ECONOMIC SILUET: ETF Edge Newsletter

Jumat, 25 September 2020

ETF Edge Newsletter

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FRI, SEP 25, 2020

YOUR WEEKLY UPDATE ON TOP ETF TRENDS

A NOTE FROM BOB

This has to mean something, but what? The legendary Fidelity Magellan mutual fund (FMAGX), run by Peter Lynch (OK, he left in 1990) is going to go into an ETF format, though it is going to be in an active non-transparent (ANT) format. That makes sense, since it is actively managed. Like almost all active funds, it has dramatically underperformed the S&P 500 and has seen outflows for years.

ESG keeps rolling on. Blackrock and Vanguard roll out more ESG ETFs. Blackrock iShares rolls out 3 size-based ETFs based on S&P indexes, while Vanguard rolls out its first bond fund.

The SEC, in a 3-2 vote along party lines, has raised the threshold requirements for shareholders seeking to submit ballot proposals. Critics argue that this ruling greatly reduces the ability of shareholders to submit proposalson many issues, including climate change and ESG (Environmental, Social, and Governance), which has attracted enormous amounts of new money this year.

Several large China fund companies are launching ETFs tied to the Star 50 index, which is tied to stocks listed on the Star Board, the newest stock venue for fostering tech startups that is owned by the Shanghai exchange. That would include the likely debut of Ant Financial in what may be the biggest IPO ever. This will open up many tech stocks to millions of investors on mainland China, many of whom cannot afford to trade because individuals are required to have a minimum 500,000 yuan (about $73,000) in their trading accounts to trade on the Star Board. Investments in the ETFs will only require 1,000 yuan. For the time being, this is off-limits for US investors as STAR Board stocks are not included in Stock Connect.

For more analysis and actionable insights, catch me live on Mondays at 1 PM ET on ETF Edge.