UK asset manager Hargreaves Lansdown is offering exchange-traded bitcoin notes (ETN) to self-invested personal pension (SIPP) and brokerage account clients, via Swedish issuer XPT Provider. Bitcoin Tracker One and Bitcoin Tracker Euro which have been designed to replicate the performance of the bitcoin, in Swedish kronor and euros, respectively, are listed and available for trading Nasdaq OMX.
Launched in 2015, Bitcoin Tracker One became the first bitcoin-based security available on a regulated exchange when it listed on Nasdaq/OMX exchange in Stockholm. Ryan Radloff, head of investor relations at XBT Provider, said that by 'adding self-service, online dealing, the team at Hargreaves Lansdown is providing UK investors with professional and quick access to the bitcoin space in the UK and greater Europe'.

'This is very exciting for any investors who have been thinking about buying bitcoin but did not want the hassle of security and regulation involved in buying bitcoin directly from exchanges,' said Radloff. Both notes are available in 179 countries.

Aussie ETF market expands, unpopular ETFs surge ahead
Australian investors are embracing index investing for their portfolios and superannuation but investing in small exchange-traded funds (ETF) which lack sufficient market liquidity could result in getting less than market value when an ETF is sold in the secondary market of the Australian Stock Exchange (ASX), according to a report from roboadviser Stockspot.

According to the report, the Australian ETF market grew 28% over the year to A$27.2bn (US$20.3bn) in assets under management (AUM) more than doubling in size since 2014 as ETFs have become more popular with individual investors, independent financial advisers and self-managed super fund (SMSF) trustees. The largest inflows coming into global shares ETFs (A$2bn) and Australian share ETFs (A$1.5bn).

The report also found that smart-beta funds also gained momentum in 2016. However the report pointed that smart beta ETFs take active bets on certain market factors beating others, and that funds that promote strong back-tested performance typically select a time period that best supports their product, and over the long-run higher fees may erode any extra returns.

Over five years the average broad market global share ETF returned 13% compared to a more modest 8% per year return on Australian share ETFs. The underperformance of the local market prompting many Australian investors to add global ETFs to their portfolios. Worldwide volatility around unexpected political events in 2016 including Brexit and the US presidential election saw the continued trend of investors diversifying into fixed income ETFs. Despite this, most bond ETFs had a lacklustre year returning 1%-3%, only marginally outperforming cash, according to the report.
ETFs in some of the most unpopular sectors, resources and Asian shares, saw some strong gains with the resource sector rallying 40% after five years of poor performance. Asian shares rebounded 24% outpacing returns in on-trend markets and sectors that had more modest gains like US shares (+17%) and Australian property (+7%).

Vanguard had another standout year with a 42% increase in AUM and a dollar growth almost double the next largest issuer at A$2bn to now account for over a quarter of the Australian ETF market. Vanguard also retained the lowest average fees at 0.24%. BetaShares had another year of high growth and again added the second largest amount in new AUM with A$1.1 billion. BetaShares have successfully focused on niche offerings, which typically have a structured element, such as gearing, and have launched the highest number of new ETFs this year. The majority of new funds again flowed into their cash ETF (AAA), US dollar ETF (USD) and their dividend focused managed fund (HVST).

Click in the link to download the full report.

BNP Paribas AM and China Post Global deploy iStoxx MUTB Japan Quality 150 Index
Stoxx has licensed the iStoxx MUTB Japan Quality 150 Index to BNP Paribas Asset Management and China Post Global to underlie respective ETFs. The iStoxx MUTB Japan Quality 150 Index aims to capture the performance of quality companies with high profitability, low leverage, and sustainable cash flows in Japan.

The index which has been developed in collaboration with the leading Japanese trust bank Mitsubishi UFJ Trust and Banking Corp. (MUTB) selects the best companies based on a combined ranking of four fundamentals ratios (return on equity, debt-to-asset, cash flow generation ability and business stability). Stocks need to fulfil minimum liquidity criteria before being added to the index. The index is weighted according to free-float market capitalization with a 2% maximum capping per constituent. Reviews are conducted on a semi-annual basis in June and December.

The BNP Paribas Easy iStoxx MUTB Japan Quality 150 Ucits ETF (LU1547514676) is denominated in euros and currency hedged. It is listed at Deutsche Börse's XTF segment. The Market Access iStoxx MUTB Japan Quality 150 Index Ucits ETF (ISIN LU1598815121) is denominated in Japanese yen and is also listed at Deutsche Börse's XTF segment.

Source launches commodities ex agriculture etf
ETF provider Source has launched the Source Bloomberg Commodity ex-Agriculture Ucits ETF which offers diversified commodity exposure, while excluding agriculture and livestock. The product is aimed at European investors seeking exposure to commodities to diversify their portfolios which has increased year to date on the back of political uncertainty and high equity valuations.

The new ETF follows on the Source Bloomberg Commodity Ucits ETF, which has already raised €1.2bn of assets since January and was the most successful European ETF launch in the past five years.

The new Source ETF aims to deliver the performance of the Bloomberg ex-Agriculture and Livestock 20/30 Capped Index, after fees. With a total cost of only 0.40% per annum (an ongoing charge of 0.19% and swap fee of 0.21%), the fund is significantly cheaper than competing ETFs. This is the latest addition to Source's range of core portfolio funds, which aim to provide efficient, low cost exposure to popular benchmarks. They complement more specialist investment strategies, many of which are not available from other providers, as well as some of the lowest cost products offering physically backed exposure to gold and other precious metals. Source has €5.3 billion of assets invested in its range of commodity products.

