There are more than 3,000 ETFs for advisors and heads of research — aka ETF nerds — like me to keep track of. The funds that get the most attention tend to be the largest based on either assets under management or net flows. However, we regularly hear from advisors who are looking for something different, even if the ETF is small and does not have a lot of trading volume. Advisors want to understand what ETFs saw unexpected demand and to understand how they are positioned.
In April, VettaFi acquired the LOGICLY platform. LOGICLY is a leading web-based platform that allows financial advisors and asset managers to streamline the investment research process and to access comprehensive portfolio management capabilities, real-time alerts, and advanced analytics. Last month, I discovered that one of the features is the ability to easily see what ETFs had a high percentage of net inflows relative to assets over a short period of time. Let’s do it again by looking at May data.
A Covered Call Treasury ETF Gains Traction
The iShares 20+ Year Treasury Bond Buy Write Strategy ETF (TLTW ) ended May with just over $250 million in assets. This is not bad for an ETF that launched in mid-August 2022. Nearly half of the money flowed in during May 2023, with $38 million alone arriving on May 21. TLTW saw net inflows most other days of the month.
TLTW provides enhanced income compared to traditional U.S. Treasury bonds in addition to owning shares of the iShares 20+ Year Treasury ETF (TLT ). TLTW sells monthly call options. Long-term Treasury exposure could be appealing to those that believe the Fed is pausing its rate hiking program.
Actively Managed ETFs Continued to Emerge in May
The PIMCO Preferred and Capital Securities Active ETF (PRFD ) had $92 million in assets but gathered $45 million over a three-day stretch in late May. The active ETF launched in January 2023. The fund provides an active approach to the tax-efficient income-generating investment style. PRFD had a 5% 30-day SEC yield at the end of May and offered an alternative to traditional bond exposure. The managers combine a top-down and bottom-up approach to build the diversified portfolio.
While fixed income ETFs have been in vogue in 2023, we are pleasantly surprised by the unexpected demand for the AB Disruptors ETF (FWD ). The actively managed disruptive technology ETF gathered $63 million on May 21. At the end of the month, FWD managed $80 million in assets after launching just over two months earlier.
Management selects companies it believes provide access to durable high-growth opportunities, with proven business models and a clear path to potential profitability. At the end of May, Advantest, Intuitive Surgical, Microsoft, NVIDIA, and Quanta Services were examples of the ETF’s top positions.
Each month, a handful of ETFs receive unexpected demand proving they are liquid and worthy of further attention. We will try to keep spotlighting them for advisors.
For more news, information, and analysis, visit VettaFi | ETFDB.
