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Exchange Traded Funds Hit Record $2.865 Trillion In April; May Reach $5.9 Trillion By 2021

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Exchange traded funds (ETFs) – baskets of assets traded as stocks by investors and institutions that typically charge lower fees than mutual funds – hit a record $2.865 trillion in April, driven by rising stocks, according to a report from ETFGI, an ETF researcher.

Source: ETFGI

The ETFGI estimate is in line with a February report from PricewaterhouseCoopers that pegged ETF assets at $2.5 trillion and predicted they will rise to $5.9 trillion by the end of 2021, according to Investopedia. Nigel Brashaw, PwC partner and global ETF leader, said the estimates are based on survey data, analysis and modeling.

Milestone Reached Following Elections

The iShares ETF from BlackRock Inc. surpassed the $1 trillion asset mark for the first time in January, Reuters reported. The milestone came following a shift in markets following the November U.S. presidential election, carrying a stock rally.

ETFs’ low cost and tax efficiency is expected to drive this growth, along with investor disappointment with high fees and poor returns on actively managed funds.

The demand for ETFs has survived questions over the funds’ durability in periods of market stress.

Martin Small, the U.S. head of iShares, said clients are using iShares ETFs in place of individual securities to trade more efficiently than futures, individual bonds and swaps to assume long term positions.

Equity Markets Drive ETF Growth

“Investors continued to favor equities over fixed income and commodities as equity markets performed positively in April,” said Deborah Fuhr, ETFGI managing partner and co-founder. She said the S&P 500 was up 1%, while emerging markets and global equity markets outside the U.S. were both up 2% in April.
“Investors were captivated by a closely-fought first round of the French elections during April,” she said.

U.S. listed ETFs/exchange traded products (ETPs) gathered $36.09 billion in April, a record amount of net inflows for the month and marking the 14th straight month of net inflows, according to ETFGI, which according to its website is the leading independent research and consultancy firm on trends in the global ETF/ETP ecosystem, based in London, England.

Equity ETFs/ETPs took in the highest net inflows with $26.41 billion, followed by fixed income ETFs/ETPs with $8.83 billion. Commodity ETFs/ETPs suffered net outflows of $889 million.
Inflows year to date reached a record $169.71 billion compared to $45.31 billion last year.

iShares accounted for April’s largest net ETF/ETP inflows with $24.21 billion, followed by Vanguard at $9.93 billion and Schwab ETFs with $2.53 billion.

Year to date, iShares took in the largest net ETF/ETP inflows of $78.53 billion, followed by Vanguard’s $50.43 billion and Schwab ETFs’ $9.21 billion.

Passive ETFs To Lead Growth

Passive ETFs that track market indices will provide the majority of the next $1 trillion in U.S. ETFs, according to PwC’s Brashaw. PwC expects smart growth ETFs to be a more critical part of the market in the future.

Actively managed funds that are not transparent represent another segment of the market. The U.S. Securities and Exchange Commission (SEC) requires daily transparency of actively managed ETFs, Brashaw said. He said this segment of the ETF market will expand if the SEC eliminates the daily transparency rule, which does not apply to mutual funds. He predicts the transparency rule will be changed at some point in the future.

The transparency rule is less of an impediment to actively managed fixed income ETFs.

Cost Drives Passive Index ETFs

Low cost is the main consideration for passive index trackers, Brashaw said. For the other two types of ETFs, investment managers’ track records are the main differentiating factors.

The average ETF investor is usually younger or has higher net worth and more sophistication than the average investor overall.

Robo advisors tend to use ETFs on account of the lower cost. Robo advisors will face higher performance and digital delivery channel expectations over time.

More investment strategists are using ETFs for building portfolios, including some who completely use ETFs.

Bitcoin ETF Awaited

Cryptocurrency users, meanwhile, are awaiting the SEC’s approval of the first bitcoin ETF since it will make the cryptocurrency more accessible to the investors and enhance its credibility. The SEC rejected a bitcoin exchange-traded fund (ETF) sought by Tyler and Cameron Winklevoss in March, but the proposal is currently under review.

ETF holdings by individual investors have been stable at 45% to 55% of total U.S. assets even as interest from institutional investors and the ETF market itself has grown, according to Brashaw.

