A NOTE FROM BOB
Active managers fizzle again. If there ever was a year active management should have outperformed passive, indexed strategies, 2020 and 2021 should have been it. A recent Morningstar report concludes active management fizzled again. Of the nearly 3,000 active funds Morningstar analyzed, only 47% outperformed their average passive counterpart in the 12 months through June 2021, about what you would expect from a coin flip. It's much worse over longer periods. What prevents active managers from outperforming? Join me Monday on ETF Edge when our guests will be Ben Johnson, Director of Global ETF Research at Morningstar and author of the report, along with two active ETF managers with a strong track record: Jerome Schneider, Head of Short & Low Duration Portfolio Strategies at PIMCO, and Ed Rosenberg, Head of ETFs for American Century Investments.
You knew this was going to happen. You knew the minute a bitcoin futures ETF was announced, someone would try to open a leveraged bitcoin futures account, which is exactly what happened. Valkyrie, which had just launched a Bitcoin Strategy ETF (BTF) only days after Van Eck launched their bitcoin futures ETF (BITO), announced they would launch a leveraged bitcoin futures ETF offering 1.25x exposure to the bitcoin reference rate. According to the WSJ, Valkyrie was asked to withdraw its application by the SEC, subsequently confirmed. No surprise either: SEC Chair Gary Gensler has said leveraged products can pose a risk to investors.
No leverage or inverse futures, but how about a short futures bitcoin ETF? Direxion wants ETF investors to be able to go short bitcoin futures. The Direxion Bitcoin Strategy Bear ETF would effectively allow investors to bet against the bitcoin futures contract used by the ProShares ETF.
Even though Gensler seems opposed to a pure-play bitcoin ETF, some are going ahead anyhow. Grayscale, which runs the Grayscale Bitcoin Trust (GBTC), has filed to convert to an ETF. Grayscale's global head of ETFs, David LaValle, explains: "Now that the Bitcoin futures products were somewhat off the plate of the SEC, they would be open to look at the filings of spot-based products." LaValle believes the SEC is likely to approve a spot bitcoin ETF in nine months. Since the SEC has a 240-day window in which it can review an ETF, filing now neatly fits in that nine-month prediction. We'll see.
Roundhill Ball Metaverse ETF (META) traded 10 times its normal volume last Thursday. Maybe it's because Mark Zuckerberg changed the name of his company? Just wondering. For more analysis and actionable insights, catch me live on Mondays at 1 PM ET on ETF Edge. KEY STORIES
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