Page 16 - Investment Advisor May 2021

ETF ADVISOR

By Bernice Napach

Schwab Plans First Actively Managed ETF

Also, ETFs set new inflows record in first quarter 2021.

harles Schwab Investment ESG risks and opportunities — includ-
Management is planning its ing risks at the company and industry
C first actively managed ETF, level — the filing says.
which also will be its first fund based on Ariel’s specialized ESG analyst team
environmental, social and governance also works with companies to help
criteria. them improve their ESG performance.
The Schwab Ariel ESG ETF Strategic In addition to the analyses of that spe-
ETF is being subadvised by Ariel cialized team, Ariel uses over 160 data
Investments, which will provide exper- points from public, third-party and pro-
tise on ESG; the new fund also will not prietary sources that are part of its cus-
disclose its actual holdings on a daily plined bottom-up approach that picks tom-built ESG research platform.
basis, as traditional ETFs do. securities based on companies’ financial The planned ETF’s fees were not dis-
In its latest SEC filing, CSIM joins performance, as well as their material closed in the Schwab Ariel SEC filing.
a growing list of asset managers with
actively managed ETFs, including
semi-transparent funds, and with ESG- U.S. ETF Inflows Set New Record
focused funds.
The Schwab Ariel ESG ETF Strategic in First Quarter
ETF is the firm’s first foray into the
ESG space, though its platform provides .S.-listed ETF inflows are reaching demand for U.S. ETFs in March and in
access to those types of funds offered by Urecord levels. Nearly $100 billion the first quarter, with inflows of $89 bil-
other asset managers. poured into U.S. ETFs in March, pushing lion and $210 billion, respectively. Fixed
The new fund will invest primarily in first quarter 2021 flows to a record $251 income flows were $13 billion in March
small- and mid-cap stocks that fall into billion, according to State Street Global and $44.2 billion in the first quarter,
the range of the Russell 2500 index and Advisors’ ETF Flash Flows report. even as close to two-thirds of bond ETFs
meet criteria set by Ariel Investments’ If this growth rate continues, ETFs positive negative returns on the quarter
ESG strategy. It will trade on the NYSE, could attract close to $1 trillion by year- due to rising rates. Commodity ETFs
according to a filing with the SEC. end — or about $950 billion — which saw net outflows of $6.2 billion, with
The ETF will not disclose its actual would be nearly double 2020’s record over $4.5 billion withdrawn in March
holdings on a daily basis but instead $505 billion of inflows, writes Matthew alone, primarily from gold-related ETFs.
will post a daily proxy portfolio, which Bartolini, head of SPDR Americas Among equity ETFs, U.S. stock ETFs
“is designed to reflect the economic Research at State Street Global Advisors. led with $127.7 billion in first quarter
exposures and risk characteristics of the “That’s a big-time projection, and inflows versus about $80 billion for non-
fund’s actual holdings,” including the unlikely to occur … [but] even if ETFs were U.S. ETFs. Among fixed income ETFs,
percentage weight of those holdings, able to amass the long-term five-year medi- aggregate bond ETFs — which include
according to the SEC filing. Actual hold- an monthly flows for the next nine months, government and corporate bonds and
ings will be disclosed quarterly with a the full year 2021 figures could net out mortgage-backed bonds — led the pack,
60-day lag via periodic regulatory filings. around $553 billion … [which] would make followed by inflation-protected bonds.
2021 a record flow year, surpassing 2020 by Large-cap and small-cap ETFs were
ARIEL’S INVOLVEMENT over $40 billion,” explained Bartolini. among the most popular U.S. stock ETFs
As the subadvisor of the ETF, Ariel First quarter ETF inflows were more along with value ETFs.
Investments will be responsible for the than four times the typical quarterly
fund’s day-to-day portfolio management average, he says. Bernice Napach can be reached at Adobe Stock
services. To do so, it will use a disci- Equity ETFs experienced much of the [email protected].

14 INVESTMENT ADVISOR MAY 2021 | ThinkAdvisor.com