By Mark DeCambre
Hey there! We’re back after a short break visiting Salt Lake City and Utah Olympic Park. Hard to blame me for being in an Olympic mood. However, Utah’s record-breaking heat wave seems to undercut the fact that the city was the site of the 2002 Winter Olympics.
The sizzling temperatures make us think of climate change, particularly amid talk of a bipartisan group of senators striking an agreement on a roughly $1 trillion infrastructure package Wednesday.
It isn’t 100% clear what’s going to wind up in any bill, but exchange-traded funds that offer exposure to clean energy, like iShares Global Clean Energy ETF /zigman2/quotes/205740995/composite ICLN -3.58% and Invesco Solar ETF /zigman2/quotes/210041821/composite TAN -4.85% , as well as infrastructure-focused funds like Global X U.S. Infrastructure Development /zigman2/quotes/200238288/composite PAVE -1.77% , have enjoyed a good week thus far, up by at least 0.7% through late-morning Thursday action.
But the big story of the moment is the initial public offering Robinhood Markets Inc. /zigman2/quotes/228268942/composite HOOD -5.19% , with speculation already starting to take shape about where the buzzy brokerage platform might appear ETF-wise. The company raised roughly $2.1 billion after selling 55 million shares at $38 each, the low end of its $38-to-$42 price range, according to a release . For good or for ill, Robinhood has come to represent a growing legion of individual investors that are aiming to outwit the pros. It is hard to say if that trend has long legs, however.
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Robinhood and the meme
Robinhood, the no-fee trading app targeting millennials that garnered outsize popularity on the back of the home-confining pandemic and a surge in interest in meme cryptos like dogecoin /zigman2/quotes/226077044/realtime DOGEUSD +3.29% , will be trade the Nasdaq Inc. later Thursday. Robinhood has drawn a lot of attention after it temporarily curbed trading in some stocks, including GameStop Corp. /zigman2/quotes/203755179/composite GME +3.59% on Jan. 28 amid extraordinary volatility.
Already, there are some questions about whether the trading platform is a good long-term investment and some speculation about which ETFs the company might find itself.
We can’t answer the former question but on the latter, Todd Rosenbluth, head of mutual fund and ETF research for CFRA, has some thoughts. The analysts speculates that HOOD, referring to the company’s ticker symbol, may soon end up in actively managed funds run by Cathie Wood, like ARK Fintech Innovation ETF /zigman2/quotes/205650811/composite ARKF -6.29% or perhaps the flagship ARK Innovation ETF /zigman2/quotes/204808965/composite ARKK -5.73% .
He speculated that Global X FinTech ETF /zigman2/quotes/204444830/composite FINX -4.06% , a market-cap-weighted fund of companies in developed markets that derive significant revenues from providing financial technology products and services, as ETF.com describes it , could also find a home for Robinhood.
Despite the sizable $32 billion valuation, don’t expect it to appear in any of the bigger ETFs until later, Rosenbluth noted, saying that “for index funds including broader ones tied to S&P and FTSE Russell benchmarks it could be a while.”
$505 billion ETF inflows…and counting
The ETF industry has seen $505 billion in net inflows, according to CFRA data, hitting a record for net inflows set in 2020 at $504 billion, with another five months remaining in 2021.
Rosenbluth said that fund giant Vanguard, which boasts some $7 trillion under management, alone has seen inflows of some $200 billion, already matching its full year 2020 performance. Relatively smaller ETF providers like Invesco Funds, Charles Schwab and Global X ETFs also seeing sizable gains.
We wrote about record pace of inflows earlier this month but are still surprised to see it play out so rapidly.
We noted last time that the impetus behind the flows is rapid rotations, as investors adjust their portfolios based on the performance of winning versus losing bets and gauge the current cycle of the recovery from the COVID pandemic.