'ETF 20/20': Exchange Traded Fund Monthly Report -- May 2019

Key Highlights

Our monthly ‘ETF 20/20’ report briefly summarizes recent Exchange Traded Fund (ETF) trends globally. It uses data from the First Bridge ETF database that includes all global ETPs.

• Global ETF assets increased by 2.9% in April 2019 to $5.66T.

• On May 20, 2019 the US SEC formally approved the application from Precidian to launch non-transparent active ETFs in the US. The SEC had earlier issued a notice on April 8, 2019 that it intended to approve the application.

• On April 22, 2019, the Japan Exchange Group (JPX) and Shanghai Stock Exchange (SSE) agreed to establish Japan-China ETF connectivity, with a goal of increasing cross-border investments. The arrangement allows the listing of feeder ETF of ETFs investing in Japanese or Chinese assets.

• There were 31 new listings in the US and 117 new ETF listings (including cross-listings) outside the US in April 2019.

• Gasoline futures, solar equities and recent IPOs were among the best performing ETF categories this year to date through May 17, 2019. VIX, shipping and coffee futures were among the worst performing categories.

About Us

First Bridge provides ETF data and analytics to reputed institutional clients. Our ETF data sets include daily ETF holdings, global ETF product & smart beta classifications, historical distributions and risk metrics. Our clients include asset managers, financial software providers and research firms that use ETF data as a critical input into their systems & workflow. We often provide ‘high touch’ services to our clients in the form of ETF data sets customized to their needs with related support.  The First Bridge team combines deep expertise in the Indexing & ETF domain with skills in statistical programming and data visualization.

Email: support@firstbridgedata.com

Phone: (650) 762-9270

Web: http://www.firstbridgedata.com

Global ETPs: Landscape Snapshot

Global ETF assets increased by 2.9% in April 2019 to $5.66T. The table below provides a detailed breakdown by ETF category, and is a summary from the First Bridge ETF data and analytics platform.

ETF / ETP Type	Assets ($M) - Apr '19	Assets ($M) - Mar '19
Bonds
1.1 Broad Market	278,236	275,823
1.2 Corporate	302,150	294,619
1.3 Municipal	39,873	38,894
1.4 Treasury / Sovereign	259,102	256,315
1.5 Inflation Protected	56,135	57,901
1.6 Specialty / Other	110,701	106,705
Commodities & Metals
2.1 Diversified Commodities	16,144	16,227
2.2 Agricultural	1,595	1,625
2.3 Energy	5,255	5,156
2.4 Gold & Metals	109,076	113,326
2.5 Other	153	149
US Equity Exposure
3.1 Broad Market & Size	1,276,387	1,215,117
3.2 Dividend & Fundamental	135,760	130,632
3.3 Factor & Thematic	127,406	121,873
3.4 Sector & Industry	368,575	357,317
3.5 Growth / Value	403,712	387,187
3.6 Quant Strategy & Other	16,724	15,423
Global/Ex-US Equity Exposure*
4.1 Broad Market & Regional	923,130	892,509
4.2 Country Specific	694,051	674,127
4.3 Dividend & Fundamental	99,553	96,120
4.4 Factor & Thematic	145,567	140,428
4.5 Sector & Industry	106,015	105,468
4.6 Quant Strategy & Other	5,762	5,535
Multi-Asset & Other	74,802	73,411
Inverse / Leveraged	79,677	87,661
ETP Listed in Israel	25,800	30,744
All Globally Listed ETPs	5,661,342	5,500,294

Source: First Bridge Data and individual ETF Sponsors; ETF data as of April 30, 2019

* The Global Equities category includes both International (ex-US) and Global (US + International)

Key ETF Industry Developments

1. SEC formally approves Precidian’s non-transparent active ETF application

On May 20, 2019 the US SEC formally approved the application from Precidian to launch non-transparent active ETFs in the US. The SEC had issued a notice on April 8, 2019 that it intended to approve the application, which it then opened up for public comment. The SEC received two submissions, which argued that the new structure could lead to insider trading. The SEC was not persuaded by the argument that operating this ETF structure involved the unlawful trading on material nonpublic information.

The approval of this structure is an important landmark in the evolution of ETFs, though its success remains to be seen. The key features of this new structure are:

• The active ETF would sell and redeem shares in creation unit sizes to an unaffiliated broker-dealer representative of the Authorized Participant (AP) rather than the AP.

• Since the AP will no longer have visibility into the ETF’s daily constituent holdings, it will need an alternative information mechanism to facilitate arbitrage between the fund units and underlying securities basket. To address this, the active ETF would disseminate a “verified indicative intraday value” every second during the trading day. The AP can then monitor the divergence between the VIIV and the price of the ETF to determine whether to engage in an arbitrage trade.

Active ETFs currently constitute about 2% of ETF assets in the US (see chart below).

2. Japan – China ETF Connectivity announced

On April 22, 2019, the Japan Exchange Group (JPX) and Shanghai Stock Exchange (SSE) agreed to establish Japan-China ETF connectivity, with a goal of increasing cross-border investments. The arrangement allows the listing of feeder ‘ETF of ETFs’ investing in Japanese or Chinese assets. So, for example, Japanese investors can invest in a Tokyo listed feeder ETF that in turns invests in a Shanghai listed ETF that holds Chinese equities. Additional QFII / RQFII or QDII quotas have been specially created for this program.

April 2019 ETF Launches – US

There were 31 new ETF listings in the US in April 2019. The new listings are summarized in the table below (this is a subset of our complete, regularly updated ETF list).

