Large issuers focus on Japanese equities with a currency hedge twist

This report aggregates newly launched funds in October and highlights the performance of the funds launched in September.

• During the month of October, 33 funds were launched, focusing mainly on the equity markets in the US and Japan
• 19 funds were launched in the Americas; seven funds each were added in Europe and the APAC region
• Nine of the funds use a currency hedging strategy to diminish potential exchange rate risk

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October new listings

Japanese equities became a target for large ETF issuers, such as Amundi, PowerShares and BlackRock, who released a number of options for investors to choose from. The funds are available in various currency hedged options. ETFs with exposure to equities in Japan saw their first cumulative outflows during the month of October since November of 2014. In total, 10 out of the 33 funds launched in October focused on Japan.

The real estate market was also a target for ETF issuers. Three funds from three different issuers looked to provide exposure to real estate in varying geographic regions. The issuers covered Japan, the US and also the global real estate market ex-US.

Several funds that launched this past month provide investors with exposure to Chinese A-shares. The A-shares market comprises roughly 50% of mainland China's equity market and had only opened up to foreign investors recently through the Hong Kong-Shanghai connection. October saw five new A-shares funds from issuers such as Deutsche Bank and State Street.

September flows

The 39 funds launched in September gained a total of $558m in assets since their inception. The growth was mainly seen in the equity ETFs, which gained $545m.

The US listed funds saw $268m in assets added since they first began trading in September. The largest inflows went into the Goldman Sachs ActiveBeta Emerging Markets Equity ETF (GEM), which has gained $156m to date. The fund uses a proprietary weighting methodology using several factors such as low volatility and momentum.

European funds gained $68m in total assets since their listing in September. The Amundi MSCI Europe BuyBack UCITS ETF (BBEU) has gained almost all of the assets, totalling $63m, which isn't entirely significant considering only six European listed funds were launched in September.

The APAC region had two funds launch in September with two distinctly different performances since their inception. While investors piled into the DIAM Topix ETF (1473), adding $433m, the Hang Seng H-Share Index ETF (82828) saw outflows of $212m since it launched.

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James Hohorst, ETF Analyst, Markit
Tel: +1 646 679 3012
james.hohorst@markit.com

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.