Listing the Active Spear Alpha ETF on NASDAQ. Ep. #86

Transcript:

Margareta Hricova Welcome to ETF TV – your insight into the world of exchange traded funds, issuers and investment. I’m Margareta Hricova, and joining me today is Debroah Fuhr, ETFGI, and Ivana Delevska, fund manager and founder of SPEAR Invest.

Ivana, Debbie, welcome to the show.

Ivana Delevska Thank you for having me.

Deborah Fuhr Great to be here.

So, Ivana, given you and your firm are a new entrant into the ETF industry, can you share a bit of the backstory as to what drove you to join the industry?

Ivana Delevska I spent my entire career investing and researching industrial companies. I spent 10 years on the buy-side working for several hedge funds, doing long/short investing. And then I spent four years publishing industrial research on a similar set of companies. So over the past three years, I’ve been managing a portfolio of industrial technology ideas and the performance has been pretty solid, so I’ve been looking for ways to leverage this. I explored the ETF structure and it seems like a great fit that allows investors exposure to the strategy, but they can also control when they want to invest, how much they want to invest and have a good visibility and liquidity.

Margareta Hricova And can you tell us about the SPEAR Alpha ETF with the ticker SPRX, which you listed on Nasdaq last week?

Ivana Delevska What’s unique about Spear is that it’s a strategy based on primary, thorough research. Our products are much more similar to a long hedge fund where it’s all about the individual stock selection, consistency and high key trade. Unlike most thematic products on the market, we offer access to a very select basket of companies so we don’t offer a broad exposure to a team. We derive most of our ideas from understanding entire supply chains, and our main source of data points are our management team.

So we’ve also spent quite a bit of time eliminating underperformance and we’ve been able to identify major accounting issues in the past, major environmental liabilities that were understated. And we will go as far as going to court hearings, engaging litigation experts and remediation experts and speaking to regulatory agencies.

Margareta Hricova And what type of investors do you expect to use the ETF and how will they use it?

Ivana Delevska The target audience for our products is investors of all sizes looking for a more active product as opposed to the many passive products available on the market today. We also have investors that are seeking exposure specifically to industrials undergoing a technology driven transformation.

Deborah Fuhr That’s great and very interesting. So you’re an active, transparent portfolio manager investing in innovation, industrial technologies, and you plan to share your research with financial advisors. That sounds very similar to Catherine Wood and her team at ARK, which have done amazingly well. Would you say that you are similar to Catherine or how would you do that comparison?

Ivana Delevska So while we invest in similar themes, I mean, these are the six major themes affecting the industrial sector, but our products go a lot deeper in the supply chain. As an example, in the electric vehicle supply chain, we have significant investments in lithium mines, charging station electrical components. So for us, it’s all about the supply chain and finding under-the-radar opportunities. So we offer a much more targeted exposure rather than a broad basket of companies that give exposure to specific theme.

Margareta Hricova And do plan to launch more ETFs in the future?

Ivana Delevska My background is in long/short investing, so we plan to offer a market neutral product as we get further into the economic cycle.

Deborah Fuhr That’s great, Ivana. Thank you so much for joining us today and sharing your insights. And good luck!

Ivana Delevska Thank you for having me.

Margareta Hricova Debbie, can we talk about some of the other news in the industry last week?

Deborah Fuhr It’s actually been a continuation of a pretty exciting year, so if we look we’re starting to see the clean data for end of July. And what we see is the ETF industry has reached another record, globally. We’re now at 9.4 trillion dollars invested in ETFs. The amount of net new money, so creation’s vs redemptions, is at a record level of 740 billion of net inflows. We don’t have all the data, so it might go up or down, slightly. And this compares to all of last year where we took in 763 billion. So we’re just short of that full year, 2020-number, and we’re only at the end of the seventh month. If we were to look at how much money, net new, has come into the industry globally over the past 12 months, it’s been just over 1.2 trillion dollars. So we are on path, I think, to break through a trillion dollars of net inflows for this calendar year.

If we look at the US, we see that the assets have also reached a new record, so 6.6 trillion US. The net inflows have reached a record 524 billion, which is more than all of last year when we took in 490. Europe is also at a new record of 1.5 trillion. The net inflows year-to-date are 126, which is more than all of last year when we saw 120 come in. Other markets have seen significant inflows, but we haven’t seen them be the level of net inflows for all of last year. I think if we look at where the money is going, we’re definitely in a risk-on environment. Equity ETFs have taken in the majority of net inflows; so far year-to-date it has been 514 billion. That’s more than the 365 that was taken in all of last year.

Fixed income is at 131, which is less than what we saw all of last year and slightly less than the net inflows of 140 billion taken in at this point last year.

Active ETFs account for about 4.3 of all the assets, so although they’re in the news a lot, we’re not seeing that they have significantly increased their share of global assets. There have been a lot of launches. There has been a lot of interest and we expect more to come to market. And for commodities, we’re seeing net outflows, so clearly last year we saw many people moving to gold investments, thinking it was going to be an inflation hedge as well as a safe haven. So a lot more news to come. It’s exciting to see the ETF industry continuing to go from strength to strength around the world.

Ivana Delevska Thanks for another great update, Debbie. Thank you to our sponsor, Syntax Advisors, to Ivana and to all of you for watching.

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