Table: April 2019 ETF Launches in the US

Type of Exposure	Sponsor	Tickers	Expense Ratios
(in bps)
US Equities
S&P 500 - first 9% loss cap	Innovator Management	BAPR:US	79
S&P 500 - first 15% loss cap	PAPR:US	79
S&P 500 - -5% to -35% loss cap	UAPR:US	79
US Big Banks 3X Leveraged	Bank of Montreal	BNKU:US	95
US Big Banks 3X Inverse Leveraged	BNKD:US	95
US Big Banks 2X Inverse Leveraged	BNKZ:US	95
US Big Banks 2X Leveraged	BNKO:US	95
US Big Banks Inverse	KNAB:US	95
US Sector Rotation	State Street	XLSR:US	70
US Big Oil  3X Leveraged	Bank of Montreal	NRGU:US	95
US Big Oil Index 3X Inverse	NRGD:US	95
US Big Oil 2X Leveraged	NRGO:US	95
US Big Oil Index 2X Inverse	NRGZ:US	95
US Big Oil Inverse	YGRN:US	95
Procure Space ETF	ProcureAM	UFO:US	75
Sofi Select 500 ETF	Sofi	SFY:US	0
Sofi Next 500 ETF	Sofi	SFYX:US	0
US Small Cap Covered Call	Global X	RYLD:US	60
Global or Ex-US Equities
India ex-State-Owned Enterprises	Wisdom Tree	IXSE:US	58
Genomics & Biotechnology	Global X	GNOM:US	68
Emerging Markets ex China	Krane Shares	KEMX:US	49
Cloud Computing Theme	Global X	CLOU:US	68
Cannabis Theme	Advisor Shares	YOLO:US	74
Self-Driving EV and Tech	Blackrock	IDRV:US	47
Bonds
Fixed Income Rotation - Active	State Street	FISR:US	50
Dec 2026 Term Muni Bond	Blackrock	IBMO:US	18
Dec 2027 Term Muni Bond	Blackrock	IBMP:US	18
Ultra Short Bond	Goldman Sachs	GSST:US	16
Dec 2028 Term Muni Bond	Blackrock	IBMQ:US	18
Senior Loan - Active	Virtus	SEIX:US	57
Ultra-Short Income - Active	Principal	USI:US	18

ETF List: http://www.firstbridgedata.com; Data as of April 30, 2019

April 2019 ETF Listings – International (Ex-US)

There were 117 new ETF listings outside the US in April 2019 including cross-listings and share class variants. US equity factor exposure, government bonds and corporate bonds were the most launched ETF categories. Wisdom Tree, JP Morgan and Blackrock listed the most ETFs outside the US, including cross-listings.

Chart: Apr ‘19 New ETF Listings by Exposure Type (Ex-US); Total = 117

Chart: Apr ‘19 New ETF Listings by Sponsor (Ex- US); Total = 117

ETF Data Source: www.firstbridgedata.com; As of Apr 30, 2019

Performance of Key Asset Classes & ETF Categories

Gasoline futures, solar equities and recent IPOs were among the best performing ETF categories this year (based on year to date total return through May 17, 2019). VIX, shipping and coffee futures were among the worst performing categories in the same time period. This list does not include leveraged & inverse ETFs, and includes only one ETF from each specific category.

Ticker	Category	Year To Date Return	Volatility
Best performing ETF categories
UGA	Gasoline Futures	41.16%	28%
TAN	Solar Equities	36.12%	26%
MJ	Cannabis Equities	35.44%	44%
PTF	Technology Momentum Equities	35.16%	29%
IPO	Recent IPOs	32.80%	24%
Worst performing ETF categories
ULBR	LIBOR Replication	-12.72%	20%
TUR	Turkey Equities	-15.43%	44%
JO	Coffee Futures	-16.77%	27%
BDRY	Dry Bulk Shipping Futures	-34.56%	49%
EVIX	Long VIX Futures	-51.12%	65%

Data source: First Bridge Data (http://www.firstbridgedata.com); Data as of May 17, 2019

US bonds (‘AGG”) and gold (‘GLD’) was the best performing of six ETFs representing the major asset classes in the trailing one month through May 17, 2019. Emerging  (‘EEM’) and Ex-US developed equities (‘EFA’) were down 9.6% and 2.9% respectively in that time frame.

Data source: First Bridge Data (http://www.firstbridgedata.com); Data as of May 17, 2019

More First Bridge ETF Resources

• ETF Daily Holdings: http://bit.ly/2315jzP

• ETF Book - ‘ETF Investment Strategies’ (McGraw-Hill): http://amzn.to/19DP5ya

• ETF Analytics Dashboard: http://tradeablebeta.com/

First Bridge maintains granular data sets for all globally listed ETFs, with key metrics. For more information, email: support@firstbridgedata.com

Important Disclaimers

First Bridge Data LLC does not intend this guide to provide investment advice, and the information provided in this guide is not and should not be considered investment advice. First Bridge Data LLC shall not be liable for any actions or decisions made based on the information provided in this document, and the reader assumes all risk associated with any investment decision made based on information contained in this document. First Bridge Data LLC is not a registered investment advisor or broker, and does not recommend specific securities, funds, or investment strategies, nor does it advocate the purchase or sale of any individual investment vehicle. Discussion or references to specific securities or investment products in this book should not be considered endorsements or offers to buy or sell those products. The past performance of a mutual fund or exchange-traded fund (ETF), security, or investment strategy cannot guarantee its future performance.

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