Tag: ETFs

Sebi proposes new norms for MFs’ ESG investments, BFSI News, ET BFSI

Personal Finance

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Mumbai: The Securities and Exchange Board of India (Sebi) has proposed to revise the investment norms for mutual fund schemes that invest as per the ESG (Environment, Sustainability and Governance) philosophy.

The markets regulator has proposed that from October 1, 2022, asset management companies should only invest in securities with Business Responsibility and Sustainability Report (BRSR) disclosures.

The existing investments in the schemes for which there are no BRSR disclosures would be grandfathered by Sebi until September 30, 2023. In ESG investing, a fund manager picks companies whose operations are considered socially responsible.

Schemes, which invest in overseas securities, could choose any global equivalent of the BRSR specified by the Association of Mutual Funds in India (AMFI), Sebi said in a discussion paper on Tuesday.

Currently, these schemes fall under the thematic sub-category. A minimum of 80% of the total assets of the scheme are mandated to be invested in securities following the ESG theme. Hence, these guidelines would apply only to the portion of investment towards the ESG theme, Sebi said.

Asset management companies should endeavour to have a higher proportion of the assets under the ESG theme and make suitable disclosures, said Sebi said.

Globally, the concept of ESG investments is gaining popularity but there are no universalorms and standards.

Standard-setting bodies like IOSCO (International Organization of Securities Commissions) and FSB (Financial Stability Board) are working towards standardised disclosures for ESG funds.

“While such standards are yet to emerge, in the meanwhile, there is a need to introduce disclosure norms for domestic ESG Mutual Fund schemes considering the increased activity in this area,” Sebi said. “It is understood that these disclosure norms would further evolve and undergo changes based on learnings and experience, both on the domestic and international front.”



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Invesco plans crypto-linked ETFs in bid to bypass SEC aversion, BFSI News, ET BFSI

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Invesco is planning to launch a pair of cryptocurrency-focused exchange-traded funds, even as regulators have repeatedly delayed the approval of a U.S. Bitcoin ETF.

About 85% of the Invesco Galaxy Blockchain Economy ETF and the Invesco Galaxy Crypto Economy ETF will be in crypto-linked equities, according to a filing with the U.S. Securities and Exchange Commission. The rest of the portfolio will be in other trusts and funds that hold cryptocurrencies.

The SEC has delayed making a decision on the pileup of Bitcoin ETF applications, though odds of approval this year have faded after skeptical comments from new Chairman Gary Gensler last month. At least 12 issuers including Fidelity Investments, Grayscale Investments and WisdomTree Investments are currently pursuing a Bitcoin ETF, and the SEC has acknowledged at least six applications, according to Bloomberg Intelligence. That means it has a limited amount of time to either approve or reject the proposals.

Invesco is the latest issuer to get creative as the SEC hits pause. An application for the Volt Bitcoin Revolution ETF was filed this week, which would target companies exposed to Bitcoin. Meanwhile, the Bitwise Crypto Industry Innovators ETF (ticker BITQ), which tracks companies such as crypto miners and payment firms, launched in May.



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US ETFs see record money inflow this year, BFSI News, ET BFSI

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Investment into US exchange traded funds (ETFs) has risen to record levels this year, driven by a rally in equities and investor preference for passive index-tracking funds over actively managed peers.

According to Refinitiv data, US ETFs attracted a record inflow of $324 billion in the first four months of this year, which was 180% higher than the same period of last year. At the same time, US mutual funds received an inflow of $318 billion, which was a 58% drop.

This surge in inflows is evidence of growing investor interest in ETFs, due to their lower fees and tax liabilities, and better returns compared with active funds in recent years.

Analysts said proposals by the Joe Biden administration to increase the US capital gains tax had also fuelled interest in ETFs.

“Over the last six months, flows have continued to be robust as the elevated savings pile of the private sector found its way into financial assets, benefitting ETFs,” said Komson Silapachai, vice president at investment management firm, Sage Advisory Services, based in Austin.

“The expected increase in capital gains tax later this year should result in a higher preference for ETFs versus mutual funds for the highest tax brackets.”

As most ETFs are passively managed, there is less amount of buying and selling taking place, which leads to lower capital gains and taxes.

Also, ETF redemptions take place through a mechanism called “in-kind transfer” in which ETFs have to deliver baskets of securities to authorized brokers instead of paying cash, which precludes them from being taxed.

According to Refinitiv data, U.S equity ETFs saw a cumulative inflow of $149.6 billion in the first four months of this year, while debt ETFs obtained $283.6 billion.

The Vanguard 500 index fund led this year’s inflows seeing net purchases of $20.7 billion, while iShares Core S&P 500 ETF and Financial Select Sector SPDR Fund procured $11.8 billion and $9.6 billion respectively.

Analysts said the higher inflows were also due to the availability of a variety of ETFs which are focused on certain themes or sectors.

The surge in ETFs was prompted by an SEC rule in 2019 that eliminated some exemptive relief requirements that has made ETF launches expensive and time-consuming.

