Robots won the day as the NZX-owned Smartshares booted up a new range of eight exchange-traded funds (ETFs) last week.
Of the eight new Smartshares funds – backed by BlackRock-owned ETF factory, iShares – the robotics-themed product attracted both the largest number of trades (17) and most dollars ($469,000) post the Thursday launch.
The other ‘thematic’ ETF, targeting innovative healthcare companies, finished a close second in popularity with 16 trades and about $430,000 in the tin.
In total, the eight Smartshares debutants pulled in just over $1.8 million in 63 trades as the NZX opened up the new product range across traditional broking channels and direct-to-consumer platforms, InvestNow and Sharesies.
Both thematic products are the most expensive among the Smartshares ETF set, priced at 75 basis points (bps): the rest of the new ETFs have annual management fees ranging from 30bps (global bond index fund tracking the Bloomberg Barclays benchmark) to 59bps for the emerging markets environmental, social and governance (ESG) product.
Between them, the five Smartshares global and regional ESG-screened funds booked 22 trades and $520,000 last week.
According to an NZX statement: “The [ESG] screens exclude companies that engage in contentious activities, including controversial weapons, civilian firearms, nuclear weapons, thermal coal, nuclear power, tobacco, oil sands and companies that have failed UN Global Compact rulings.”
The Smartshares ESG funds track indices built by MSCI while the two thematic ETFs cleave to the iSTOXX Factset benchmarks.
Christian Obrist, iShares Australia head, told the crowd gathered to usher in the new funds at the Wellington NZX headquarters last Thursday, that “convenience” was the main driver of growth of ETFs globally.
Figures from research house ETFGI show the global ETF market hit about US$5.4 trillion at the end of April this year, spread across 6,658 underlying products compared to US$716 billion and 1,618 funds in 2008.
Smartshares, one of the ETF pioneers, increased its product range to 31 funds after releasing the iShares suite.
The NZX also set the scene for further ETF growth last week with the launch of two new indices created in partnership with S&P Dow Jones to track the geographic exposure of local companies.
In a release, the NZX said the two new indices identify local firms among the top 50 listed stocks based on above average revenue sourced from NZ and offshore, respectively.
The S&P/NZX 50 New Zealand Revenue Exposure and Foreign Revenue Exposure indices join the global family of geographic income-based benchmarks developed by S&P.
Mark Peterson, NZX chief, said in a statement: “There is a growing demand for innovative index-based solutions. New Zealand investors continue to seek ways to gain exposures to certain countries and regions while anticipating and navigating potential domestic and global risks.”
Whether Smartshares builds products on the new indices remains to be seen but as at the end of May, the NZX-owned ETF shop managed just over $2.8 billion, of which $1.8 billion came courtesy of in-house fund manager, SuperLife, and the remaining $1 billion from external investors.
Since last May, Smartshares has seen external funds under management (FUM) grow about 33 per cent compared to 13.7 per cent from SuperLife. All told, the NZX fund business reported FUM of over $3.3 billion at the end of May including the $464 million of SuperLife money invested outside of Smartshares.
SuperLife has almost $900 million in its KiwiSaver scheme and a further $1.4 billion in a traditional superannuation and fund vehicle. In April this year, SuperLife restructured to offer underlying funds as separate products.
Last week, the NZX also expanded its pool of accredited software providers after adding FlexTrade to the approved list.
The New York-headquartered FlexTrade offers trading technology to ‘sell-side’ institutions.
Dan Enstedt, FlexTrade Australia and NZ vice president, said in a release: “By certifying with the NZX, we can provide valuable services such as direct market access, customised workflows, bespoke algos and improved trade order entry to brokers and traders who wish to trade more efficiently on the exchange.”