Industry Updates

BlackRock's biotech ETF comes to Europe

David Tuckwell

Today's listings


BlackRock lists high yield corporate bond ETF

BlackRock has listed a new fixed income ETF in the US that gives broad exposure to US dollar denominated corporate junk bonds, the iShares Trust Broad USD High Yield Corporate Bond ETF (USHY).

It does this via the BofA Merrill Lynch US High Yield Constrained Index, which is made up mostly of BB and B graded bonds issued in the US. The index weighs companies by market cap and caps exposure at 2% per issuer. At the time of writing, there are almost 2,000 issuers whose debts are eligible for inclusion.

BlackRock is not the first issuer to track this index. Lyxor has a product doing so in Europe, via swaps (HYST). BlackRock is unlikely to be the last either. High yield debt has been cracked wide open by ETFs in recent years, as passive products have offered retail investors access to a space once reserved for institutional investors.

ETFs flooding into high yield corporate debt comes at a time that institutional investors are moving away from them, believing that they do not offer high enough returns for the risk that they come with.

VictoryShares lists emerging markets high dividend yield

VictoryShares is listing a new dividend ETF in New York that tracks the highest dividend paying companies in emerging markets, the Victory CEMP Emerging Market High Div Volatility Wtd Index ETF (CEY).

CEY hunts its big dividend stocks via an in-house index. The index takes the "500 largest emerging market companies by market capitalization with positive earnings" the past 12 months, the prospectus says.

It then identifies the top 100 dividend yielding stocks and weighs them by their "daily standard deviation (volatility) of daily price changes over the last 180 trading days. Stocks with lower volatility receive a higher weighting and stocks with higher volatility receive a lower weighting."

Dividend ETFs are coming into fashion - with good reason. Around 90% of returns on equity come from dividends, studies show, making income a far greater source of return than capital gains. In our era of historically high stock prices and PE ratios, many investors are returning to the basics of returns.



BlackRock brings successful biotech ETF to Europe

BlackRock is listing a biotechnology ETF on the London Stock Exchange, the iShares Nasdaq US Biotechnology UCITS ETF (BTEK, BTEC). BTEK tracks an index that takes the NASDAQ and selects its top performing biotechnology and pharmaceutical companies.

BlackRock already has this product listed in the US (IBB), where it has roughly $10bn in assets under management. The product will be available in pounds sterling and euros.

BlackRock cross-lists bond ETF into euros

BlackRock is cross-listing a fixed income ETF into euros, the iShares Global High Yield Corp Bond UCITS ETF USD Dist (HYEA). HYEA is already available in pounds sterling and currently holds just under $1bn in assets.


BlackRock makes long-term treasuries ETF available in CHF

BlackRock is making its iShares USD Treasury Bond 20+yr UCITS ETF USD Dist (DTLC) available to Swiss investors in Swiss francs. The product is currently listed in Switzerland, but only in US dollars.

Today's top ETF articles from around the web

Robots are beating Wall St

Robots have arrived on Wall St and right now they're giving stock picking gurus a run for their money. The newest arrival is the AI Powered Equity ETF (AIEQ). AIEQ does not track an index. Rather it uses algorithms and - crucially - human beings to actively manage a fund. It's still early days but the fund has thus far beat its benchmark, the S&P 500.

ETFs are causing major problems

Opinion piece. ETFs are at least partly responsible for three of the stock market's major flaws. First, overvaluation. The Shiller 10-year PE ratio is currently at 30.7, which is clearly bubble territory. This is fueled by ETFs sending money after indexes indiscriminately. Two, fake diversification. An index with 500 companies may seem diversified, by asset correlations are increasing thanks to central bank policies. Third, passive beating active is cyclical. There are extended periods where active managers beat the index. ETFs have made people forget this.

Why ETFs won't cause a market crash

The flash crash in August 2015, in which ETFs traded below their index, is taken as evidence that ETFs will betray their owners during a downturn. Yet everyone forgets - or doesn't know - that the reason this happened was because exchanges blocked trading in volatile markets. But this has since been fixed, meaning that ETFs may still trade at a discount during a crash, but nowhere near as badly.

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