(Bloomberg) – Welcome to the ETF Weekender, your roundup of the biggest and most interesting stories from one of the hottest corners of the global markets.
In this week’s issue: A New Threat to the Tax Advantage That Helped Boost the US ETF Industry, Two Asset Managers Ponder a Mega-merger and Passive Vehicles Losing Ground in the Stock Market.
These are the stories you need to read.
Tax threat to millions
What happened: The chairman of the Senate Finance Committee has unveiled a plan that would end the notorious tax advantage of ETFs.
Why It Matters: The proposed measures are designed to close loopholes that wealthy individuals and large companies use to defer paying income taxes. However, they would affect ETF investors of all kinds and lead to strong pushback from the industry. The importance of the draft was almost lost in the news stream, as Democrats are also applying new tax rates to everything from corporations to property.
Read it here.
Invesco + State Street = Large
What happened: Invesco is in talks with State Street’s asset management arm about a possible combination.
Why It Matters: The union would form a much more formidable third-place candidate in the competitive world of passive fund management, a land of giants. While the industry leaders BlackRock Inc. and Vanguard Group are significantly larger, the combination of the third and fourth place franchises from State Street and Invesco would narrow the gap by forging an institution with a market share of approximately 20%. .
Read it here.
Passive active nibbles
What happened: The share of the stock market owned by passive funds is down to 20.1% of outstanding shares from 21.3% a year ago.
Why It Matters: The drop marks the first drop in liability share since Jefferies began tracking six years ago. A record number of initial and secondary offerings are behind the change, but a decent performance from active managers this year could help sustain it. Meanwhile, even as liabilities fell overall, ETFs’ market share almost doubled.
Read it here.
They want more? Extra weekend reading
Ark pulls out of the top 10 ETF issuers as the ‘Shiny’ lure wears off. Fidelity lobbied for approval of the Bitcoin ETF in a private SEC meeting. IPO shares break the Russell indices in the biggest wave of the decade. Goldman is looking for the next 175,000% stock rally with a new active ETF.
Good Intel: Goldman takes over Ark
A look at the Bloomberg Intelligence analysis available on the terminal.
Goldman Sachs is launching a new fund to challenge Cathie Wood’s ARK ETFs, which have amassed $ 42 billion in assets, joining a crowded field of issuers that have so far had limited success. Roughly three dozen “future technology” ETFs have launched in the wake of ARK’s performance and subsequent flows, but none have matched ARK’s growth, even when they have outperformed. For example, BlackRock Future Tech ETF (BTEK) is only $ 21 million after a year on the market despite nearly doubling returns from the ARK flagship.
Right now one of the most popular ETFs in the US, this $ 1.1 billion fund is one of only two tied to a rare and valuable commodity. Both have increased in recent weeks along with the raw material, but they go back a decade and the prices were much more crazy.
That is the answer. The question that identifies this fund will appear in the next issue. Last Week’s Question: What is Direxion Daily Financial Bull 3X Shares ETF, FAS ticker?
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