ETF Weekender: Turning Points for Volatility, BlackRock and Bitcoin

(Bloomberg) — Welcome to ETF Weekender, your roundup of the biggest and most interesting stories from one of the hottest corners of global markets.

In this week’s edition: The SEC is concerned about leveraged complex funds just as it approves new ones. BlackRock is changing the way it handles proxy voting for major clients. And everyone is holding their breath on a Bitcoin ETF.

These are the stories you need to read.

Pump the Vol . on

What happened: Investors plunged into complex leveraged products the day the Securities and Exchange Commission warned about their risky nature. Still, that didn’t stop the US’s top regulator from approving new funds that reinvent two infamous volatility strategies.

Why it matters: Leveraged funds and inverse funds are magnets for controversy, yet many investors love them, as evidenced by the money pouring in to capture a rebound in stocks. That’s why the SEC is in a bind. The green lighted the proposed new funds for being compliant, but just days later SEC chairman Gary Gensler announced they were reviewing the risks and possible new rules to protect investors.

Read about the new funds and the cash deluge here.

Power to the people

What happened: BlackRock is giving more voting rights to some of its biggest clients.

Why It Matters: Was It Pushed or Jumped? The move of asset managers comes just as the SEC is proposing new rules to give major funds more information about how they vote. At the same time, recent research shows that simply sending cash to good companies and away from the bad companies creates little incentive to behave better. In any case, one thing is certain: the shift to using voting power to effect change rather than purchasing power is accelerating.

Read about it here.

Approval seeking behavior

What Happened: A Bitcoin US ETF, powered by the futures market, could be approved as many as four this month.

Why it matters: America is being left behind by Canada and Europe, where crypto products are now well established. Even so, the US market is still the largest in the world, so issuers with first-mover advantage can bring in a lot of money.

Read about it here.

Want more? Bonus weekend reading

• Gundlachs DoubleLine plans ETF entry with stocks, bond funds.
• BlackRock alumni want to shake up the world of investing in unwanted debt.
• Invesco pairs with Novogratz’s Galaxy on Crypto-Flavor ETFs.
• Simplifies New PINK Health-Care Fund gives away its profits.
• Cathie Woods ARK leaves NYC with shift to Florida office.

Good Intel: Concentrate

A glimpse of the Bloomberg Intelligence analysis available at the terminal.

A wave of new ETFs will likely find it increasingly difficult to attract trading volume in an already crowded market. The top 10 funds account for nearly half of sales, with as much as 80% in products launched in 2008 or earlier. Since early 2020, 648 ETFs have entered the market, almost a quarter of the total. But only 30 introduced since early 2014 have generated more than $10 billion in sales in the past 12 months.

Fund danger!

This bullish fund uses derivatives to improve its performance, so it’s supposed to be a short-term bet. Still, assets have risen to more than $16 billion as investors flock to the product to witness the ongoing US stock rally.

That’s the answer. The question identifying this fund will appear in the next issue. Last Week’s Question: What is the KraneShares Global Carbon ETF, ticker KRBN?

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