The first two weeks of July have been lively for exchange-traded fund filings, with key new offerings coming from established players as well as cutting-edge single-stock funds being released by relative newcomers.
Most notably, Goldman Sachs Group Inc., which currently has funds with nearly $24 billion in total assets under management, filed for six ETFs. Three of them are managed to align with the Paris Agreement on climate change.
The Goldman Sachs ActiveBeta Paris-Aligned Climate Emerging Markets Equity ETF and the Goldman Sachs ActiveBeta Paris-Aligned Climate International Equity ETF will follow a similar approach as the Goldman Sachs ActiveBeta Paris-Aligned US Large Cap Equity ETF (GPAL), which combines a factor strategy that highlights value, momentum, quality and low volatility with environmental, social and corporate governance screens that are in accordance with the Paris Agreement. The main difference is that, instead of the U.S. market, the proposed funds will target emerging and developed markets, respectively.
Goldman has also filed for the Goldman Sachs Paris-Aligned Climate High Yield Corporate Bond ETF, which also tracks an index. The fund targets junk bonds, screening them based on liquidity and fundamentals before applying additional screens that consider ESG criteria and carbon emissions.
Meanwhile, the Goldman Sachs Defensive Equity ETF is an actively managed fund that looks to achieve long-term capital growth with lower-than-average volatility. The fund invests in an equity portfolio with similar characteristics to the holdings of the S&P 500 Index, and applies a put spread collar using options on that Index.
The Goldman Sachs MarketBeta U.S. Small Cap Equity ETF is similar to a Russell 2000 index fund, though the filing does not include an expense ratio. Earlier this year, the issuer launched the Goldman Sachs MarketBeta U.S. 1000 Equity ETF (GUSA), which competes with Russell 1000 ETFs, with an expense ratio of 0.15%. It currently has more than $1.5 billion in assets under management.
Finally, Goldman filed for a municipal bond ETF. The Goldman Sachs Community Municipal Bond ETF tracks the Bloomberg Goldman Sachs Community Municipal Index, which offers an ESG twist on the muni bond universe, screening out bonds supporting certain types of projects and sources of funds, among other criteria.
The Charles Schwab Corp. also filed for a municipal bond ETF. The Schwab Municipal Bond ETF (SCMB) will fill a hole in Schwab’s existing 27-fund lineup as the issuer’s first muni product. The fund will track the ICE AMT-Free Core U.S. National Municipal Index.
Capital Group Expanding Lineup
Capital Group is another firm that filed for a municipal bond ETF. The Capital Group Municipal Income ETF (CGMU), however, will be actively managed and can invest in both investment-grade and below-investment-grade munis.
The filing also included the Capital Group U.S. Multi-Sector Income ETF (CGMS), which is intended to provide both current income and capital appreciation. The fund will invest mainly in high yield corporate debt, investment-grade corporate debt and securitized debt, with wide latitude to target other sectors opportunistically and to invest in junk bonds.
Finally, the Capital Group Short Duration Income ETF (CGSD) will invest mainly in short-duration investment-grade debt, aiming for an average portfolio duration that is expected to be less than two years. Capital Group entered the market in February, with the launch of six actively managed ETFs that now have nearly $2 billion in combined assets under management.
And although it already offers the passively managed $9.6 billion iShares Floating Rate Bond ETF (FLOT), BlackRock Inc. has filed for the actively managed BlackRock Floating Rate Loan ETF, which will invest in a wide range of floating-rate debt securities.
Alpha Architect has also filed for the Alpha Architect High Inflation and Deflation ETF (HIDE), an actively managed multi-asset ETF that will primarily invest in other ETFs. HIDE will target funds that invest in intermediate U.S. Treasury bonds, real estate and commodities, and will shift allocations based on market conditions and a quantitative model. The filing indicates the fund will have an expense ratio of 0.29%.
Global X is also leaning into its lineup of options strategies, with four filings for more “covered call & growth” strategies. The premise is that the strategy buys the stocks in the reference index and writes covered calls on roughly half of the value of the portfolio, offering some protection while allowing for some upside growth. Global X already offers versions of this strategy tied to the S&P 500 and the Nasdaq-100 indexes, but the filings propose bringing the strategy to the Russell 2000 and three key sectors:
- Global X Health Care Covered Call & Growth ETF
- Global X Information Technology Covered Call & Growth ETF
Other filings from established issuers include the following:
- IQ MacKay ESG High Income ETF
- IQ Candriam ESG U.S. Mid Cap Equity ETF
- Harbor Corporate Culture ETF (HCFI)
Newcomers Plan Single-Stock Offerings
In the wake of the first leveraged and inverse single-stock ETFs launching from AXS Investments, similar products are likely to be coming from multiple issuers. White-label issuer SHP ETF Trust has a filing for 10 pairs of ETFs carrying the “Kurv” brand name and offering two times long and short exposure to ExxonMobil Inc., JP Morgan Chase & Co., Bank of America Corp., Apple Inc., Alphabet Inc., Goldman Sachs Group Inc., Morgan Stanley, Newmont Corp., Dow Inc. and Freeport-McMoRan Inc.
Toroso Investments has also partnered with Zega Financial to create a lineup of “Option Income” ETFs tied to individual tickers. The portfolios will consist of different types of options contracts tied to the reference ticker as well as U.S. Treasury securities and cash or cash equivalents. The idea is to participate in the performance of the targeted security while also generating income through the options contracts.
The filings cover five ETFs and 10 stocks, with the former including the following:
The targeted stocks include Apple Inc., Amazon.com Inc., Berkshire Hathaway inc., Coinbase Global Inc., Meta Platforms Inc., Alphabet Inc., Netflix Inc., NVIDIA Corp., Block Inc. and Tesla Inc.
Additional filings from FundX and Soundwatch Capital indicate they will be converting some of their mutual funds.
The FundX ETF will apparently convert to an ETF wrapper after being available as the Upgrader Fund with the ticker FUNDX. It mainly holds a diversified portfolio of U.S. equity ETFs. The FundX Aggressive ETF is currently available in a mutual fund wrapper as the Aggressive Upgrader Fund with the ticker HOTFX. It too invests mainly in U.S. equity ETFs.
Soundwatch will be converting its Soundwatch Hedged Equity Fund, which has the ticker BHHEX, to an ETF. It also has plans to launch the Soundwatch Covered Call ETF.
Finally, Curran Financial Partners is subadvising a fund from white-label issuer Toroso Investments. The actively managed God Bless America ETF will trade under the ticker YALL and seek to invest in companies that do not participate in political activism or promote social agendas.
Contact Heather Bell at [email protected]