Industry Updates

Are you a Democrat or a Republican?

David Tuckwell

Today's new listings


More political ETFs

In another sign that ETFs are becoming more like active management, new issuer Event Shares has listed two new actively managed ETFs that use politics to decide which companies to buy.

The Democrat Policies Fund (DEMS) will look at which companies are most likely to benefit from Democrats and long those likely to benefit, short those likely to lose out. While the prospectus says that DEMS will expose investors to "Democratic Policies", it does not say how it will do so when there are no Democratic policies to speak of. At present, the White House, Congress, the Senate, the Supreme Court and most Governors' mansions are controlled by Republicans.

The Republican Policies Fund (GOP) will do the same as DEMS, but for Republicans. It will seek to pick the winners of Republican governments across the US and across the world, while shorting the losers. That the fund is actively managed may make sense given the unpredictability of the current White House.


UK and France

Lyxor wants the best of Japan

Lyxor has listed a new Japanese dividend ETF in London and Paris that tracks large Japanese companies based how big and how consistent their dividend payments are. SGQJ will track an index produced in-house by Societe Generale, Lyxor's parent company, and use swaps to track its index.

Lyxor already has similar dividend trackers for European and global companies.

France and Germany

BNP Paribas has listed three new smart beta ETFs in France and Germany targeting dividends and value. They are:

  • BNP Paribas Easy Equity Dividend Europe UCITS ETF (EDEU)

  • BNP Paribas Easy Equity Dividend US UCITS ETF (DIUS)

  • BNP Paribas Easy Equity Value US UCITS ETF (EVUS)

BNP uses the monicker "Easy" to describe its smart beta funds. Each of the new ETFs uses swaps to track an in-house index and comes with a 0.30% management fee.

EDEU and DIUS target American companies that BNP believes will pay higher and more consistent dividends. While EVUS targets American companies that BNP believes are undervalued.

Today's news from around the web

ETF Strategists: the new kingmakers

As ETFs become more popular strategists are becoming industry kingmakers. According to BlackRock as much as 12 percent of inflows into iShares products this year has come from ETF strategists. That is, active managers who have the power to decide which ETFs their fund will invest in. The growth of strategist is being driven by Obama's reforms that require advisers to act in the best interests of clients.

Actively managed mutual funds underperforming as always

Active managers have failed their investors, again. And who's surprised? The new S&P Dow Jones Indices' SPIVA U.S. for mid-year 2017 has found that the majority of active managers lost to their respective index. Roughly 56 percent of large-cap active managers lost to the S&P 500; 61 percent of mid-cap managers lost to the S&P MidCap 400; 60 percent of small-cap managers lost to the S&P SmallCap 600.

Chinese internet ETFs benefit from censorship

Chinese internet giants Baidu, Alibaba and Tencent ("the BAT") and ETFs tracking them have performed remarkably this year. Why? Because the BAT help Beijing censor the internet—something potential Western competitors refuse to do. This gives them a competitive advantage and a home monopoly of sorts, boosting earnings and growth.

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