Industry Updates

ETF Wrap: How creative can small issuers get?

An EU green deal ETF, Warren Buffett ETP and State Street tokens made headlines this week

Jamie Gordon

ETF Wrap

This week saw two wildcard strategies make headlines with an ETF targeting the EU Green Deal policy and an exchange-traded product (ETP) looking to emulate Warren Buffett by investing long-short in companies and investment trusts.

On Tuesday, white-label ETF issuer HANetf announced plans to launch its own ETF tracking a Société Générale index capturing 55 Europe-listed companies involved in clean energy, sustainable mobility, building and renovation and circular economy sectors.

The European Green Deal ETF will look to capitalise on investing to achieve EU targets such as 45% of power being generated by renewable sources by 2030, a 90% reduction in transport-related emissions by 2050 and a goal of 70% of European waste being recycled by 2030.

Clean energy and emissions reduction have been among the most heavily addressed themes in the European ETF space, with around 20 products addressing the utilities segment of the sector alone.

HANetf’s latest launch will be just its latest contribution to the roster, following its energy transition mining, uranium, decarbonisation enablers, cleaner living, solar and electric vehicle charging infrastructure products launched in partnership with its clients.

Elsewhere in white labelling, Leverage Shares announced its latest gambit in actively-managed white label ETPs with the the Buffettique Growth Strategy ETP (BUFF) in partnership with Bristol-based Arcanum Asset Management.

BUFF allocates 60% to popular UK investment trusts it believes are strongly managed, such as Scottish Mortgage, BlackRock Smaller Companies, Finsbury Growth & Income and Pershing Square.

Within its primary ‘inevitables’ sleeve, the eponymous ETP captures Buffett’s own company, Berkshire Hathaway, via a 20% allocation to a two-times leveraged ETP courtesy of Leverage Shares.

BUFF itself carries a fee of 1% and a high-watermark performance fee of 10%. Its largest position is then in another Leverage Shares product with a 0.75% fee and a 1.5% margin rate.

It rounds its 11-strong portfolio off with a 20% ‘special situations’ sleeve based on one-month-duration single company allocations or investments in Leverage Shares inverse ETPs.

This ‘black box strategy’ currently takes four positions in NVIDIA, Advanced Micro Devices, Netflix and Alphabet.

Following a rapid expansion in the thematic and short and leveraged rosters – and an unenviable market backdrop for launches – small, specialist providers look to increasingly idiosyncratic corners of the market to carve out unique exposures.

Looking ahead, they will likely compete with the largest asset managers to fill out Europe’s currently underdeveloped active ETF space.

SPDR tokens 

Matteo Andreetto, head of SPDR EMEA at State Street Global Advisors (SSGA), revealed at ETF Stream’s ETF Ecosystem Unwrapped 2023 event that tokenising ETFs and private assets are “extremely interesting developments” and something his firm “will be looking at”.

“From our perspective, clients would love SPDR digital asset classes or SPDR tokenised ETFs. Considering how vast our platform is, we know we have to look at it – in partnership with our custodians at State Street.

“We will look at the tokenisation of ETFs,” he added. “And then the tokenisation of private assets. That for me will be game-changing.”

He concluded by stating SSGA are “not in the business” of launching a suite of crypto ETPs but tokenisation is being looked at by State Street and “sits at the top of their agenda”.

SSGA’s nod to the space is just the latest, with BlackRock, DWS and Franklin Templeton also eyeing opportunities in tokenisation.

ETF Wrap is the weekly digest of top stories on ETF Stream

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