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July 3, 2021, 3:26 p.m. EDT

What it might take to convert the largest bitcoin fund into the U.S.’s first ETF

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By Mark DeCambre

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State Street and Invesco

Chatter of a potential merger between State Street’s asset-management arm andInvesco, reported by Bloomberg late last year have led to speculate about what such a combination might mean for the ETF business.

It could create the third-largest provider with assets of over $1 trillion, behind BlackRock’s iShares and Vanguard,

A record for first half

The first half of 2021 saw a record $466 billion in inflows to ETFs, according to Matthew Bartolini, Head of SPDR Americas Research at State Street Global Advisors. That outpaced the previous first-half record of $242 billion in 2017.

Here are some of the highlights from Bartolini:

  • For the 11 month in a row, cyclical sectors (+$2.4 billion) beat defensives (+$581 million).

  • Growth ETFs had their best month ever while outgaining value.

  • Bond ETFs took in $20 billion in June and are on pace to break 2020’s full year record. 

  • Led by active fixed-income strategies, active ETFs took in $6.6 billion in June, their sixth highest and the 15 month in a row with inflows—a record streak.

  • With over $3 billion of inflows in June into ESG ETFs, those focused on environmental, social, and governance, have now surpassed the notable milestone of more than $100 billion in assets under management

  • Treasury-inflation Protected funds had the second-most flows, taking $3 billion. This is their 14 month in a row with inflows.

The good and the bad

Top 5 gainers of the past week %Return
Invesco Solar ETF /zigman2/quotes/210041821/composite TAN 9.1
Amplify Transformational Data Sharing ETF /zigman2/quotes/204122720/composite BLOK 6.8
ARK Innovation ETF /zigman2/quotes/204808965/composite ARKK 5.9
SPDR S&P Semiconductor ETF /zigman2/quotes/204438110/composite XSD 5.7
First Trust NASDAQ Clean Edge Green Energy Index Fund /zigman2/quotes/205893823/composite QCLN 5.4
Source: FactSet, through Wednesday, June 30, excluding ETNs and leveraged products Includes NYSE, Nasdaq and Cboe traded ETFs of $500 million or greater
Top 5 decliners of the past week %Return
U.S. Global Jets ETF /zigman2/quotes/207744796/composite JETS -5.0
VanEck Vectors Oil Services ETF /zigman2/quotes/207596637/composite OIH -4.3
ETFMG Prime Junior Silver Miners ETF /zigman2/quotes/207797470/composite SILJ -4.2
VanEck Vectors Junior Gold Miners ETF -3.7
Global X MLP ETF /zigman2/quotes/205872419/composite MLPA -3.6
Source: FactSet

Is there an ETF for that?

Innovator Capital Management launched the Innovator Defined Wealth Shield ETF on Cboe Global Markets /zigman2/quotes/208166986/composite CBOE -1.31% on Thursday. The ETF is meant to serve as a bond alternative, with benchmark 10-year Treasury yields /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -0.82% hovering at 1.50% but analysts are increasingly pointing to the possibility of a return to the 2% range (and higher) as the world reopens from the COVID pandemic and the U.S. economy kicks into higher gear. That means holding on to bonds could be a risky proposition since yields move inversely to price.

BALT /zigman2/quotes/227827915/composite BALT +0.08% , referring to the fund’s ticker symbol, is aiming to compensate investors for the risks in bonds and inflation, especially when factoring in for fees.

The fund is representative of products that promise a set buffer against the downside, in exchange for a ceiling on the upside of your returns, to smooth out stomach-churning market volatility.

Such products, and those like it, have come more into vogue with the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.55% , the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.75% , and the Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +1.13% hovering around records and bond prices are also punching higher but are expected to eventually cool.

It is important to note that BALT doesn’t provide investment income and isn’t meant to mimic a money-market fund but it is intended to “provide a large buffer (15-20% on a quarterly basis) against loss, with a defined upside cap before fees and expenses, benchmarked to the price return of the SPDR S&P 500 ETF Trust /zigman2/quotes/209901640/composite SPY +0.78% .

Many strategists recommend using such ETFs within the framework of a broader strategy.

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Rev. per Employee
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