Bitcoin ETF Saga, Direct Indexing, & the Rise of Active
In the latest episode of ETF Prime, VettaFi’s head of research Todd Rosenbluth discusses iShares’ bitcoin ETF filing and the increasing number of launches and filings for active ETFs. Later, Charles Schwab’s senior investment portfolio strategist D.J. Tierney discusses ETF flows, standout ETFs, and their direct indexing platform. Plus, T. Rowe Price’s global head of ETFs Tim Coyne talks about the firm’s expanding actively managed ETF suite.
The Bitcoin ETF Saga Continues
Just when you think the bitcoin ETF saga is dragging, something new comes along. That something new is BlackRock’s iShares arm filing for a bitcoin ETF. Rosenbluth admitted to podcast host Nate Geraci that the filing caught him by surprise.
“I was surprised,” Rosenbluth said. “The SEC has been consistent with concerns about fraud and manipulation for a spot bitcoin ETF.” He cited the SEC’s battle against Grayscale as an example of the agency fighting against a spot bitcoin ETF.
Rosenbluth said the Nasdaq may do surveillance to support the effort but is unsure if that will make a difference. And while “BlackRock doesn’t launch products just to launch products,” Rosenbluth remains “skeptical that we’re going to see any spot bitcoin ETF in 2023.”
“The regulatory environment isn’t favorable towards such a product,” he added.
So, why would BlackRock file if the idea is getting such pushback from the SEC? Rosenbluth agrees with Geraci that it feels like BlackRock may know something. Whether what they know will “lead to a spot bitcoin ETF being approved this year” remains to be seen. But if BlackRock is successful in getting the ETF approved, “it’ll be tremendously successful because it’s BlackRock.”
“I think they’re smart to get in line early in case the SEC shifts their stance,” Rosenbluth said.
An Exciting Time for Actively Managed ETFs
Prior to Geraci speaking with Coyne from T. Rowe Price, Rosenbluth discussed the firm’s newly launched T. Rowe Price Capital Appreciation Equity ETF (TCAF) and four additional active transparent funds. Unlike T. Rowe Price’s other launches, TCAF is not a clone. Rather, it’s a fully transparent equity-only portfolio with the same approach as the equity sleeve of the mutual fund.
Rosenbluth noted that, in addition to T. Rowe Price, Franklin Templeton, Fidelity Investments, and J.P Morgan have also thrown their hats into the active ETF ring.
“It’s just really exciting to me when asset managers bring their best into the ETF space,” he added. “This is a really exciting time for actively managed ETFs.”
Goldman Sachs Introducing Eagle Capital to the ETF Party
Eagle Capital is another issuer that’s thrown its hat into the active ETF ring. And it’s done this with the help of the Goldman Sachs ETF Accelerator business. The Eagle Capital Select Equity ETF will likely trade under the ticker EAGL in the second half of 2023. Per the filing, the ETF – the firm’s first – will be actively managed and fully transparent.
But the Goldman Sachs ETF accelerator is different than Alpha Architecture or Tidal. “What Goldman is doing is leveraging more of its institutional expertise,” Rosenbluth explained. Goldman Sachs is leveraging its new institutional expertise to set the new ETFs up for success. It’s acting more like a consultant than as a white labeling service.
“Goldman is not helping manage the fund,” he said. “They are really using all of their relationships within the broader ETF ecosystem to support a firm like Eagle Capital.”
Or, to put it another way: “If you’re showing up to a party 30 years late, it helps of have a friend introduce you around to the right people.”
VettaFi Honored as Wealthies Finalist
Rosenbluth also gave a shout-out to the VettaFi team for being a finalist for WealthManagement.com’s 2023 Industry Awards (a.k.a. the “Wealthies”). VettaFi is one of two firms to be recognized for outstanding achievement in research innovation.
“We’re really proud of the recognition,” Rosenbluth said. It’s an honor to be a finalist.”
The Wealthies honors companies, organizations, and individuals supporting financial advisor success.
ETF Flows, Active Funds
Later in the episode, Charles Schwab’s Tierney kicks off his segment by talking about ETF flows so far this year.
“I think we all have to take note of the large flows that we’ve seen into the fixed income category this year,” Tierney said. “They really are significant.”
Tierney added that overall, flows are a little lower, particularly within equity ETFs.
For Coyne’s segment, the global head of ETFs for T. Rowe Price discussed the firm’s rapidly expanding ETF suite. T. Rowe Price entered the ETF space about three years ago. Now, the firm has a lineup of 15 actively managed ETFs.
“When we entered the active ETF market, we really committed to putting our best foot forward for our clients,” Coyne said. “We’re committed to developing a comprehensive suite within ETFs to really better service our clients.”