Fund news: ETFs and the parabolic rise in GameStop price

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    We are in the middle of March madness, the name of the annual NCAA college basketball tournament that has many Americans predicting and tracking the process of teams elimination during the month. Davids frequently competes against Goliaths, and in a recent LinkedIn post, Matthew Bartolini, executive director and head of SPDR Americas Research at SPDR Exchange Traded Funds, argues that the stock market had its own March Madness in January when GameStop (GME) stocks ) rebounded 1,625%. The stock rose 400% in the last week of January.

    “This year, however, video game retailer GameStop (GME) ‘s first quarter market activity was undoubtedly similar to the exciting gameplay, spontaneity and national absorption of mind-share effects of the tournament,” writes Bartolini. “And the resulting butterfly effect on ETFs was akin to how a novice shooter missed a # 2 seed can cause millions of staples to blow up at once.”

    GameStop’s price hike affected many ETFs that hold shares in the stock, and increased those ETFs’ exposure to GME. This includes an ETF, the one from Bartolini’s own company, the SPDR S & P Retail ETF (XRT). As of December 2020, the ETF had a 1% weight against GME. At the end of January 2021, however, it was up to 19.5% of the portfolio. Yet Bartolini argues that the ETF acted exactly as it intended.

    “The weight increased not with the purchase of GME shares, but with the increase in the price of GME. After all, it was just a matter of following the industry’s movements as intended, ”he writes.

    The ETF still owned the same percentage of GME stocks as it did a few weeks before the frenzy began (0.77%). And the ETF never made up more than 1% of the daily trading volume of the stock, according to Bartolini’s charts.

    “And throughout the first quarter, as the GME mania stretched like a Cinderella team into the Elite Eight of the NCAA tournament beyond the last few days of January, the average of XRT was still just 0.11% of all GME traded. Shares, “he writes. “Overall, the result is that this extremely low trading volume from the launch / redemption of ETFs is far too small to have an impact on the security.”

    Scaramucci, Fidelity files for Bitcoin ETFs

    The race for regulatory approval for the first Bitcoin ETF continues. Anthony Scaramucci, former White House communications director and founder of SkyBridge Capital, is backing a new ETF that would invest in the cryptocurrency. According to Bloomberg, First Trust Advisors has applied for the launch of the First Trust SkyBridge Bitcoin ETF Trust. Scaramucci’s company launched a Bitcoin fund earlier this year, but it is only available to accredited investors.

    Meanwhile, Fidelity launched a Bitcoin ETF with the SEC this week called Wise Origin Bitcoin Trust, which uses underlying prices from US exchanges like Bitstamp, Coinbase, Gemini, itBit, and Kraken.

    Fidelity and First Trust are joining four other firms that have applied for a cryptocurrency ETF, including WisdomTree and VanEck Associates.

    BlackRock cuts fees for style ETFs, State Street for bond ETFs

    Two of the largest wealth managers this week cut fees on their exchange-traded funds.

    BlackRock cut the expense ratios for nine iShares Morningstar US Equity Style Box ETFs from 25 to 30 basis points to 3 to 6 basis points, according to Bloomberg. The company’s style ETFs have assets of $ 7.6 billion. The company also named new benchmarks for these funds and new tickers.

    State Street Global Advisors also announced this week that it has cut expense ratios for its companies SPDR Portfolio Mortgage Backed Bond ETF (SPMB) and SPDR Portfolio High Yield Bond ETF (SPHY). SPMB was reduced from 6 to 4 basis points while SPHY was reduced from 15 to 10 basis points, the company said.

    The company’s portfolio portfolio ETF suite, launched in 2017, has assets of more than $ 92 billion.

    Potomac Fund Management adds new portfolio manager

    Turnkey boutique asset manager Potomac Fund Management has hired Dan Russo as their portfolio manager. He comes from Chaikin Analytics where he was Chief Marketing Strategist.

    Russo joins Potomac’s 10-person team led by Manish Khatta, president and chief investment officer. He is the first external investment management employee in the company’s history.

    The TAMP approaches nearly $ 400 million in assets under management and management and is specifically focused on serving advisors with an AUM of less than $ 100 million.

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