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Active ETFs designed to outperform
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Why active ETFs are on track for $600bn by 2023
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Active ETFs: Ripple or Sea Change?
Levered and inverse ETFs prove popular
Profiting from volatility
Best of both worlds
Active ETFs attract assets
NAVIGATING HEADWINDS
A robust halfway house in market storms
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Once a binary choice between active and passive investment management, active ETFs promise investors the best of both worlds. With volatility spiking, the market is expanding to offer investors an array of ways to capture upside and mitigate downside risk.
THE RISE OF ACTIVE ETFs
Hear from our roundtable debate
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A fad or the future?
Interest and activity in the active ETF market is rising given the structure’s ability to marry the efficiency of ETFs with the opportunity to add alpha that active fund management brings. Regulatory developments have also stoked innovation and broadened the types of active ETF strategies being launched. What should asset allocators think about when considering active ETFs and what does the future hold for this space?
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We explore our extensive buy list data to reveal the favourite ESG funds among selectors
All investments involve risks, including possible loss of principal. This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. The value of investments and the income from them can go down as well as up and investors may not get back the amounts originally invested, and can be affected by changes in interest rates, in exchange rates, general market conditions, political, social and economic developments and other variable factors. Investment involves risks including but not limited to, possible delays in payments and loss of income or capital. Neither Franklin Templeton nor any of its investment managers guarantees any rate of return or the return of capital invested. Details on referenced advisor survey: ETF Trends and Franklin Templeton combined to ask advisors their opinions on active ETFs. Over 426 responses were collected and vetted from across the range of advisory firms in the final weeks of 2021. Respondents included 221 registered investment advisors, 31 institutions (asset managers, pensions, endowments, and insurance) 157 broker dealer representatives, and 17 wirehouse representatives. Franklin Templeton is not affiliated with ETF Trends. ETFs trade like stocks, fluctuate in market value and may trade at prices above or below the ETF’s net asset value. Brokerage commissions and ETF expenses will reduce returns. There is no guarantee that any strategy will achieve its objective. Franklin Templeton ETFs are not riskless investments, and investors can lose money. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. To obtain a summary prospectus and/or prospectus, which contains this and other information, talk to your financial professional, call us at (800) DIAL BEN/342-5236 or visit anklintempleton.com. Please carefully read a prospectus before you invest or send money. ©2022 Franklin Distributors, LLC. Member FINRA/SIPC. A Franklin Templeton affiliated company.
Indexed, or passively managed, exchange-traded funds (ETFs), have long dominated both assets and product proliferation within the industry landscape. Almost 30 years into this growth story, passive ETFs continue to experience a meteoric rise. For some context, consider that ETFs have now nibbled away at the US mutual fund space enough to have reached one-third its size. Our indicators show this trend continuing its steady upward trajectory and we project ETF market share should reach over 40% of mutual fund assets by the end of 2022.¹ While passive strategies make up 96% of the $7.2 trillion ETF pie, momentum among their active counterparts has been surging. In fact, 2021 marked the best year on record for active ETFs, which boasted $83 billion in net flows—a 42% increase from 2020.²
Pierre Caramazza
Head of US Product and Specialty Sales Franklin Templeton
As seen in the chart above, active ETFs experienced positive flows even amid periods of outflows for active mutual funds, indicating that there may be a distinct demand for them. Today, active ETF assets have risen to nearly $300 billion in the US, with the majority allocated to fixed income strategies. This proclivity is a nod to several regulatory and market structure changes that have resulted since the global financial crisis, which paved the way for fixed income ETFs. SURVEYING THE ACTIVE LANDSCAPE With such an explosive year of growth in the rearview mirror, last December presented an opportune time for us to step back and properly gauge advisor sentiment on active ETFs. Franklin Templeton collaborated with ETF Trends to collect more than 400 advisor opinions and outlooks in this space. While we expected to see some level of awareness and adoption, we found results to be overwhelmingly positive: • 69% of survey respondents currently use active ETFs, with over half stating they planned to increase allocations. • Of advisors who were not using active ETFs, 76% intend to use them in the future. As more advisors adopt active ETFs, we think manager capabilities and track record will be at the core of the conversation. We found that the responses from our survey lined up with this assumption when advisors ranked seven reasons for using active and passive ETFs by importance.
Todd Mathias, CFA
Head of US ETF Product Strategy & Development Franklin Templeton
Source: Morningstar. For U.S. domiciled ETFs only. As of December 31, 2021
On Active Duty: ETF vs. Mutual Fund Net Flows $ in billions.
1. Source: Morningstar. Data as of 12/31/2021. Projections calculated by applying historical compound annual growth rates to 2021 year-end figure. 2. Source: Morningstar. Data as of 12/31/2021
“Based on my conversations with clients, it’s clear they value our expertise and active insights. Being able to deliver that expertise in an ETF wrapper gives us a compelling edge. These survey results further substantiate that notion and highlight that the ETF industry has evolved beyond simply providing low-cost beta exposures. ETFs are no longer synonymous with passive investing - it’s a truly exciting time to be at the forefront of this movement to active ETFs.”
3. Source: ETF Flows Active ETF Advisor Survey. Conducted in December 2021 and sponsored by Franklin Templeton. 4. Source: ETF Flows Active ETF Advisor Survey. Conducted in December of 2021 and sponsored by Franklin Templeton.
THE LATEST ROLL-OUT: PRODUCT DEVELOPMENT TRENDS ETF issuers have been quick to respond to client demands for active solutions. Of all ETFs launched last year, 65% were active — compared with just 24% in 2016.³ Additionally, more traditional active providers are entering the ETF space. Mutual fund-to-ETF conversions are among the methods leveraged, and deemed beneficial, in part, as they allow managers to port over the attractive active mutual fund track records. Such conversions are tax-free for investors and let them harness the benefits of the ETF structure. Since 2020, about 30 of these conversions have been filed by some of the largest asset managers.⁴
“We are uniquely positioned to convert select mutual funds to ETFs that have delivered exceptional results. Rather than simply repurposing yesterday’s products, we've crafted our ETF platform with an eye to tomorrow, and seek to bring products to market that solve real client challenges. Our strategy remains focused on anticipating those challenges and listening to what clients tell us is important, such as full holdings transparency and competitive fees.”