S&P 500 ETF Benefits

The S&P 500 is considered by many to be the best representation of the U.S. economy since it covers all the main economic sectors and covers about 80% of the country’s market capitalization. About $7.8 trillion of investor cash is held in the index’s equities, of which more than $2 trillion is in index ETFs.
Some S&P 500 ETFs do a better job of replicating the index benchmark while some do a better job at a lower cost.

Warren Buffet has suggested investing 90% of retirement funds in S&P 500 ETFs.

ETF Picks For 2017

Top ETF picks for 2017 according to Investopedia are as follows:

SPDR S&P 500 ETF (SPY)

Issued by State Street Global Advisors, SPDR S&P 500 ETF had $227 billion under management and has increased 4.13% year to date as of March with a 0.09% expense ratio.

SPY is a unit investment trust and technically not an ETF. It is the oldest of the S&P 500 benchmarked funds and has the most assets under management. The fund trades in excess of $25 billion daily, making it an attractive tactical trading instrument in addition to being a buy-and-hold investment.

iShares Core S&P 500 ETF (IVV)

With $94.5 billion assets under management, iShares Core S&P ETF gained 4.09% year to date as of March with a 0.04% expense ratio. The fund offers S&P 500 exposure at low prices. The fund is liquid for every class of investor, with more than 3 million shares trading daily.

Unlike SPY, the iShares Core S&P 500 is a true ETF, escaping the cash drag that is inherent in a unit investment trust.

Vanguard S&P 500 ETF (VOO)

With $61 billion in assets under management, the Vanguard S&P 500 ETF gained 4.09% year to date as of March with a 0.05% expense ratio. The fund offers low costs, high liquidity and offers large-cap coverage of an S&P 500 benchmark fund.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.9 stars on average, based on 8 rated postsLester Coleman is a veteran business journalist based in the United States. He has covered the payments industry for several years and is available for writing assignments.




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Altcoins

Cryptocurrency Prices Have Recovered $26 Billion from Last Week’s Bear-Market Low

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Cryptocurrency prices were seeing green on Tuesday, as investors continued to rally behind news of a popular bitcoin trading app being granted regulatory approval to operate in New York. The push for regulated crypto custodial services has also not gone unnoticed, with the likes of Coinbase looking to overcome one of the final barriers to institutional adoption.

Crypto Prices Hit One-Week High

Digital currencies on Tuesday overcame tepid trading conditions and lower trade volumes to reach their highest level in seven days. The total market peaked at $294.2 billion at 17:00 UTC but has since consolidated at $290.5 billion, according to CoinMarketCap. As a reminder, the market bottomed near $264 billion last week, the lowest since early April.

Crypto prices have been surprisingly stable since last week’s brisk selloff. As Hacked reported earlier, bitcoin volatility is at its lowest level in a year even while factoring the latest price collapse.

Almost all of the top-ten coins had reported gains over the past 24 hours. Tron’s 8.3% gain was the biggest, with TRX trading at $0.048.

Ethereum rose 3.4% over the past 24 hours to trade at $536.86. Bitcoin cash reported slight gains, climbing 1.6% to $900.54.

Bitcoin was virtually unchanged compared with the same time Monday. The world’s largest cryptocurrency by market cap is up 2.5% over the past seven days.

Although trading volumes were a paltry $13.2 billion, turnover is up 39% from Sunday’s lows.

Prices received their initial boost Monday afternoon on news that Square, Inc.’s Cash app was granted a BitLicense to operate in New York. The app, which has a bitcoin trading platform, has more than seven million active users. The company, which is led by Twitter’s Jack Dorsey, saw its share price and market cap rise significantly on the news.

Custodianship: The Final Frontier?

San Francisco-based Coinbase has joined forces with hedge funds and third-party custodians to unlock up to $10 billion in institutional capital. According to some industry insiders, custodianship is the last of the major barriers to widespread cryptocurrency adoption among hedge funds, banks and day traders.

As Goldman Sachs, Nomura Holdings and others have demonstrated, there is strong appetite for cryptocurrencies at the institutional level. But without a stable and robust custodian service, staking large positions on a highly volatile market is not considered feasible. This is especially the case for funds that are involved with handling university endowments and pension programs.

According to Ari Paul, co-founder of the Blocktower crypto-focused hedge fund, institutional money has been trickling into the digital currency market since mid-2017. And while adoption has been slower than expected, “that doesn’t mean it’s not coming,” Paul tweeted May 31. “There are a lot of pieces that need to come together, one big piece being third party custody,” he said.

