Hi Everyone!
It’s Conor here from Outer Beach Conor and I’m back with a November launch update.
We’re looking at all of the ETF launches in the US during the month.
I’ll be putting my opinion on each launch while also singling a few funds out to take a deeper dive on and explain my reasoning.
The goal is to segment them by what version of helpful to the market I think they are.
Here are my metrics:
👍Good: Anything that may already exist in another form but is an honest attempt at reskinning the cat. Largely investor-positive.
🤔We’ll See?: May not exist yet, either as an asset type, strategy, or anything else in ETF format. Can be quite investor-positive. Requires analysis.
👎Bad: A fund that plays on an existing asset or strategy but without a value-add, sometimes with a value loss. Leveraged products, income products, high expense versions of existing product types with no discernible add-on. Almost always benefits the issuer instead of the investor.
Keep in mind that everything in here is just my opinion.
I’m happy to hear all challenges to my assigned ratings in the comments or via DM.
Breakdown:
For November, I ended up with the following results:
Good: 54 launches
Bad: 58 launches!!!
We’ll See: 4 launches
This month had 116 launches, down 16 from last month but still a VERY active month historically.
There were quite a few less Bad launches, I’m guessing as IPOs start to ramp back up into next year we’ll see another rash of 2x, inverse, and income varietals launch for each one.
We actually had 11 more Good launches! I’ll go through how those stack up.
Next month looks busy but January/February look insanely crowded, can’t wait to see which ones actually launch!
We had a whole mess of good launches this month.
I want to highlight the new crypto products that launched. We saw the first XRP, Solana, and crypto basket products launch as the SEC finished up their work clarifying regulatory pathways for these to get approval.
Most of them have a reasonable expense ratio considering the underlier and have seen big flows!
If I have to highlight one (don’t consider this an endorsement!)
I would pick Grayscale Dogecoin Trust (GDOG).
I don’t care about Dogecoin but that is a realllllly good ticker. 35 bps seems like a good expense ratio for what is effectively a memecoin product.
The average expense ratio across the Good launches held steady at 43 bps from last month.
The launch group was also really diverse.
Lots of launches in the muni bond space, crypto, structured products, and multi-factor equity segments.
I enjoy seeing all the portfolio pieces getting launched by a really broad set of issuers as well. It encourages competition and gives investors more choices.
KraneShares launched a pretty novel product, the KraneShares Wahed Alternative Income Index ETF (KWIN).
This product gets around pesky Shariah-incompliant interest payments by generating income using options which has been approved by the relevant authorities.
State Street and S&P are collaborating (again) for a leverage loan ETF product (State Street SPDR S&P Leveraged Loan ETF (LVLN) good ticker!)
Interesting to see that come to market right now but I guess they see the demand!
No big surprise that we again have the majority of the Bad launches being leveraged, “income” or “yield” focused, or some combination of the two with very high expense ratios and questionable strategies.
What is surprising is that we have some reputable names in the Bad column this month with some (in my opinion) less than stellar products.
Tom Lee has decided he wants to generate income with FundStrat Granny Shots US Large Cap & Income ETF (GRNI).
This uses a similar basket to his successful Granny Shots product (GRNY) but adds an options income overlay that makes it way more expensive and gives away the upside that Tom is supposed to provide as the portfolio manager.
Bit silly.
I should also note that Tom and team launched their new SMID cap product, the FundStrat Granny Shots US Small- & Mid-Cap ETF (GRNJ) which has a lower fee and is in the “Good” column.
We have a bunch of other questionable active equity products with HEFTY expense ratios but also an incredibly expensive indexed product from Donoghue Forlines (never heard of them).
This is their inaugural product, the DF Tactical 30 ETF (DFTT).
It’s an index-based momentum product that comes in at a whopping 65 bps.
We have 4 entries this month (I would say it’s actually 2 but I grouped 3 of the offerings together).
We’ll start with a new fund from Hedgeye Asset Management, they launched Hedgeye Fourth Turning Fund (HEFT) with an expense ratio of 70 bps.
What’s interesting is the strategy itself.
If you’re not already familiar with Hedgeye, they’ve been an index and research provider for the asset management business for many years and have recently launched their own branded ETF products.
Per the fund page, it’s an “actively managed long–short strategy seeking long-term real capital appreciation through a dynamic investment approach grounded in Fourth Turning generational theory.”
The strategy is managed and led by Neil Howe who is a major leader in generational theory and cyclicality.
The fund is betting that the next 10 year will have markets focused on protectionism, reinflation, industrial policy and geopolitical tensions. Definitely a weighty topic and bet to make!
There is no lack of research cred and tactical nous behind the team running this so I’ll be very interested to see what they decide should be in the basket!
The next entries will be grouped together.
We have Tidal, traditionally a white label provider with none of their own funds, launching three indexed equity products under their own banner (kind of) for the first time.
They’re launching them under the Portfolio Building Block issuer label, that name makes me happy, and it looks like there will be more on the way.
We have Portfolio Building Block European Banks Index ETF (PBEU), the Portfolio Building Block World Pharma and Biotech Index ETF (PBPH), and the Portfolio Building Block Integrated Oil and Gas and Exploration and Production Index ETF (PBOG).
All three clock in with 13 bps expense ratios and have indices provided by BITA.
This is a HUGE change for Tidal.
They’re basically attacking State Street and other legacy players with thematic offerings that can be used to construct any number of portfolios and doing so at a pretty reasonable cost.
I will be immensely curious to see how they draw flows and stick these into their customer’s funds to help potentially lower costs.
Hats off to Tidal for taking a punt, this is a real shot across the bow.
I’ll try to keep a cadence of these going every month.
If you’d like to see me take a look at anything in particular, please comment.
I’m happy to dive into any ETF product that you’d like to see.
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This animated chart, built with PlotSet.com, illustrates how active ETFs have steadily gained ground in total ETF flows, transforming from a niche experiment into one of the industry’s strongest growth engines.
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