ETF providers quietly dial back production

Some major ETF providers haven't launched a fund all year

Aug 22, 2019 @ 2:22 pm

By Jeff Benjamin

When it comes to exchange-traded funds, the asset management industry has been experiencing what sports franchises might call a rebuilding year, as some of the most prolific ETF providers have been dialing back on new product launches.

ETF.com reports that between June 1 and August 21, there were just 35 new ETF launches compared with 63 during the same period last year. This year also stands in stark contrast to the 88 ETFs that debuted during the same period in 2015.

The pullback is most noticeable at firms like The Vanguard Group and Invesco, which combined to launch 35 new ETFs last year but haven't launched any this year.

"Given how strong demand for ETFs has been among financial advisers, it's surprising to see this kind of slowdown," said Todd Rosenbluth, director of mutual fund and ETF research at CRFA.

Dan Wiener, editor of The Independent Adviser for Vanguard Investors, downplayed the dearth of new Vanguard ETFs based on the fact the company launched nine ETFs last year.

But he added that Vanguard, as the second-largest ETF provider, should be hustling to fill "the big gaping hole in their lineup of an ESG bond fund."

In response to a request for comment, a Vanguard spokesman emailed a statement that reads in part: "Though not by design, there is a natural ebb and flow in our product development cycles. To illustrate this point, the 2016-2018 time frame saw a fairly high level of Vanguard ETF activity with 12 new ETFs launched in that time frame, bringing our total U.S. ETF count to 80. By contrast, we have not launched an ETF in nearly a year."

In the case of Invesco, the fourth-largest ETF provider, Mr. Rosenbluth said its lack of production might be because the firm is still absorbing the OppenheimerFunds, which it acquired late last year.

"We think the 2019 addition of funds previously offered by OppenheimerFunds, slowed down Invesco's new product pipeline," Mr. Rosenbluth said. "However, the firm has filed for 10 municipal bond BulletShares ETFs, with maturity dates ranging between 2021 and 2030, so it isn't like they're going to remain on the sidelines."

Invesco, which launched 24 new ETFs last year, did not respond to a request for comment.

BlackRock, the largest ETF provider, remains the most active in the industry, having launched 17 ETFs already this year compared with 19 for all of last year. State Street Global Advisors, the third-largest ETF provider, launched two ETFs this year compared with six last year.

While ETF launches are relatively sparse this year, Mr. Rosenbluth has recognized a trend in the form of "thematic strategies."

"Many of the products that have come to market are more narrowly focused," he said.

Some of the thematic funds launched this year include AdvisorShares Pure Cannabis (YOLO), Cambria Cannabis (TOKE), Amplify Seymour Cannabis (CNBS), The Cannabis (THCX), iShares Self-Driving EV and Tech (IDRV), and Roundhill Bitkraft Esports & Digital Entertainment (NERD).

"Thematic funds are products that can be hit or miss out of the gate," Mr. Rosenbluth said. "Asset managers often try to time launches to when it will resonate with investors."

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