Newcomer enters ETF market with two trackers
FormulaFolio Investments, a private money manager, has entered the ETF market with the launch of two actively managed funds-of-funds with very different objectives. The FormulaFolios Hedged Growth ETF (FFHG) and the FormulaFolios Income ETF (FFTI) will both invest primarily in other ETFs.

FFHG comes with an expense ratio of 1.15%, while FFTI charges 1.00%. Both funds are listed on CBOE's Bats exchange. Growth-focused FFHG's portfolio invests 50% each into two different proprietary investment models, according to the prospectus. The first uses momentum indicators to invest in leveraged ETFs when market conditions are favourable, and switches to US Treasuries and inverse ETFs when those same indicators suggest market conditions are unfavourable. The prospectus notes that the fund will invest no more than 15% of its assets in inverse and leveraged ETFs. The second model comprises two equally weighted strategies. One shifts between a diversified portfolio of US equity ETFs when trends suggest the market is doing well and US Treasuries when trends suggest the market is faltering. The second strategy relies on the same trend indicators, but selects one sector of the S&P 500 to invest in based on momentum and low volatility when equities are favoured. When equities are on a downside cycle, it invests in Treasuries and inverse ETFs.

FFTI, on the other hand, targets income and invests in ETFs that target foreign and domestic fixed-income securities. It uses a model to rank five fixed-income classes based on yield spread and price momentum, selecting the top three classes to include in the portfolio. However, asset classes are automatically excluded if they do not have positive momentum.

The portfolio is re-evaluated on a monthly basis. High-yield US debt and treasuries are each limited to a weighting of 56.67% in the portfolio, while the US aggregate bond space, US investment-grade debt and international government bonds are each limited to 21.67% weightings. The prospectus notes that if more than two of the asset classes do not have positive price momentum, the fund will give more weight to short-term US Treasury.

Amplify rollsout oil-hedged MLP income ETF
Chicago-based Amplify ETFs has launched the Amplify YieldShares Oil-Hedged MLP Income ETF (Bats: AMLX), the first MLP ETF to actively hedge its exposure to oil prices. AMLX is the fourth income-oriented ETF to launch on the Amplify YieldShares platform.

AMLX seeks to own historically high-yielding oil & gas master limited partnerships (MLPs) while hedging exposure to oil prices. The active oil price hedge seeks to reduce MLP price volatility and correlation to oil price declines.

Over the last 10 years, 80% of the days where crude oil prices declined 2% or more, master limited partnerships fell as well, according to comparisons between the Alerian MLP Total Return Index and the S&P GSCI Crude Oil Index. By hedging, Amplify believes they can also protect the income potential of MLPs over the long term. The Alerian MLP (AMLP 11.99 +0.04 +0.33%) ETF is down 4%, with the iShares S&P GSCI Crude Oil Return (OIL 5.12 +0.12 +2.40%) fund down a 20.6%. MLPs have had a tough five years due to oil. The Alerian fund is down over 22% in that period, but oil is down even more, around 75%.

Investors should consider low vol ETFs, SPDR
Investors would do well to consider an exposure to low volatility ETFs, the sterling bond market, as well as utilities and telecoms sectors, according to Antoine Lesné, head of SPDR ETF strategy & research, Europe, Middle East & Africa (Emea).

According to Lesné, market leadership has continued to evolve over the last couple of weeks, with defensives gaining a firmer footing amidst a pick-up in volatility. 'As pockets of the equity market are becoming stretched and the earnings story has been largely digested, top-down drivers are reasserting themselves on price actions in sectors,' he said. 'Utilities and Telecoms have benefited from this rotation in the market with the latter having had depressed valuations owing to headwinds faced by the sector. The much anticipated Opec production cut extension did more to support crude prices before the announcement as prices slid at the end of the week, leaving no meaningful read-through on the energy sector.'

The short, sharp spike in implied equity volatility (as seen by the move in the Vix Index) has also brought attention back to the 'volatility factor' over the last two weeks, said Lesné, adding that low volatility, minimum volatility and minimum variance funds have suffered outflows year to date, but with reasonable valuations and an equity market priced for perfection, investor demand for these lower-risk options could return.

Japan's ETP market hits new record
Assets invested in ETFs/ETPs listed in Japan reach a new record high of US$209bn at the end of April 2017, according to research and consultancy firm ETFGI. At the end of April 2017, the Japanese ETF/ETP industry had 185 ETFs/ETPs, with 230 listings, assets of US$209bn, from 20 providers listed on two exchanges.

ETFs and ETPs listed in Japan saw net outflows of US$837m in April. Year to date, net inflows stand at US$26.06bn. At this point last year there were net inflows of US$9.20bn. Equity ETFs/ETPs saw net inflows of US$402m in April, bringing year to date net inflows to US$26.55bn, which is greater than the net inflows of US$8.51bn over the same period last year. Fixed income ETFs and ETPs experienced net inflows of US$8m in April, growing year to date net inflows to US$17m, which is less than the same period last year which saw net inflows of US$21m. Commodity ETFs/ETPs saw net outflows of US$28m in April. Year to date, net outflows are at US$37m, compared to net inflows of US$150m over the same period last year.

Kokusai AM gathered the largest net ETF/ETP inflows in April with US$17m, followed by MUFJ with US$16m and Rakuten with US$13m net inflows. YTD, Nomura AM gathered the largest net ETF/ETP inflows with US$10.23bn, followed by Nikko AM with US$6.15bn and Daiwa with US$5.68bn net inflows.