Industry Updates

ETF Wrap: Perils of passive push

BNP Paribas Asset Management CEO warns of passive growth consequences, a string of ETF launches and bitcoin’s supply crunch all made headlines this week

Lauren Gibbons

ETF Wrap

BNP Paribas Asset Management’s (BNPP AM) CEO Sandro Pierri has warned that directing too many flows into passive strategies – dominated by US equities – could have “unintended consequences” for Europe’s capital markets.

“We are just channelling 70% of incremental flows to the US economy, not European economies,” Pierri said.

However, he noted the growth of active ETFs has the potential to close the gap between active and passive, driving the former’s comeback over the next decade.

It comes after the asset manager launched its first active ESG ETFs in February, designed to actively implement ESG criteria.

BNPP AM also said it will expand its active ETF range to include “alpha-generating” products.

Five issuers launch ETFs

This week saw Tabula launch its first non-fixed income ETC, as it unveiled an ESG filtered gold exchange-traded commodity (ETC).

Gold held by the ETC must not be of Russian origin, must not be recycled gold of unknown provenance and mercury must not be used in its extraction.

BlackRock expanded its iBonds range, launching two fixed maturity products capturing US and Italian government bonds.

Meanwhile, WisdomTree, Franklin Templeton and Legal & General Investment Management launched new strategies covering US and global equities and commodities.

Bitcoin’s looming supply crunch

A stream of flows into US-listed spot bitcoin ETFs has led to increasing fears that demand will outstrip supply, as investors poured into the suite of new wrappers since being approved in January.

Adding fuel to the fire, the bitcoin halving event – occurring earlier in April – is likely to reduce supply even more and has sparked concern among investors.

This is due to forecasts that the current rate of bitcoin demand accessed via spot bitcoin ETFs would outpace new bitcoin creations tenfold.

However, the halving event has coincided with demand for bitcoin ETFs slowing in recent weeks.

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

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