Todd Mathias, Franklin Templeton’s Head of US ETF Product Strategy & Development
Pierre Caramazza, Head of US Product and Specialty Sales for Franklin Templeton
Among the newest offerings in an ETF structure are active non-transparent ETFs, or ANTs. ANT ETF holdings are not published daily, but the funds are traded intraday and provide the same opportunity for tax efficiency as typical ETFs. The jury is still out on how widely these new products may be adopted. Of the advisors we surveyed who use only fully transparent active ETFs, the top reasons cited for not using ANTS included lack of track record in the vehicle and the importance they place on daily transparency. RIPPLE OR SEA CHANGE? So what’s to say this recent buzz around active isn’t a mere ripple in the ETF universe? We see major industry tailwinds supporting the growth of active ETFs over the long term. Perhaps most pivotal was the Securities and Exchange Commission’s (SEC) approval of the “ETF Rule” in late 2019. This regulatory change was lauded for allowing asset managers to bring ETFs to market without certain costs and delays related to obtaining an exemptive order. The rule also explicitly states that there are no operational differences between active and index ETFs, allowing for basket flexibility not previously afforded to active funds. What’s more, market conditions have shifted recently and present a truly challenging investing environment. Clients are balancing the repercussions of pandemic recovery, the potential for rising rates, inflation concerns and ongoing geopolitical uncertainties. These factors have investors re-evaluating how to best position their portfolio and navigate current risks, including assessing which outcomes to pursue and which vehicles to employ. Having been at the forefront of active ETF product development and advocacy, our ETF experts at Franklin Templeton see the pace of change in the active ETF evolution as unprecedented. We believe our collection of industry-leading independent specialist investment managers positions us to provide clients with deep expertise and specialization in and across asset classes, investment styles, and geographies, offering diversified thinking on one shared ETF platform.
3. Source: Morningstar. Data as of 12/31/2021. 4. Source: ETFs in Pictures 2021 (etftrends.com)
Fund buyers:
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As investors face a variety of headwinds in 2022, active ETFs offer a robust halfway house capable of capturing upside and mitigating downside, writes Gareth Platt
Navigating headwinds
During the pandemic, there has been a dramatic swing of the pendulum between active and passive exchange-traded funds. In Europe, active ETFs increased by nearly 25% in the first half of 2021, and they have dominated the list of new arrivals on Wall Street in recent months. All told, nearly 60% of all ETFs launched over the last two years are active. This will certainly irk critics who view active ETFs as a fudge, a halfway house that fails to provide a clear pathway in either direction. To them, active ETFs offer relatively low returns, while still carrying unacceptable spreads and betas. However, many investors and commentators are now looking at the glass the other way up. Active ETFs are now seen by many as the best of both worlds: they carry lower fees and tax drags than comparable mutuals and there is no minimum investment, but they present a more alluring upside. Not all active funds will beat the market, but the potential for gains is higher when they do. Above all, they are flexible, empowering managers to make snap decisions at both the sector and security levels. In the context of the current market turbulence, this is crucial. ‘Actively managed ETFs can deliver the intentionality of active management through the benefit-rich ETF vehicle,’ says Bryon Lake, global head of ETF solutions at JP Morgan Asset Management in New York. ‘In 2022, where investors are challenged with a variety of headwinds, active ETFs are a great tool to navigate active markets.’ Headwinds remain It has been almost two years since Covid-19 rattled the markets to their foundations. On 12 March 2020, the FTSE 100 lost more than 10% of its value. Four days later, the Dow went even further, shedding nearly 13%. While it seems unlikely that we will witness a repeat any time soon – the omicron variant of Covid-19 has proven less disruptive than first feared and, with each passing week, the virus is being further assimilated into our daily life – the aftershocks continue. Witness the Nasdaq’s 15% drop in a single week at the end of January or the 26% selloff in Facebook on 3 February. And there is still the potential for a fresh jolt of turmoil. Aside from the ever-present specter of a fresh, vaccine-busting variant, there are other incognitos at play, many of them indifferent to the pandemic. Inflation has reached record levels in the eurozone and is nudging its highest peaks since the 1980s in the US. At the same time, the Federal Reserve continues to talk in gnomic terms about long-term interest rate policy, giving analysts little chance to predict which way the world’s most powerful economic policymaker will fall. Global public debt has reached a record high relative to GDP, so there is no telling how seismic the fallout from a rate hike would be. Freedom to adapt In this climate, active ETFs offer investors a blend of long-term security and short-term dexterity. Like their passive counterparts, active ETFs have benchmarks, but their managers are trying to beat these markers – not just track them. Managers can tweak the portfolio throughout the day, whether that be to ditch a stock that is plummeting or change the weighting to reduce exposure to a struggling asset class. For Harriet Ssentongo, a senior member of the ETF team at Franklin Templeton, active ETFs combine the benefits of the ETF wrapper – flexibility, liquidity, and often transparency – with the benefits of active management. They allow managers to adapt their portfolios: ‘To choose specific stocks or bonds and not be at the mercy of what an index does,’ she says. Ssentongo gives the example of fixed income. Here, an active ETF can mitigate the effects of rising interest rates by moving swiftly away from government debt towards investment-grade corporates, which carry lower debt burdens and whose default rate has been falling for months or it can tilt towards negative duration, meaning that prices rise in line with interest rates and can ride out sudden hikes. It is for reasons like these that active ETFs add value in a more uncertain environment, ‘where markets are not trending and volatility is being driven by a few idiosyncratic macro drivers’, says Sefian Kasem, a senior ETF investment strategist at HSBC Global Asset Management. ‘For example, monetary policy tightening will introduce material volatility into rate markets and, in all likelihood, passive exposure to fixed income securities may see substantial performance volatility. ‘An active ETF can add value under these circumstances if it is able to navigate this volatility and generate alpha along the way by capturing upside or mitigating downside.’ Range of options At the same time, the breadth of ETF solutions means there are havens for practically every type of circumstance and eventuality. Thanks to the explosion in demand for niche ETF products over recent months, investors can tap into volatility funds, inflation funds, even funds that hedged against interest rate hikes. A skilled active manager can easily mix and match these specialist products, blending passive portfolios together in an active way. ‘There are thousands of ETFs to play whichever strategy someone has, according to their views on various economic indicators,’ says Anthony Martin, cofounder of Rize ETF. ‘There is nothing in the ETF structure that specifically makes this possible, simply that ETFs now have such broad market coverage. ‘Whichever strategy you may have, there are ETFs to implement that strategy. Active strategies can be implemented with passive ETFs.’ Of course, ETFs are far from perfect. There are still issues around transparency, despite significant progress in this area, and some will argue that the flood of new entrants and the low barriers to entry will translate into lower returns for investors who get to the party later. However, there is little doubt that active ETFs provide a dynamic solution to the present uncertainty. Despite the progress made in tackling Covid and its attendant economic headaches over recent months, the exit from the woods remains some way off. In this context, a strategy that allows managers to make quick decisions and exploit value mismatches is highly welcome. Active ETFs may once have been derided, but this ‘halfway house’ is proving more robust with each headwind that crashes into its rafters.
