Industry Updates

Ethereum ETN comes to Sweden

David Tuckwell

Today's listings


Europe's video game capital gets Ethereum ETN

Jamie Dimon thinks bitcoin is a "fraud" and a bubble "worse than tulips". But what about ethereum?

Swedish ETN provider XBT is listing a new ethererum tracking note in Stockholm (COINETH). Being an ETN not an ETF, COINETH is unsecured debt tracking the spot price of ethereum.

Ethereum is a cryptocurrency that trades on a blockchain, just like bitcoin. Many people believe that ethereum is better than bitcoin because its blockchain has an additional feature called the 'smart contract'. The 'smart contract' allows ethereum to not only track transactions but programme them. 'Smart contracts' let investors exchange other assets - such as shares or property - without having to go to a lawyer, accountant or third-party service provider.

Despite arguably holding more promise, ethereum has been more volatile than bitcoin. During a flash crash in June, it sank from $319 to 10 cents in seconds.

UK and Germany

PowerShares brings its famous NASDAQ tracker to Europe

Invesco PowerShares biggest ETF by far is its famous NASDAQ tracker, the QQQ. With $53 billion under management, QQQ is one of the most successful ETFs in the world. And now PowerShares will try to export QQQ's success to Europe, with the PowerShares EQQQ Nasdaq-100 UCITS ETF being listed in London and Frankfurt (EQGB, EQEU).

NASDAQ is a major US index that is famously and heavily weighted towards tech companies. The biggest four tech companies alone - Google, Apple, Facebook, Microsoft - make up almost 40% of the index's weighting.

NASDAQ tracking ETFs have drawn criticism because they fall into a peculiar pocket of EU regulation. Strangely, under UCITS rules an index like NASDAQ cannot be tracked by an actively managed fund because it is insufficiently diverse. (Actively managed UCITS funds are banned from getting more than 40 percent exposure from position sizes of 5 percent or greater). Yet ETFs are exempt from these rules.

Whereas PowerShares had first mover advantage in the US with the listing of QQQ, it will have no such advantage in Europe. iShares' NASDAQ tracker has more than $1.1bn in assets in the UK alone.

PowerShares also lists Fallen Angels ETF in UK and Germany

PowerShares will also be listing a bond tracking ETF that tracks "fallen angels"—the PowerShares US High Yield Fallen Angels UCITS ETF (FAGB, FAEU).

Fallen angels is a term of art used by Invesco for companies that have had their bonds downgraded from investment grade to junk. The index tracks American and Canadian companies that had their bonds downgraded anytime the past five years.


Source lists corporate junk bond trackers under PIMCO's masthead

Source is listing a new ETF in Germany that tracks short-term (0 - 5 years) corporate junk bonds. While the name of the fund is the "PIMCO Euro Short-Term High Yield Corporate Bond Index Source UCITS ETF" (EUHA, EUHI) PIMCO is not the issuer, Source is. PIMCO's name goes at the start because it is the bigger company. EUHA tracks corporate junk debt via the BofA Merrill Lynch 0-5 Year US High Yield Constrained index.

Today's news from around the web

7 tips on ETF trading

Avoid trading ETFs in the first and last 20 minutes of the day. Learn about the ETF's underlying before you trade it. Learn about how other traders trade the ETF. Be visible when making the trade as it can help broker-dealers keep spreads tighter. Have an exit strategy. More volume can be better.

Bitcoin ETFs rejected - again

Another financial institution has hit a roadblock attempting to list a bitcoin ETF. The SEC has made clear, again, that it will approve no bitcoin ETFs until there are viable derivatives on which they can be based.

ESG and smart beta: why not put them together?

ESG ETFs are a hot conversation topic in passive investing. But while many new ESG ETFs are being listed they're not collecting any assets. What's the solution? Bring smart beta in. Like ESG, smart beta is a massive trend. And smart beta could help slake investors concerns about ESG performance.

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