup
SSGA | 1/26/2021
Because… Ten ETFs scheduled to be liquidated include three actively managed funds sub-advised by MFS. SPDR MFS Systematic Core Equity ETF (SYE), SPDR MFS Systematic Growth Equity ETF (SYG), and SPDR MFS Systematic Value Equity ETF (SYV), which made their debut in January 2014, had assets of $20 million, $26 million, and $19 million, respectively, at the end of 2020. Their below-average category rankings for all 1-, 3-, and 5-year periods resulted in a 3-star Morningstar rating for SYE and SYV and a 2-star rating for SYG. MFS, which launched the industry’s first mutual fund in 1924, was the 14th largest among all long-term mutual fund and ETF managers with assets of $325.2 billion. It raked in $17.1 billion last year, up from $11.9 billion in 2019. Its sales were quite impressive considering the firm, which does not offer ETFs, could not capitalize on the ETF popularity. Now that its partnership with SSGA failed to come to fruition, it will be interesting to see if MFS will finally introduce its own ETFs.
3) Hamilton Lane to Acquire 361 Capital, Further Expanding Its Presence in the Private Wealth Channel
GlobeNewswire | 1/28/2021
Because… Besides Hamilton Lane’s takeover of 361 Capital, a boutique specialized in alternative strategies, CI Financial announced its acquisition of Chicago-based Segall Bryant & Hamill on January 25. We expect the demand for deals to remain strong in the new year. Some asset managers are looking to strengthen their investment capabilities to stem outflows, while others are feeling greater pressure of growing their size. Meanwhile, more banks and insurance firms are reassessing their business models to focus more on their core strengths and put their fund unit up for sale. Wells Fargo, for one, could fetch billions from finding a new parent for its wealth and investment management segment. However, market environment uncertainty, COVID-19’s impact, and divergent expectations between buyers and sellers could hinder deal flow. Asset managers on both sides of a transaction should not rush into deals. A thorough review of potential targets and analysis of post-merger synergy would help firms make most intelligent decisions.