Bryon Lake, JP Morgan Asset Management
Anthony Martin, Rize ETF
Footnotes ¹ National Academies of Sciences, Engineering, and Medicine, A Research Strategy for Ocean-based Carbon Dioxide Removal and Sequestration Washington, DC: National Academies Press, 2021. ² Dr. Sarah Kapnick, “The global carbon market: How offsets, regulations and new standards may catalyze lower emissions and create new opportunities,” J.P. Morgan Asset Management, October 14, 2021. ² The Carbon Negative Shot, unveiled in November 2021, is the U.S. government’s first major effort in carbon dioxide removal, based at the Department of Energy Office of Fossil Energy and Carbon Management. It calls for innovation in the expanding field as a key facet of achieving net-zero emissions by 2050. ⁴ Arame Tall, Sarah Lynagh, Candela Blanco Vecchi et al., “Enabling Private Investment in Climate Adaptation and Resilience: Current Status, Barriers to Investment and Blueprint for Action,” World Bank, March 2, 2021. 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What are the major influences of climate change that need to be addressed to meet? The world faces many challenges in reducing greenhouse gas emissions to net zero by 2050. One of these is demand; global energy demand is expected to have increased by 50% by that same net zero target year, which when coupled with a global population that is not expected to peak until 2060, presents the most daunting of these challenges. Given this increase in demand is inevitable, decarbonizing our energy is the key to attaining net zero; experts estimate that up to $140 trillion in investment is needed to achieve this. While most people know that energy production and consumption are major sources of the emissions causing climate change, other sources also need reduction.
Dr. Sarah Kapnick
Senior Climate Scientist & Sustainability Strategist, J.P. Morgan Asset & Wealth Management
What trends or solutions are emerging as companies address climate change solutions? Dr. Kapnick addresses the three Rs. The three Rs of climate investing: Reduce, remove and retrofit. Investors can participate in these three approaches through associated investment opportunities in traditional and emerging technologies. Reduce Emissions reduction, which includes the decarbonization of the energy supply, has been a major focus of climate investments. There are also less well-known opportunities to reduce energy demand and to transform other (non-energy) carbon-intensive processes. Decarbonization of the energy supply can be accomplished by accelerating renewable energy generation and storage. The deployment of these technologies can be further incentivized through regulation such as market-based Renewable Portfolio Standards for utilities, which increase the amount of clean energy. Reductions in energy demand can also decrease emissions (especially in the near term, before the power grid comes to rely on renewable sources) while reducing operating costs, making reductions economically desirable even absent climate considerations. Remove Carbon removal is necessary to reach net zero in situations where carbon-neutral substitutes are not available. Excess greenhouse gases can be removed (sequestered) from the atmosphere two ways—naturally and mechanically. Greenhouse gases can even be removed from the ocean, which absorbs CO2.¹ Carbon is naturally sequestered in trees, plants, soils and plankton. The mature forestry industry currently provides investible timber products.² Nonprofits, governments and private funders have supported the development of other nature-based removal projects (eg, soils, kelp, mangroves), but standards for verifying carbon removal are still evolving. The technology to lock carbon underground or within new materials is still nascent. The U.S. Department of Energy recently announced the Carbon Negative Shot, with the goal of reducing the cost of mechanical removal below $100 per ton of carbon or its equivalent (tCO2e).³ For perspective, a similar program was developed for solar more than a decade ago. The success of today’s solar industry suggests such actions can bear fruit over time. Retrofit The World Bank estimates that up to $500bn will be needed each year until 2050 to globally adapt to climate change. Yet even as adaptation requires upfront costs, it can lead to multiples of benefits from avoided damages.⁴ One example for potential investment opportunities is the built environment. Investments are needed to protect against damage from climate extremes and to allow for continuous operations. Due to their multi-decade lifetimes, buildings and infrastructure need to be built or retrofitted to withstand the climate of the future, in addition to climate change that has already happened. What are the trends in sustainable investing and what should investors consider when investing in climate change solutions? Bryon Lake addresses the ESG opportunities. ESG and climate change investing exists on a spectrum. There are a broad range of businesses that are changing how they do business to respond to challenges associated with climate change. There are several ways investors can approach climate change investing; opportunities exist in investing in startups seeking venture funding for innovations involving a higher risk of technological failure but potentially higher returns. Other more mature options have longer track records with lower return profiles. In addition to direct investing, there are several ways to gain exposure to climate change solutions either through an ESG integrated approach that provides broad market exposure with a more sustainable outcome or through the investment in a thematic portfolio that provides access to a particular sustainable theme. Within the exchange-traded fund (ETF) investment vehicle, Sustainable Thematic Investing is an emerging trend that is growing exponentially. Why is active management important for sustainable investing? The move towards a more sustainable future touches every single industry, creating a large universe of starting points for companies. With this, a nuanced approach is needed – you can’t just set up a simple rule or screen to include or exclude names from an index. Active engagement with portfolio companies is necessary to monitor industry trends and company evolution. Having a human behind fundamental research to evaluate each name and understand what each company is trying to accomplish to address climate change challenges, that’s where active management is critical, and goes beyond passive limitations. As investors are looking for exposures in the sustainable space, we find that the active transparent approach delivers the ability for investors to see and understand the holdings and what they own. Here at J.P. Morgan Asset Management, we have launched our first sustainable active ETF in the US: The JPMorgan Climate Change Solutions ETF (NYSE Ticker “TEMP”). With TEMP, we take an active approach to portfolio construction that is designed by data and refined by research. First, we utilize artificial intelligence and big data to uncover companies most exposed to climate change solutions. From there we are able to leverage a combination of fundamental and sector-specific insights and develop a high conviction portfolio of approximately 100 stocks investing in companies that are developing the solutions required to address climate change.