Kyle Samani, a cryptocurrency hedge fund manager, recently told Bloomberg that custodianship is viewed as “the final barrier” to market entry. “Over the next year, the market will come to recognize that custodianship is a solved problem. This will unlock a big wave of capital,” he said.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 458 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Altcoins

TRON Spikes 21% in 24 Hours Ahead of Token Migration

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Only a few days away from its departure from Ethereum, TRON’s token price surged over the last day, racing to 21.4% gains in just under 22 hours.

That took the TRX token – which is due to go through the dreaded swap process on the 21st of June – from a starting price of $0.041 last night, to a price of $0.051 a few hours ago.

Since then its movement has corrected somewhat, but gains of around 14% have been holding steady since the sudden spike, and TRX is still close to the 5 cent mark as it tries to break out of the $0.04 range that it has been mired in since the sudden dip around early June.

TRX was trading at $0.10 on April 30th, and in the month and a half since then its value has sunk by an unbelievable 60%. In the same period, BTC lost just over 30% of its value, while Ethereum’s losses are closer to 40%.

In this context, TRON’s growth over the last 24 hours doesn’t seem all that out of place. Every day we see sudden gains recorded by altcoins which are correcting for sudden losses experienced earlier in the month.

TRON’s 60% loss over this period was itself a correction for the month of April, where TRX began the month trading at $0.030, only to find itself at a price of $0.10 just four weeks later. That 233% upwards movement was one of the best recorded by a Top 20 coin April, and the subsequent losses were almost equal in scale.

BitTorrent Acquisition

It was confirmed at the start of the week that TRON founder Justin Sun had followed through on his plans to buy the BitTorrent file-sharing platform.

A reported figure of $140 million is sure to make juicy headlines, and it marks one of the rare occasions when the crypto world has reached out and got involved with other industries. We can only speculate at this point whether Sun plans to simply oversee BitTorrent, or if he intends to integrate it somehow with his crypto platform.

Token Migration

On May 31st when the mainnet originally launched, TRON’s price didn’t see the kind of spike that everyone was expecting. By that time the long, bearish slide of May was already in full effect, and a price of $0.062 at that time would actually seem desirable now.

But now, in the ramp up to the token migration, TRX is starting to see some movement. It’s 24 hour volume is now three times as much as it was on Saturday – going from $114 million to its volume of $356 million at the time of writing.

Whether this is an omen of good things to come for the much hyped platform remains to be seen.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 11 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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Analysis

Crypto Update: Coins Pop Higher as Consolidation Continues

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Trading activity increased in the major coins today, amid a mixed news flow, and for now, bulls scored a small victory following last week’s bearish price action. Bitcoin, Ethereum and most of the largest digital currencies gained several percents, despite the weekend’s deterioration, and although the technical setup didn’t change significantly, an immediate breakdown has been averted.

The discouraging BIS report that has been making waves today wasn’t enough to push the coins below support, but for now, the short-term strength left the trading range intact with the primary resistance levels still keeping a lid on prices. Given the uncertain long-term picture, the coming weeks will be crucial for the largest coins and the whole segment alike, with Bitcoin being in the center of attention after its long period of relative weakness.

BTC/USD, 4-Hour Chart Analysis

Bitcoin held up above the April low, despite the bearish short-term picture, and the coin the highest price level in a week, breaching the $6750 level in the process. While the most valuable coin fared relatively well today, it clearly remains a laggard from a broader perspective, and it is still trading in a declining short-term trend, with several strong resistance levels just ahead.

The $5850 is the key from a long-term perspective, with further support levels at $6500 and $6275 and resistance ahead at $7000 and $7350.

Bearish Rotation Among Altcoins

ETH/USD, 4-Hour Chart Analysis

On a negative note, the leaders of the latest rally were among the weaker coins today, and that is a sign of bearish rotation in a segment, and until major resistance levels are broken traders shouldn’t enter new positions here. Ethereum managed to rally above $500 yet again, but it remained below week’s bounce high, leaving the trading range intact, while the declining short-term trend is also still dominant.  Strong resistance is still ahead between $555 and $575, while support below $500 is found at $450, $400, and $380.

EOS/USD, 4-Hour Chart Analysis

EOS, which is one of the strongest majors technically speaking also edged higher today, but it remains stuck in the declining short-term pattern, and below key support/resistance zone near $12. The coin is well below last week’s high and until a confirmed short-term trend change, traders shouldn’t enter positions here.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 277 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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