Odds & Ends: ‘Night Effect’ Funds Close on Dim Returns

Plus, ETF inflows spiked in June, more than doubling May’s numbers.

The NightShares 500 ETF (NSPY) and the NightShares 2000 (NIWM), are shutting down next month. The two actively managed stock funds had hoped to take advantage of the “night effect,” a phenomenon wherein some funds perform better in overnight trading than during the day by allowing investors to be first movers on news announced after markets close.  

However, as is often the case, turning a market anomaly’s theoretical opportunities for returns into actual returns proved more difficult than expected, and the funds are shuttering after just over a year in operation. Both are down since inception, while the S&P 500 is up double digits in the same period. Nonetheless, hope springs eternal, and NightShares will be launching a new fund, the NightShares Select fund, this fall. 

ETFs broadly, by contrast, have been doing very well. According to data from Morningstar Inc., over $71.3 billion flooded into ETFs in June, more than double the $33.1 billion in May. Large cap blended ETFs—those that don’t focus specifically on value or growth—saw the largest inflows, of $19.6 billion, as large cap stock indexes like the Nasdaq-100 and S&P 500 continued their strong rally.  

Intermediate-term bond funds also saw large inflows of $16.3 billion as investors remain wary of potential recession, even as flows into stock funds have begun to speed up. The yield curve remains very inverted, meaning longer-term bonds are yielding less than shorter-term ones.  

This is caused by the high demand for longer-term bonds because investors expect a recession and subsequent easing of interest rates. The stock market and most economic data points are looking in the opposite direction, with job numbers strong and inflation dropping.  

Launches 

Monday: 

• JPMorgan High Yield Municipal ETF (JMHI) 
• JPMorgan Sustainable Municipal Income ETF (JMSI) 
• Matthews Korea Active ETF (MKOR) 

Tuesday: Innovator Equity Defined Protection ETF - 2 Yr to July 2025 (TJUL) 

Wednesday: 

• Panagram AAA CLO ETF (CLOX) 
• Touchstone Securitized Income ETF (TSEC) 

Thursday: Avantis International Small Cap Equity ETF (AVDS) 

Closures 

Tuesday: Natixis U.S. Equity Opportunities ETF (EQOP) 

Thursday: ETFMG Breakwave Sea Decarbonization Tech ETF (BSEA) 

Friday: Hartford Schroders ESG US Equity ETF (HEET) 

Contact Gabe Alpert at [email protected]