Bryon Lake
Global Head of ETF Solutions, J.P. Morgan Asset Management
Source: Climate Watch, World Resources Institute; data as of 2016. Direct industrial processes include cement (3%), chemicals and petrochemicals (2.2%). Energy use in industry includes mining and quarrying, construction, textiles, wood products and transport equipment (such as car manufacturing). Data is latest available; global granular sectoral composition is not updated regularly.
Investors have a role in helping to slow, stabilize, potentially reverse – or adapt to some inevitable – climate change. We asked Dr. Sarah Kapnick, J.P. Morgan Asset Management’s Senior Climate Scientist & Sustainability Strategist, and J.P. Morgan Asset Management’s Global Head of ETF Solutions Bryon Lake for their thoughts on investing for real change.
How can I invest for climate change?
ACTIVE ETFs ATTRACT ASSETS
Envestnet PMC expects most active mutual fund assets to move into the more efficient active ETF structure over the next decade. ‘Active ETFs have proven to be a superior investment vehicle to mutual funds for most investment strategies due to their lower cost structure, tax efficiency and ability to trade intra-day,’ says Tim Clift, its Boston, Massachusetts-based chief investment strategist. He reckons that after more than a decade of rising markets and embedded gains, tax efficiency has become a top priority for investors: ‘The “in-kind” feature of ETFs can make them dramatically more tax-efficient than mutual funds.’ In addition, cost pressures will continue to drive assets toward cheaper options. ‘We see tax and cost efficiencies as increasingly important to advisors, making active ETFs a crucial building block for portfolio management as we move forward in an environment where every basis point counts.’ Envestnet uses a handful of active ETFs, primarily when seeking exposure to fixed income markets. ‘Fixed income managers are less concerned with transparency issues, and there are more choices with longer track records,’ Clift says. As more active ETFs are launched, he expects a greater percentage of Envestnet’s assets under management to move into both active and passive ETFs. The company plans to launch several proprietary active ETF strategies this year, which it intends to use as core holdings in some of its model portfolios. ‘While many active managers, especially equity managers, have been slow to adopt active ETFs because of transparency issues, the approval of semi- and non-transparent ETFs makes the issue go away,’ he adds. Approved by the Securities and Exchange Commission in 2019, these allow fund managers to keep the content of their ETF portfolio hidden day-to-day, reporting it as infrequently as every month or quarter.
As choice in the active ETF space grows, investors are increasingly seeking to benefit from the best of both worlds, as Jennifer Hill discovered when she spoke with three fund buyers
TIM CLIFT
ENVESTNET PMC
Symmetry Partners in Glastonbury, Connecticut, is considering using active ETFs for emerging market (EM) equity exposure. The MSCI USA index returned an annualized 16.69% in the 10 years to the end of 2021, while the MSCI Emerging Markets index returned just 4.53%. ‘After years of being outpaced by the US market, emerging equities are attractively priced,’ says its chief investment strategist, John McDermott. He favors active ETFs that focus on systematically investing in small- to mid-cap, value and more profitable companies than their EM benchmark. ‘Value and small- and mid-cap stocks globally have also suffered through tough times in the last decade,’ he says. ‘As a result, the value spread – the difference in P/E [price-to-earnings ratios] between value and growth companies – is near an all-time high in emerging markets. ‘Put simply, emerging equities, especially small and mid-cap value stocks, are historically cheap. Overweighting higher profitability stocks in the EM value asset class avoids investing in cheap companies that deserve to be cheap.’ He likes the Dimensional Emerging Core Equity Market ETF (DFAE) and the Avantis Emerging Markets Value ETF (AVES). Both are well-diversified across a range of emerging countries. AVES is decidedly smaller with a weighted average market capitalization of $8.5bn compared with $107bn and holds fewer securities (around 900 compared with 2,000). Crucially for McDermott, both are competitively priced (35-36 basis points) and trade reasonably well (with a median spread of 12-14 basis points). ‘Active ETF offerings are particularly attractive for taxable investors to avoid the taxation that arises from portfolio turnover in an active strategy while also avoiding the embedded capital gains in mutual fund offerings. ‘The opportunity to invest in emerging value stocks has never been more attractive and active ETFs provide a great vehicle to gain the exposure in a highly tax-efficient and low-cost manner.’
