Launching an ETF is very much like planting a seed—a new fund takes time to bloom and grow. But every once in a while, we run into true magic beans that go from seed to billion-dollar trees almost overnight.
In 2018, we’ve had a handful of these magic beans hit the market.
Here are the 10 most successful launches of the year:
Top Asset Flows For New-To-Market ETFs
|Ticker||Fund||Launch Date||YTD Flows ($M)||AUM ($M)|
|XLC||Communication Services Select Sector SPDR Fund||06/18/2018||3,461.11||3,133.20|
|BBJP||JPMorgan BetaBuilders Japan ETF||06/15/2018||3,251.88||3,049.87|
|BBCA||JPMorgan BetaBuilders Canada ETF||08/07/2018||2,342.55||2,135.64|
|BBEU||JPMorgan BetaBuilders Europe ETF||06/15/2018||1,899.64||1,754.46|
|FIYY||Barclays ETN+ FI Enhanced Global High Yield Exchange Traded Notes Series B||03/15/2018||1,445.23||1,416.76|
|BBAX||JPMorgan BetaBuilders Developed Asia ex-Japan ETF||08/07/2018||801.28||750.14|
|FFEU||Barclays ETN+ FI Enhanced Europe 50 Exchange Traded Notes Series C||03/15/2018||766.65||635.29|
|GLDM||SPDR Gold MiniShares Trust||06/25/2018||302.22||330.79|
|JHEM||John Hancock Multifactor Emerging Markets ETF||09/27/2018||281.44||282.71|
|IG||Principal Investment Grade Corporate Active ETF||04/18/2018||229.07||223.72|
Each of these ETFs has an interesting story behind their quick success.
The first thing we can say about them is that none of them is exactly your run-of-the-mill new launch, coming from a small new issuer trying to carve a niche into a crowded market. These are all new funds by well-established brands—brand recognition goes a long way in helping distribute a new strategy.
More importantly, these funds each benefited from unique circumstances that translated into massive asset growth in a short amount of time. Their magic is in the details.
New GICS Sector
Starting at the top, the Communication Services Select Sector SPDR Fund (XLC) wasn’t like any other telecom ETF. It was the telecom ETF.
XLC represented an entirely new sector following changes to the Global Industry Classification Standard used by S&P Dow Jones Indices and MSCI that took effect in September. GICS changes don’t come about all that often, so XLC came to market with fanfare and plenty of attention.
XLC, which pulled from the technology and consumer discretionary sectors to create a portfolio deemed more purely telecom, gained, while the Technology Select Sector SPDR Fund (XLK) and the Consumer Discretionary Select Sector SPDR Fund (XLY) lost in the reshuffle.
Successful launch? No doubt. But not entirely magic.
‘BYOA’ Becomes A Thing
Five of the ETFs in this top-10 list relied on another recipe for overnight success. It’s one we’ve come to call “BYOA” (bring your own assets).
J.P. Morgan and John Hancock both brought to market competitively priced, core-type strategies that weren’t particularly innovative, and that competed in segments densely populated by some serious heavyweights from firms like iShares and Vanguard.
But these newcomers found immediate following in the form of in-house client assets. J.P. Morgan, in its BetaBuilder lineup of ETFs, and John Hancock, in the John Hancock Multifactor Emerging Markets ETF (JHEM), became their own biggest buyers. These firms put their own clients’ money into their proprietary funds, with asset flows so swift and impressive that these ETFs landed among the year’s most successful new launches.