“The relaxation of the exemption rule requirements has allowed ETFs to be structured to cover narrower segments of the market such as marijuna stocks, ‘high conviction’ stocks, crypto-focused, etc.,” said Warren Ward, founder of financial planning firm, Warren Ward Associates in Houston.

“I suspect this is the main driver of the higher inflows, he said.

“Why choose a single stock if you can utilize a small basket of them instead?”



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Paytm launches ‘Wealth Community’ for young investors

Banking & Finance

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Home-grown digital financial services platform Paytm has launched a new video-based wealth community called the Paytm Wealth Community.

Paytm Wealth Community is an investing community based on video, and “will enable users to attend live sessions conducted by subject matter experts across an array of wealth topics like Stocks, F&O, IPO, ETFs, Mutual Funds, Gold, Fixed Income, and Personal Finance,” the company said in an official release.

“Users will be able to learn from experts, interact with them to clarify doubts, and also chat with other users on the platform to discuss various wealth-related topics,” it said.

The community is meant to tap young users and has been designed for the needs of the “new Indian investor.”

Artificial Intelligence: Financial services industry behind the curve in meeting customer expectations

In beta mode first

“The next 100mn capital market investors in India are expected to originate from social groups and investment communities. Paytm Wealth Community intends to be the leader in helping users save, invest & trade better,” the company said.

The “intuitive” platform will offer live video content on an interactive chat platform. Creators can conduct 30 to 60-minute sessions in multiple languages like Hindi, English, Gujarati and others.

The Paytm Wealth community is owned and operated by OCL Ltd (Paytm) and is initially being offered in beta mode on the Paytm Money platform. It will be offered in beta for select users for the next two months, followed by open access for all.

A limited set of creators have been onboarded by Paytm in beta. In a bid to ensure the safety of retail investors, all creators go through a comprehensive KYC onboarding and all content is recorded/checked, the company said. Over time, users will be able to create custom discussion rooms, set up their creator accounts and chat.

Paytm Money opens new Technology Development Centre in Pune

Community calendar

Varun Sridhar, CEO of Paytm Money, said, “Paytm Money was a natural choice for the Beta launch of Paytm Wealth Community, given our direct access to the broad investment community and reach across India. The Paytm team has implemented cutting edge video & community technology ensuring the platform is seamless, and the user communication is safe and secure. We are very excited by the potential positive impact it will have on how users engage, learn and invest.”

Users who have received access to the Paytm Wealth Community can explore the community calendar, which lists out all upcoming sessions and their details on the Paytm Money app. They can also share sessions on various social media platforms. Other interested users can download or update their Paytm Money app to the latest version and follow Paytm Money on social media platforms to get access to the live session links.

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Wall Street revives dream of Bitcoin ETF with new SEC filing, BFSI News, ET BFSI

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For years, regulators have quashed hopes of a Bitcoin exchange-traded fund, citing worries about everything from market volatility and industry manipulation to thin liquidity. Just like Bitcoin itself, issuers keep fighting back.

VanEck Associates Corp. has started a new push to launch an ETF tracking the world’s largest digital currency, according to a filing Wednesday to the U.S. Securities and Exchange Commission. The VanEck Bitcoin Trust would reflect the performance of the MVIS CryptoCompare Bitcoin Benchmark Rate.

It’s a bold move for the New York-based firm. There have been multiple applications for crypto-tracking ETFs over the years, and the SEC has denied them all.

VanEck may be betting that a change in SEC leadership — with Jay Clayton stepping down as chairman — combined with Bitcoin’s growing adoption on Wall Street have improved the odds of regulatory approval, according to analysts.

“All indications from the SEC are that a bitcoin ETF still faces an uphill battle,” said Nate Geraci, president of the ETF Store, an investment advisory firm. “That VanEck has the confidence to file for a Bitcoin ETF might indicate some shifting viewpoints within the SEC. Clearly, a key to watch as this drama continues unfolding is who President Biden taps as SEC chair.”

VanEck’s filing comes in a week when Bitcoin has continued to set record highs. The world’s largest digital asset has advanced about 300% this year, catching the attention of some of Wall Street’s most famous investors, including Paul Tudor Jones, as well as mainstay firms like PayPal Holdings Inc.

While crypto fans see its rally continuing, many are also aware its high-profile surge could attract greater scrutiny. The new SEC chair may take a softer line than Clayton, but President-elect Joe Biden has nominated Janet Yellen as Treasury secretary. In the past she has described Bitcoin as a “highly speculative asset” and “not a stable store of value.”

“By filing now, it will restart the clock for a review when there will be new SEC membership and leadership,” said Todd Rosenbluth, director of ETF research for CFRA Research. “However, I think the SEC has made it clear they have concerns that need to be overcome.”

According to the filing, VanEck’s ETF plans to hold Bitcoin and will value its shares based on prices contributed by exchanges that MV Index Solutions GmbH believes represent the top five exchanges for the cryptocurrency.

Bitcoin was trading 0.3% lower at around $28,800 as of 7:49 a.m. in New York.

Such an ETF “could be taken as bullish for Bitcoin because it does broaden the universe of investors who could be aware of Bitcoin,” said Everett Millman, finance expert with Gainesville Coins.



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