JOHN McDERMOTT
SYMMETRY PARTNERS
While recognizing that the active part of the ETF universe is still developing and is limited in choice relative to the mutual fund universe, Rhame & Gorrell Wealth Management uses several of the available solutions. ‘ETFs in general tend to provide several advantages when compared to mutual funds,’ says David Hunter, chief investment officer of the firm based in The Woodlands, Texas. ‘They often skew lower in expense ratios, are frequently more tax-efficient and provide more liquidity. ‘While the active management side of the ETF investment universe has yet to develop the depth of options available in the mutual fund space, we have and do utilize some of the solutions.’ Within fixed income, it uses the First Trust TCW Opportunistic Fixed Income ETF (FIXD) as part of its core exposure to the aggregate fixed income market. Another fund it has used in this space is the Fidelity Total Bond ETF (FBND). ‘Both funds have been an effective way for us to gain exposure to the core fixed income market while providing the potential for active management to produce risk-adjusted returns in excess of the benchmark,’ says Hunter. The firm has also previously used municipal bond active ETFs, such as the JPMorgan Municipal ETF (JMUB) and the First Trust Managed Municipal ETF (FMB). It does not currently use any active ETFs for core equity exposure. However, it does use an active beta strategy in the domestic large-cap equity space, namely the Goldman Sachs ActiveBeta US Large Cap Equity ETF (GSLC). It has also used the JPMorgan Equity Premium Income ETF (JEPI) as a supplement to high-yield and unconstrained fixed income strategies. ‘It has done the job of boosting the income yield of the portfolio and providing equity exposure in a less volatile manner,’ adds Hunter.
DAVID HUNTER
RHAME & GORRELL WEALTH MANAGEMENT
Why Active ETFs Are on Track for $600B by 2023
Footnotes ¹ Bloomberg Finance L.P., as of December 31, 2021, based on SPDR Americas Research calculations. ² Bloomberg Finance L.P., as of December 31, 2021, based on SPDR Americas Research calculations. ² Bloomberg Finance L.P., as of December 31, 2021, based on SPDR Americas Research calculations. ⁴ Bloomberg Finance L.P., as of December 31, 2021, based on SPDR Americas Research calculations. ⁵ Bloomberg Finance L.P., as of December 31, 2021, based on SPDR Americas Research calculations. ⁶ Bloomberg Finance L.P., as of December 31, 2021, based on SPDR Americas Research calculations. Growth rate is derived from flows as percent of start-of-year assets. ⁷ Bloomberg Finance L.P., as of December 31, 2021, based on SPDR Americas Research calculations ⁸ Bloomberg Finance L.P., as of December 31, 2021, based on SPDR Americas Research calculations ⁹ Bloomberg Finance L.P., as of December 31, 2021, based on SPDR Americas Research calculations ¹⁰ Bloomberg Finance L.P., as of December 31, 2021, based on SPDR Americas Research calculations ¹¹ Bloomberg Finance L.P., as of December 31, 2021, based on SPDR Americas Research calculations ¹² Bloomberg Finance L.P., as of December 31, 2021, based on SPDR Americas Research calculations. Model includes a 10-year, 5-year, and 3-year lookback for both year-over-year asset growth and share of flows. Other factors are average 60-month and 36-month flows extrapolated based on today’s starting asset level. ¹³ Morningstar and Bloomberg Finance L.P., as of December 31, 2021, based on SPDR Americas Research calculations. ¹⁴ Morningstar, as of December 31, 2021, based on SPDR Americas Research calculations. ¹⁵ Morningstar, as of December 31, 2021, based on SPDR Americas Research calculations. ¹⁶ Morningstar, as of December 31, 2021, based on SPDR Americas Research calculations. ¹⁷ Morningstar, as of December 31, 2021, based on SPDR Americas Research calculations. ¹⁸ Morningstar, as of December 31, 2021, based on SPDR Americas Research calculations. Average manager in the peer category is 0.75%. Information Classification: General Important Risk Information All information is from SSGA unless otherwise noted and has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. The views expressed in this material are the views of Matthew Bartolini through the period ended December 31, 2021 and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. This communication is not intended to be an investment recommendation or investment advice and should not be relied upon as such. The trademarks and service marks referenced herein are the property of their respective owners. Third party data providers make no warranties or representations of any kind relating to the accuracy, completeness or timeliness of the data and have no liability for damages of any kind relating to the use of such data. The value of the debt securities may increase or decrease as a result of the following: market fluctuations, increases in interest rates, inability of issuers to repay principal and interest or illiquidity in the debt securities markets; the risk of low rates of return due to reinvestment of securities during periods of falling interest rates or repayment by issuers with higher coupon or interest rates; and/or the risk of low income due to falling interest rates. To the extent that interest rates rise, certain underlying obligations may be paid off substantially slower than originally anticipated and the value of those securities may fall sharply. This may result in a reduction in income from debt securities income. Actively managed ETFs do not seek to replicate the performance of a specified index. These investments may have difficulty in liquidating an investment position without taking a significant discount from current market value, which can be a significant problem with certain lightly traded securities. The Fund is actively managed and may underperform its benchmarks. An investment in the fund is not appropriate for all investors and is not intended to be a complete investment program. Investing in the fund involves risks, including the risk that investors may receive little or no return on the investment or that investors may lose part or even all of the investment Effective 2/26/21, the fund name has been changed from SPDR® Blackstone/GSO Senior Loan ETF to SPDR® Blackstone Senior Loan ETF. Effective 2/26/21, the Sub advisor name has been changed from GSO / Blackstone Debt Funds Management LLC to Blackstone Liquid Credit Strategies LLC. The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor. ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETF’s net asset value. Brokerage commissions and ETF expenses will reduce returns. Bonds generally present less short-term risk and volatility than stocks, but contain interest rate risk (as interest rates rise, bond prices usually fall); issuer default risk; issuer credit risk; liquidity risk; and inflation risk. These effects are usually pronounced for longer-term securities. Any fixed income security sold or redeemed prior to maturity may be subject to a substantial gain or loss. 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Concentrated investments in a particular sector or industry tend to be more volatile than the overall market and increases risk that events negatively affecting such sectors or industries could reduce returns, potentially causing the value of a Fund’s shares to decrease. Investing involves risk including the risk of loss of principal. The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA’s express written consent. Intellectual Property Information: Standard & Poor’s® , S&P® and SPDR® are registered trademarks of Standard & Poor’s Financial Services LLC (S&P); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones); and these trademarks have been licensed for use by S&P Dow Jones Indices LLC (SPDJI) and sublicensed for certain purposes by State Street Corporation. 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Active ETFs continued to flourish in 2021, with a record number of launches, flows, and the continuation of a 14-year streak of taking share away from passive ETFs within the US-listed ETF industry¹ — the inverse of the trend for active mutual funds. Performance trends have also been strong, most notably in fixed income. Combined with lower fees and improved tax efficiency versus active mutual funds, and a growing number of strategy types, active ETFs are likely to replace active mutual funds as the vehicle of choice when seeking to generate alpha within portfolios. 2021 Saw Record-Setting Flows Active ETFs witnessed record-setting flows in 2021, taking in $90 billion — 44% more than the 2020 record of $62 billion.² Flows were positive in every month and never dipped below $2 billion. In fact, active ETFs ended 2021 with 21 consecutive months of inflows.³ These flows were not the result of a few large funds getting larger either, as 86% of all active ETFs had inflows in 2021 — a higher participation rate than the rest of the US-listed ETF industry (72%).⁴ It is also the highest participation rate for active ETFs in a calendar year. This depth trend is reinforced by the fact that the active strategy with the most flows (+$6.8 billion), our SPDR Blackstone Senior Loan ETF [SRLN], was the 22nd largest active fund at the start of 2021.⁵ After witnessing a 304% growth rate, it ended the year as the fourth largest active ETF overall.⁶ Its trading volume grew by 188%, trading over $20 billion on the year,⁷ as its usage as a credit market liquidity tool increased – just one example of an expanding portfolio use case for active ETFs. The flows were tilted more heavily towards equity, seeing 50% of flows, while fixed income strategies garnered 37%. This is a shift from the early phase of the active ETF market, when many of the flows and assets were skewed towards fixed income. In fact, last year was the first time since 2014 where equity had more inflows than fixed income, as shown below. Interestingly, and evidence of expanding use cases and strategy types, the “other” category within active ETFs has steadily grown. In 2021, the “other” category took in its highest flows ever in a calendar year, accounting for 13% of all active flows even though they made up just 3% of all active ETF assets to start the year.⁸ Active ETF Flows by Asset Class ($ Billions)
The consistent and persistent inflows have pushed total assets to a record high, with active ETFs ending the year with $292 billon.⁹ But not all of the flows or assets went to established strategies. There were 466 funds launched in 2021; 306 (or 66%) were active.¹⁰ Both the number and percent of all launches are a record for active ETFs. Those new funds had $20 billion of inflows and ended the year with $62 billion of assets, given the number of conversions that took place which do not register as “new” fund flows.¹¹ With such growth, and broader usage, the potential for active ETFs to surpass $400 billion in assets by the end of 2022 is a real possibility. Based on an eight-factor trend model, our projection for active ETF assets by the end of 2022 is $420 billion, with assets increasing to over $600 billion by 2023.¹² Inverse Trends for ETFs and Mutual Funds Every year for the last 15 years, active ETFs have had inflows, and they are currently on a 21-month streak of consecutive inflows.¹³ Meanwhile, active mutual funds have been trending in the opposite direction, seeing outflows every year since 2015 and outflows in 12 of the last 14 years.¹⁴ Given this trend, active mutual funds now make up 73% of the mutual fund market, down from 88% ten years ago. Conversely, active ETFs have grown their market share over this time period. Ten years ago they made up a scant 0.40% of the US-listed ETF industry and are now 5%, as shown below. Active ETF Market Share on the Rise
Matthew J Bartolini, CFA
Head of SPDR Americas Research, State Street Global Advisors
Source: Bloomberg Finance L.P., as of December 31, 2021. Other category contains Commodity, Specialty, Alternative and Mixed Allocation funds. Past performance is not a reliable indicator of future performance.
Source: Morningstar as of December 31, 2021. Past performance is not a reliable indicator of future performance.
Some of this growth is a result of an increase in choice, as ten years ago there were only 68 active ETFs spread across 37 Morningstar categories. Now there are nearly 800 funds spanning 83 different Morningstar categories.¹⁵ Beyond the increase in choice, there are also structural elements of the ETF construct that have led to greater interest than in their mutual fund counterparts — a “structural alpha” effect — as a result of noticeably lower fees and improved tax efficiency: - Fees: The average active ETF has a 0.71% expense ratio versus 0.90% for active mutual funds.¹⁶ - Cap Gains: Over 66% of active mutual funds paid capital gains last year, compared to just 19% for active ETFs.¹⁷
Source: Morningstar, as of December 31, 2021. Past performance is not a reliable indicator of future performance. Based on the excess return of each fund within the Equity and Fixed Income Morningstar category compared to the fund’s listed prospectus benchmark.
