By Mark DeCambre
Hello there! This is the final ETF Wrap of November, as we won’t publish one, on Thursday’s Turkey Day. Still, we’ve got some good bits on the exchange-traded fund industry this week to tide readers over, including a few new launches.
So, Happy Thanksgiving to all.
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Another dimension of ETFs
Bloomberg writes that quant-investing fund provider Dimensional Fund Advisors is deepening its suite of ETF offerings, with a plan to unfurl a number of new funds that could bring it to nearly two dozen offerings.
Earlier this week, the fund kicked off the actively managed Dimensional Core Fixed Income ETF /zigman2/quotes/230997940/composite DFCF -0.88% , the Dimensional Short‐Duration Fixed Income ETF /zigman2/quotes/230997881/composite DFSD -0.34% , Dimensional National Municipal Bond ETF /zigman2/quotes/230997864/composite DFNM -0.30% and Dimensional Inflation‐Protected Securities ETF /zigman2/quotes/230997920/composite DFIP -0.99% , which carry fees of no more than 0.19%.
The news outlet writes that Dimensional is shifting from being a late entrant to ETFs in November 2020, to one of the top 10 issuers by assets with $44 billion, citing Bloomberg data.
Dimensional manages about $653 billion overall, including $120 billion in fixed income, Bloomberg wrote.
“We’re going to see a lot of growth in systematic fixed income over the next decade. Hopefully we’ll be a part of that growth,” Dimensional’s co-CEO Gerard O’Reilly was quoted as saying.
Offering, perhaps, a good follow up to those fixed-income launches, CFRA’s mutual fund and ETF expert Todd Rosenbluth offered a list of bond-related ETFs that aren’t likely to pay any capital gains. Those include iShares iBoxx $ Investment Grade Corporate Bond ETF /zigman2/quotes/206919681/composite LQD -1.14% , SPDR Bloomberg Barclays High Yield Bond ETF /zigman2/quotes/202941311/composite JNK -1.01% .
Beyond fixed, income Rosenbluth writes that an estimated 98% of equity ETFs offered by providers iShares, State Street Global Advisors, and Vanguard will pass along zero capital gains to existing shareholders in 2021, consistent with 2020 levels.
Why is this significant? After all, tax-efficiency is one of the hallmarks of the ETF wrapper.
Rosenbluth said that it is important to highlight utility of ETFs from a tax perspective, particularly, amid legislative rumblings that proposed to do away with ETFs’ tax benefits.
“Little to no cap gains was to be expected but it is an ongoing reminder why ETFs are gathering record equity ETF inflows in 2021,” Rosenbluth told ETF Wrap.
“Plus Congress floated the idea of removing the tax benefit of in-kind redemptions as part of revenue generation to offset the Build Back Better,” spending initiative.
High stakes bet on cannabis?
MarketWatch’s Steve Gelsi writes that AdvisorShares and Poseidon longtime cannabis investor Poseidon Investment Management have launched an actively managed ETF aimed at providing individual investors access to U.S. cannabis companies barred from trading directly on the New York Stock Exchange or the Nasdaq.
Gelsi writes that big U.S. multistate operators such as Trulieve TCNNF , Verano VRNOF or Curaleaf CURLF are generally not available for investors to purchase directly in their brokerage accounts, as part of the federal ban on cannabis that prohibits cannabis company listings on the Nasdaq and the NYSE.