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U.S. ETFs Fetch Record Cash in Q1, Newbies Make a Killing

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The popularity of $6-trillion-ETF investing has been going through the roof. After a smashing 2020, the pace of ETF launches has been robust in 2021. In the first quarter of 2021, we saw about 100 ETF launches compared with about 54 launches in the year-ago period and 45 by this time in 2019, per a Bloomberg article. The pace is in fine fettle in the second quarter too.

Theme-based ETFs have taken the center stage. The investment objective has been pretty innovative as it suits changing macroeconomic dynamics and holds investors’ attention despite the peaks and troughs of the market.

“The uptick in launches can also be explained in part by the emergence of two new categories of ETFs — structured outcome funds and active non-transparent ETFs,” said Ben Johnson, Morningstar Inc.’s global director of ETF research, according to a Bloomberg article.

Those two groups combined have made up about 30% of all new ETFs launched in 2021, according to Morningstar data, as indicated on the Bloomberg article. Active nontransparent ETFs — known as ANTs — are advertised by supporters as the key to snatching yet more assets from the mutual-fund world.

They combine the access and tax advantages of ETFs with the charm of active management, per a Bloomberg article. The largest ANT is the Fidelity Blue Chip Growth ETF (FBCG - Free Report) , which has gathered $331.1 million since it hit the market in June.

On the other hand, Innovator Capital Management and First Trust Advisors brought about structured outcome funds, which offer a lower downside risks in return for limited upside. For example, U.S. Equity Accelerated ETF (XDAP - Free Report) was launched in early April and it looks to provide double (2X) the upside return of SPY (SPDR S&P 500 ETF Trust), to a cap, with approximately single exposure to the downside, over the outcome period.

The latest launches followed 318 new ETFs in the whole 2020. The pace of rollout, in fact, charged up after 2019 which saw about 246 launches compared with approximately 270 each in 2018 and 2017. 

New ETFs Aflush With Cash

As stocks continue to breach records and the economic recovery in the United States takes momentum on improving COVID-19 metrics, investors are pouring money into ETFs — which is tempting issuers to come up with new strategies that can fetch more cash.

In the first quarter of 2021 itself, U.S. listed ETFs amassed more than $243 billion total, the biggest asset generation on record with more than $200 billion going into equity funds alone, per a Bloomberg article (read: 3 New ETFs to Make Headlines Over the Long Term).

Popular ETFs of Q1

Vanguard S&P 500 ETF (VOO - Free Report) – Amassed about $17.07 billion

Vanguard Total Stock Market ETF VTI) – Amassed about $9.74 billion

Financial Select Sector SPDR Fund (XLF - Free Report) – Amassed about $9.11 billion

iShares Core S&P 500 ETF (IVV) – Amassed about $8.76 billion

iShares Core MSCI Emerging Markets ETF (IEMG) – Amassed about $7.43 billion

ARK Innovation ETF (ARKK) – Amassed about $6.48 billion

Successful New ETFs of 2021

BlackRock U.S. Carbon Transition Readiness ETF (LCTU - Free Report) – $1.28 billion in assets to date; launched on Apr 6, 2021

BlackRock World ex U.S. Carbon Transition Readiness ETF (LCTD - Free Report) – $588.7 million in assets on date; launched on Apr 6, 2021.

ARK Space Exploration & Innovation ETF(ARKX - Free Report) – $648.6 million in assets till date; launched on Mar 30, 2021

VanEck Vectors Social Sentiment ETF (BUZZ) – $355.5 million till date; launched on Mar 4, 2021

Horizon Kinetics Inflation Beneficiaries ETF (INFL) – $165.2 million till date; launched on Jan 12, 2021

Invesco International Developed Dynamic Multifactor ETF (IMFL) – $131.5 million till date; launched on Jan 12, 2021

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