State Street SPDR Active ETF Solutions Our suite of 12 transparent active ETFs harnesses the structural components of the ETF market and wrapper while blending our in-house expertise with skilled sub-advisory relationships. And with an average fee of 50 basis points, our suite has a fee that is 32% below that of the average fee within each of the fund’s peer Morningstar category.¹⁸ The suite covers a diverse selection of strategies, whether investors seek to build a portfolio for risk management, packaged tactical asset allocation, alpha or income generation within specific market segments and asset classes. SPDR Suite of Active ETFs
There is also the potential for performance-related alpha, in addition to the “structural alpha” generated by active ETFs. The return alpha is most apparent within fixed income, as the median excess return for active bond ETF managers over the last 1-, 3-, and 5-year periods is above that of the median active bond mutual fund manager. The percentage of managers outperforming their benchmark over each one of those periods is also greater for active bond ETFs than active bond mutual funds, as shown in the next chart. The underlying category makeup is not an apples-to-apples comparison, but the larger point of not having to sacrifice on performance when using an active ETF holds. ETFs See Higher Excess Returns Across a Larger Percentage of Funds
Market volatility is back, and with it comes an interest in levered and inverse exchange-traded funds. This niche category of ETFs is designed to give traders tools to make directional bets on the broad market, specific themes, or specific funds. ProShares Ultra S&P500 (SSO), for example, gives investors two-times daily long exposure to the S&P 500. On the other side, the ProShares UltraShort S&P500 (SDS) will give two-times daily short exposure to the S&P 500. These funds are meant to be held over the very short term – in some cases just a day – as part of a directional view on markets or as a hedging strategy. Other thematic versions of these funds are designed to do the same thing as SSO or SDS but with a specific sector or set of stocks. Other funds, such as the Tuttle Capital Short Innovation ETF (SARK), allow investors to short a specific fund, in this case, ARK Invest’s ARK Innovation ETF (ARKK). Designed for those who think disruptive innovation is overbought, SARK attempts to achieve the inverse (-1x) of the return of ARKK for a single day. As market volatility increases, there are more opportunities to take directional views on the broad market or a specific theme. For savvy traders, the bets can sometimes pay off, as they did in January. For traders who used bear-shares levered funds during the January selloff, the drop was positive. ETF issuer Direxion’s Daily S&P 500 Bear 3X ETF (SPXS) ended the month up almost 16%, while the S&P 500 lost more than 5% during its worst start to the year since January 2009. Ben Johnson, director of global ETF research at Morningstar, reckons this year will be a year for increased asset flows into levered/inverse ETFs if January is any indication. ‘Historically, we have seen an uptick in flows to these funds when things get tough in the market or when there is just more going on,’ he says. ‘There is more money to be made during volatile markets. But there is also greater risk.’ If bet the right way – bullish or bearish – levered/inverse ETFs can double or triple the initial investment. But the catch is, if bet the wrong way, the investment loses by the same margin. The mitigating factor is meant to be that the wins or losses are only for a single day, or a handful of days if the funds are held for longer. New variations Issuers have responded to the uptick in demand for levered and inverse ETFs by offering more variations. These new funds reflect investor interest in thematic ETFs. In January, Direxion launched Direxion Daily FinTech Bull 2X Shares (FNTC), an ETF that takes a levered long position on an index of companies in the fintech and decentralized finance sectors. At the same time, it also launched Direxion Daily Oil Services Bull 2X Shares (ONG), which provides levered long exposure to an index of oil services companies. Both funds play on themes that have been popular with investors during the past year. David Mazza, managing director and head of product for Direxion, says investor interest has driven the expansion but believes it is unlikely that levered thematic funds will grow to the same extent as unlevered ones. ‘It’s important that the underlying index of companies is liquid enough to support a levered fund,’ he says. ‘These funds are rebalanced and traded on a daily basis, so whatever the theme, [the market] has to be able to support that.’ Direxion and ProShares are the two oldest issuers in the space, but there are also a few new issuers. In addition to its SARK fund, boutique issuer Tuttle Capital offers the Short De-SPAC ETF (SOGU), a fund that offers the inverse daily performance of its De-SPAC ETF (DSPC), a passive index that tracks 25 US-listed stocks that have gone public as the result of a merger with a special purpose acquisition company. ETF Managers Group, another boutique issuer, has launched a leveraged cannabis ETF, ETFMG 2x Daily Alternative Harvest ETF (MJXL), which provides two-times exposure to its Prime Alternative Harvest index, which compiles cannabis companies. Despite recent launches, Morningstar’s Johnson thinks this part of the market will remain somewhat small, not only because of liquidity requirements. ‘Most of the real estate in this area has already been taken up by Direxion and ProShares,’ he says. ‘When you see new issuers come in, they’re growing at the margins.’ As with other parts of the ETF universe, new issuers that can hit on a specific hot theme at the right moment may end up faring best against established rivals. Recalibrations ahead The combination of increased interest and new thematic funds could set up a big year for levered/inverse ETFs. Direxion’s Mazza says traders and individual investors are thinking through how to allocate portfolios in response to recent changes in market conditions. ‘There's a question about whether we’re entering a new market regime,’ he says. ‘We have seen increased asset flows into our bearish funds, for example. ‘Other areas, like our semiconductor funds, have seen increased activity given how the situation has changed for those stocks in recent months. I think we’re going to see traders recalibrating their views more frequently throughout this year than they might have in the past.’
Levered and inverse ETFs have grown in popularity in recent months as investors seek to capitalize on market volatility, finds Bailey McCann
Ben Johnson, Morningstar
David Mazza, Direxion
Active ETFs Designed to Outperform
This ETF is different from traditional ETFs. Traditional ETFs tell the public what assets they hold each day. This ETF will not. This may create additional risks for your investment. For example: – You may have to pay more money to trade the ETF’s shares. This ETF will provide less information to traders, who tend to charge more for trades when they have less information. – The price you pay to buy ETF shares on an exchange may not match the value of the ETF’s portfolio. The same is true when you sell shares. – These price differences may be greater for this ETF compared to other ETFs because it provides less information to traders. These additional risks may be even greater in bad or uncertain market conditions. – The ETF will publish on its website each day a “Proxy Portfolio” designed to help trading in shares of the ETF. While the Proxy Portfolio includes some of the ETF’s holdings, it is not the ETF’s actual portfolio. The differences between this ETF and other ETFs may also have advantages. By keeping certain information about the ETF secret, this ETF may face less risk that other traders can predict or copy its investment strategy. This may improve the ETF’s performance. If other traders are able to copy or predict the ETF’s investment strategy, however, this may hurt the ETF’s performance. For additional information regarding the unique attributes and risks of the ETF, please see the fund’s prospectus.
