Credit: Shutterstock photoCinthia Murphy, Staff Writer for ETF.com
There’s a common practice in the ETF industry known as securities lending that’s said to improve fund performance and lower costs for investors. According to ETF.com data, six in 10 U.S.-listed ETFs today can or do lend out securities in their portfolios to that end.
But what’s not commonly known is “the revenue boost gained from securities lending is minimal, and barely impacts investor costs, even for funds that lend hundreds of millions of dollars in securities from their portfolio,” ETF.com’s Lara Crigger reports.
In an in-depth piece this week, Crigger points out that the primary beneficiaries of this practice are ETF issuers, and that the gain to investors vary greatly depending on issuer practices. The takeaway to investors is that, in the end, as with everything else in this business, product and issuer due diligence is important when choosing an ETF.
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Launches & Closures
On the product front, First Trust rolled out its own take on cutting-edge technology with a robotics and artificial intelligence ETF that focuses on liquidity, and tracks an index developed by the Nasdaq and the Consumer Technology Association: the Nasdaq CTA Artificial Intelligence and Robotics Index.
The First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT) isn’t the first of a kind, but it’s currently the cheapest robotics-centered offering, at 0.65% in expense ratio.
Meanwhile, WisdomTree said it will close one in 10 of its ETFs. The nine funds set to shutter on March 16 include currency-hedged and trend-following strategies.
The list of doomed ETFs includes several currency-hedged products and three funds designed to capture trade-based trends.
The funds are as follows:
- WisdomTree United Kingdom Hedged Equity Fund (DXPS)
- WisdomTree Japan Hedged Real Estate Fund (DXJR)
- WisdomTree Japan Hedged Capital Goods Fund (DXJC)
- WisdomTree Japan Hedged Health Care Fund (DXJH)
- WisdomTree Global ex-U.S. Hedged Dividend Fund (DXUS)
- WisdomTree Global ex-U.S. Hedged Real Estate Fund (HDRW)
- WisdomTree U.S. Domestic Economy Fund (WUSA)
- WisdomTree U.S. Export and Multinational Fund (WEXP)
- WisdomTree Strong Dollar Emerging Markets Equity Fund (EMSD)
More on ETF.com:
Fixed Income ETFs Jump Into ESG
Emerging Markets & Bond ETFs Bolster Weekly Inflows
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
