By Mark DeCambre
ProFund announces bitcoin mutual fund
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 (link) 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 (link) 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 (ICLN) and Invesco Solar ETF (TAN), as well as infrastructure-focused funds like Global X U.S. Infrastructure Development (PAVE), 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 (link)., 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 (link). 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.
As per usual, send tips, or feedback, and find me on Twitter at @mdecambre to tell us what we need to be jumping on. Sign up here (link) for ETF Wrap.
Check out: Opinion: Three arguments for, and three against, buying Robinhood shares once they start trading after the IPO (link)
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 , will be trade the Nasdaq Inc. later Thursday. Robinhood has drawn a lot of attention (link) after it temporarily curbed trading in some stocks, including GameStop Corp. (GME) 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 (ARKF) or perhaps the flagship ARK Innovation ETF (ARKK).
He speculated that Global X FinTech ETF (FINX), 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 (link), 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 (link) 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.
The good and the bad
Top 5 gainers of the past week %Return Global X Copper Miners ETF COPX 4.2 iShares MSCI Global Metals & Mining Producers ETF PICK 3.3 Utilities Select Sector SPDR Fund XLU 3.2 iShares MSCI Mexico ETF EWW 3.2 iShares U.S. Utilities ETF IDU 3.0 Source: FactSet, through Wednesday, July 28, 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 KraneShares CSI China Internet ETF KWEB -21.8 Global X MSCI China Consumer Discretionary ETF CHIL -16.4 WisdomTree China ex-State-Owned Enterprises Fund CXSE -14.2 Emerging Markets Internet & e-commerce ETF EMQQ -13.4 Invesco China Technology ETF CQQQ -12.9 Source: FactSet
China crackdown cracks ETFs
China-pegged ETFs are taking it on the chin (link). The widening crackdown on Internet companies by the People's Republic has forced broad-based selling in holdings that were once quite popular. Shares of ride-sharing company DiDi Global Inc. (DIDI) are down over 30% this month along, while shares of Alibaba Group Holding Ltd. (9988.HK) are down 15%.
That selling has cratered ETFs like KraneShares CSI China Internet ETF, which has lost over a fifth of its value since last Wednesday, according to FactSet data (check out ETF Wrap's performance table).
Double-digit losses have been the order of that day for other ETFs that offer exposure to popular Chinese stocks, including Global X MSCI China Consumer Discretionary ETF and the WisdomTree China ex-State-Owned Enterprises Fund.
That said, some brave souls may see this as a chance to bargain hunt on KWEB (KWEB).
"KWEB is most exposed to these stocks but investors have been buying the ETF seeing this as an opportunity," CFRA's Rosenbluth said.
Is there a bitcoin ETF?
However, ProFunds, a mutual fund management company that looks after some $60 billion, announced (link) the first mutual fund in the U.S. that offers bitcoin exposure, via futures. It isn't an ETF but the fund was approved presumably because as opposed to ETFs, a mutual fund can be closed to new investor, which may have provided more comfort to regulators at the Securities and Exchange Commission, who have delayed approval of a number of ETF proposals so far.
(END) Dow Jones Newswires
07-31-21 1228ETCopyright (c) 2021 Dow Jones & Company, Inc.