Opportunity in the Active ETF Market

January 29, 2021

Semi-Transparent ETFs Collectively Cross $1 Billion in Assets

On Jan. 12, the quickly expanding semi-transparent market, which is currently comprised of 19 ETFs, collectively closed with over $1 billion in assets under management (AUM). It took just 286 calendar days for the semi-transparent marketplace to reach this milestone. For perspective, 2,371 calendar days passed before active transparent domestic equity ETFs reached the same threshold back in 2013.

SEC Publishes Notice of NYSE Filing to Obtain Additional Basket Flexibility for Active Managers

On Jan. 12, the SEC published notice of the NYSE and Natixis Investment Manager’s amended exemptive relief filing to allow for additional basket flexibility within the NYSE’s active, semi-transparent ETF structure. Once formally approved, future asset managers using the NYSE model will be able to construct creation/redemption baskets that differ from the daily tracking basket and proxy portfolio, much like transparent ETFs that fall under the ETF Rule do today. This will further enhance the operational efficiency of the NYSE model, increase tax efficiency and provide for reduced costs for asset managers. The SEC Notice can be found here.

Spotlight on Semi-Transparent ETFs

A lot has happened since the first two semi-transparent ETFs launched in April 2020. The sector has accumulated nearly $1.1 billion in AUM across 19 ETFs from seven different asset managers. Despite current relief exclusively permitting domestic equity strategies, the market is comprised of a diverse set of investment objectives including: ESG, Value, Growth, Dividend, Multi-Cap and Single Cap (Large & Mid) investment strategies. As of Jan. 22, first-mover American Century leads the industry in assets, with over $531 million year-to-date. Fidelity sponsors the largest ETF: the $230 million Fidelity Blue Chip Growth ETF (FBCG). FBCG is joined by three other ETFs from American Century that have already eclipsed $100 million in assets. Collectively, these four ETFs now account for 71.67% of assets.

The Growth of Active ETFs

Source FactSet as of 1/21/2021

Ahead of the first semi-transparent ETF launch, market participants wondered how efficiently liquidity providers would be able to make markets while managing a variety of structures and a lack of transparency. The answer? Quite well. Spreads have been similar to, and in some cases tighter than, comparable active transparent ETFs. According to a recent Quick Take note from Jane Street, average daily bid-ask spreads for the 19 ETFs ranged from 7.5 to 26.4 basis points (bps) with an average of 15.7 bps and median of 15.1 bps. Meanwhile, average spreads for the 139 transparent active equity ETFs that launched in 2020 ranged from 4 to 110 bps, with a median spread of 25 bps.

Semi-Transparent ETF Spreads

Source: NYSE Consolidated tape 12/22/2020 - 1/22/2021

Secondary market volumes have grown month-over-month since April 2020, with shares traded and dollars traded averaging 452,880 and $14.34 million respectively year-to-date. Three of American Century’s funds (FDG, ESGA and FLV) have traded over 1 million shares in a single trading day, with over 1.8 million shares of FDG setting the high watermark for the space on June 4, 2020. Despite concentrated volume in a few names, market quality has remained consistently strong across issuers and solutions.

Semi-Transparent ETF Volumes

Source: NYSE Consolidated tape 12/22/2020 - 1/22/2021

Additional Reading on the Active ETF Market

Foreside’s “The Expanded ETF Ecosystem- Transparent & Semi-Transparent ETFs”: Foreside, with Arro Financial Communications, created a guide to understanding the expanded ETF ecosystem, encompassing both traditional passive ETFs and new semi-transparent models.
Janus Henderson’s blog, “Active ETFs Are Here to Stay”: Discusses the driving forces behind the growth of ETFs and why active ETFs are capturing a large share of the overall market.

Active ETF Stat Pack

Firms
# of Issuers	94
# of New Issuers 2021	1
Products		Assets
# of ETFs	489	AUM ($B)	$191.21
# of New Launches 2021	16	3 Yr AUM CAGR	161%
Avg. ER	0.55%	5 Yr AUM CAGR	56%
Cash Flow		Trading
YTD Cash Flow ($B)	$12.7	YTD ADV (Shares)	50,088,126
3 Yr Cash Flow	$124.1	YTD ADV ($)	$3.72 B
5 Yr Cash Flow	$146.5	YTD Avg. Spread (bps)*	30.30

Active, Semi-Transparent Update

Ticker	Inception	Name	AUM	Flows	Avg. Spread (bps)	ADV (shares)	Structure	LMM	Expense Ratio
Ticker	Inception	Name	AUM	YTD Flows	Avg. Spread (bps)	ADV (shares)	Structure	LMM	Expense Ratio
EQOP	09/17/2020	Natixis U.S. Equity Opportunities ETF	$12,220,349	$ -	13.89	27	NYSE AMS	Citadel	0.90%
VNSE	09/17/2020	Natixis Vaughan Nelson Select ETF	$6,229,209	$ -	15.77	7	NYSE AMS	Citadel	0.90%
VNMC	09/17/2020	Natixis Vaughan Nelson Mid Cap ETF	$8,048,730	$ -	23.08	967	NYSE AMS	Citadel	0.85%
ESGA	07/15/2020	American Century Sustainable Equity ETF	$120,120,536	$7,150,365	15.01	15,742	NYSE AMS	Citadel	0.39%
MID	07/15/2020	American Century Mid Cap Growth Impact ETF	$8,759,200	$539,689	15.06	1,134	NYSE AMS	Citadel	0.45%
FDG	04/02/2020	American Century Focused Dynamic Growth ETF	$226,146,270	$ -	11.79	18,565	ActiveShares	Citadel	0.45%
FLV	04/02/2020	American Century Focused Large Cap Value ETF	$176,462,172	$3,841,735	15.84	9,420	ActiveShares	Citadel	0.42%
CFCV	05/28/2020	ClearBridge Focus Value ETF	$3,218,715	$180	26.37	-	ActiveShares	GTS	0.50%
FBCG	06/04/2020	Fidelity Blue Chip Growth ETF	$230,266,613	$22,709,505	14.93	221,105	Fidelity Proxy	GTS	0.59%
FBCV	06/04/2020	Fidelity Blue Chip Value ETF	$51,288,745	$6,867,500	16.13	51,647	Fidelity Proxy	GTS	0.59%
FMIL	06/04/2020	Fidelity New Millennium ETF	$29,774,735	$6,935,095	18.46	35,478	Fidelity Proxy	GTS	0.59%
TCHP	08/05/2020	T. Rowe Price Blue Chip Growth ETF	$78,914,707	$13,749,825	10.01	61,444	T Rowe Proxy	Virtu	0.57%
TDVG	08/05/2020	T. Rowe Price Dividend Growth ETF	$39,422,539	$2,272,282	7.53	11,617	T Rowe Proxy	RBC	0.50%
TEQI	08/05/2020	T. Rowe Price Equity Income ETF	$26,339,387	$2,413,064	9.93	8,352	T Rowe Proxy	Virtu	0.54%
TGRW	08/05/2020	T. Rowe Price Growth Stock ETF	$28,493,485	$1,593,760	8.49	10,275	T Rowe Proxy	RBC	0.52%
IVDG	12/22/2020	Invesco Focused Discovery Growth ETF	$1,253,000	$ -	25.5	3,040	Invesco Model	Citadel	0.59%
IVLC	12/22/2020	Invesco US Large Cap Core ESG ETF	$1,233,000	$ -	13.65	1,157	Fidelity Proxy	Citadel	0.48%
IVRA	12/22/2020	Invesco Real Assets ESG ETF	$1,206,000	$ -	19.61	1,369	Fidelity Proxy	Citadel	0.59%
IVSG	12/22/2020	Invesco Select Growth ETF	$1,262,000	$ -	17.61	1,532	Invesco Model	Citadel	0.48%
		Total/Average	$1,050,659,390	$68,073,000	15.72	452,880			0.57%

Source: Factset & NYSE Internal Database and Consolidated Tape Statistics as of 11/30/2020
*Simple average

January Active ETF Launches

Ticker	Name	Issuer	Launch Date	Asset Class	AUM
AZAJ	AllianzIM U.S. Large Cap Buffer10 Jan ETF	Allianz	01/04/2021	Equity	$29,088,905
AZBJ	AllianzIM U.S. Large Cap Buffer20 Jan ETF	Allianz	01/04/2021	Equity	$27,670,170
JANZ	TrueShares Structured Outcome (January) ETF	TrueMark Investments	01/04/2021	Equity	$3,221,250
DBJA	Innovator Double Stacker 9 Buffer ETF - January	Innovator	01/04/2021	Equity	$9,029,895
DSJA	Innovator Double Stacker ETF - January	Innovator	01/04/2021	Equity	$2,594,960
TSJA	Innovator Triple Stacker ETF - January	Innovator	01/04/2021	Equity	$20,200,375
EUCG	Euclid Capital Growth ETF	Toroso Investments	01/05/2021	Asset Allocation	$30,259,644
XDAT	Franklin Exponential Data ETF	Franklin Templeton	01/14/2021	Equity	$2,543,000
INFL	Horizon Kinetics Inflation Beneficiaries ETF	Horizon Kinetics LLC	01/12/2021	Equity	$17,486,000
LVOL	American Century Low Volatility ETF	American Century Investments	01/14/2021	Equity	$4,226,901
OVLH	Overlay Shares Hedged Large Cap Equity ETF	Liquid Strategies	01/15/2021	Equity	$2,535,000
OVT	Overlay Shares Short Term Bond ETF	Liquid Strategies	01/15/2021	Fixed Income	$2,500,000
FJAN	FT Cboe Vest US Equity Buffer ETF - January	First Trust	01/19/2021	Equity	$35,194,661
DJAN	FT Cboe Vest U.S. Equity Deep Buffer ETF - January	First Trust	01/19/2021	Equity	$18,192,661
BUFD	FT Cboe Vest Fund of Deep Buffer ETF	First Trust	01/21/2021	Equity	$2,005,840
BGLD	FT Cboe Vest Gold Strategy Quarterly Buffer ETF	First Trust	01/21/2021	Commodities	$2,000,240
Total	16 New Actively Managed ETFs				$208,749,502

Source: Factset & NYSE Internal Database and Consolidated Tape Statistics as of 1/22/2021
*Simple average

NYSE ETF Summit & Active ETF Webinar Series Replay

Missed the NYSE ETF Summit or our Active ETF Webinar series?

Visit HomeofETFs.com to catch-up

Hear from ETF experts from each of the various active ETF structure providers, fund sponsors such as American Century, Fidelity, PIMCO and T. Rowe Price, liquidity providers such as Flow Traders and Jane Street, and service providers such as BNY Mellon and State Street.

NYSE ETF Education Series

Join the NYSE ETF Team and industry experts in our series of educational webcasts. sign up by emailing us at [email protected]

Visit HomeofETFs.com to catch-up on past webinars

Let us support your ongoing business plans

Contact the NYSE ETF Team

Missed a previous issue?

Visit The Home of Active ETFs to catch up

Check out the archive

Get NYSE's Active ETF Updates

Recent Updates

Your browser is unsupported