T. Rowe Price active strategies have a compelling long-term track record. Regardless of the market environment, we seek to deliver strong performance through our research and insight. T. Rowe Price Active ETFs give investors the benefits of exchange-traded funds (ETFs) they may prefer, while also offering the potential for outperformance that they deserve. Our Active ETFs benefit from the same investment management expertise that our actively managed funds do, as well as the advantages that an exchange-traded fund structure provides. The Well-Known Benefits of ETFs:
Tim Coyne
Head of Exchange Traded Funds, T. Rowe Price
ETFs Designed to Outperform When investors use passive investments, they are at the whim of the market. Whether a passive investment is tied to a specific sector or broad index, by definition, there is no objective to outperform. And in market downturns, passively managed ETFs also have no discretion to make adjustments. Unlike passive strategies, active management has the ability to adapt to changing market environments. T. Rowe Price Active ETFs seek to achieve outperformance beyond indexes through the added value of our investment expertise and deep research capabilities. And in challenging markets, we can take a more defensive approach when needed. None of this is possible with the limitations of passively managed ETFs. T. Rowe Price’s Active ETFs build upon a tradition of innovation. We have long believed that we could deliver the benefits of our core “product”—thoughtful fundamental research and a long-term perspective—in the form of an ETF. Active ETFs are the latest “wrapper” that enables us to package this expertise, for clients who may prefer the ETF vehicle.
For more information, please call 1-877-561-7670 or visit troweprice.com.
Consider the investment objectives, risks, and charges and expenses carefully before investing. For a prospectus or, if available, a summary prospectus containing this and other information, visit troweprice.com. Read it carefully. T. Rowe Price ETFs publish a daily Proxy Portfolio, a basket of securities designed to closely track the daily performance of the actual portfolio holdings. While the Proxy Portfolio includes some of the ETF’s holdings, it is not the actual portfolio. Daily portfolio statistics will be provided as an indication of the similarities and differences between the Proxy Portfolio and the actual holdings. The Proxy Portfolio and other metrics, including Portfolio Overlap, are intended to provide investors and traders with enough information to encourage transactions that help keep the ETF’s market price close to its NAV. There is a risk that market prices will differ from the NAV. ETFs trading on the basis of a Proxy Portfolio may trade at a wider bid/ask spread than shares of ETFs that publish their portfolios on a daily basis, especially during periods of market disruption or volatility, and, therefore, may cost investors more to trade. The ETF’s daily Proxy Portfolio, Portfolio Overlap, and other tracking data are available at troweprice.com. Although the ETF seeks to benefit from keeping its portfolio information confidential, others may attempt to use publicly available information to identify the ETF’s investment and trading strategy. If successful, these trading practices may have the potential to reduce the efficiency and performance of the ETF. ETFs are bought and sold at market prices, not NAV. Investors generally incur the cost of the spread between the prices at which shares are bought and sold. Buying and selling shares may result in brokerage commissions, which will reduce returns. This material is provided for general and educational purposes only. This material does not provide recommendations concerning investments, investment strategies, or account types. It is not individualized to the needs of any specific investor and not intended to suggest any particular investment action is appropriate for you nor is it intended to serve as the primary basis for investment decision-making. T. Rowe Price Investment Services, Inc., its affiliates, and its associates do not provide legal or tax advice. Any tax-related discussion contained in this material is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax penalties or (ii) promoting, marketing, or recommending to any other party any transaction or matter addressed herein. Please consult your independent legal counsel and/or tax professional regarding any legal or tax issues raised in this material. All investments are subject to market risk, including the possible loss of principal. Active investing may have higher costs than passive investing and may underperform the broad market or passive peers with similar objectives. Passive investing may lag the performance of actively managed peers as holdings are not reallocated based on changes in market conditions or outlooks on specific securities. T. Rowe Price Investment Services, Inc. © 2021 T. Rowe Price. All Rights Reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the Bighorn Sheep design are, collectively and/or apart, trademarks of T. Rowe Price Group, Inc. CCON0089125 202108-1737327
We offer three ETFs modeling our popular flagship fixed income strategies
A Proprietary Process That Helps Protect Investors Many ETFs publish a daily list of their full holdings. This information is used to accommodate the institutional investors known as authorized participants and market makers who help to maintain orderly market prices. With index-based strategies, the display of daily holdings is somewhat irrelevant since most index holdings are already widely known. In the best interests of shareholders, active investment managers like T. Rowe Price often keep their holdings and real-time trading activity confidential. This is done to prevent outside investors and competitors from using the information in a way that may be detrimental to performance. By working directly with the regulators and exchanges, we developed a proprietary process that safeguards our daily investment decisions while still allowing accurate pricing of our active equity ETFs and we were able to do this without disrupting the existing ETF market process. Our Commitment Our decision to begin offering these new solutions reflects our ongoing desire to meet the changing needs of investors. For clients seeking returns that go beyond the limitations of following an index, T. Rowe Price is committed to offering a different kind of exchange-traded fund: one that combines the control of ETF investing with the additional edge our strategic investing approach can deliver. We plan to continue our innovation to provide investment strategies to help clients feel confident in reaching their goals. We offer five ETFs modeling our popular flagship equity strategies:
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You may not directly or indirectly change, edit, add to or produce summaries of or derivative works from Feed Content or any content on the Citywire website nor place any full-story Citywire content in an HTML (or any other markup language) frame-set. 5.5 You may not directly or indirectly suggest any endorsement or approval by Citywire of your website or any non-Citywire entity, product or content or any views expressed within your website or service. 5.6 You acknowledge that Citywire has absolute editorial control over all Content and you accept that Citywire is editorially independent and that the editorial integrity of Content is the sole responsibility of Citywire. 5.7 Should you receive any enquiries which relate to Citywire or the Citywire Content you shall promptly refer such enquiries to Citywire. 5.8 You acknowledge and agree that we own all rights of whatever nature in and to the App. Citywire grants you a non-transferable, non-sublicensable, royalty-free, non-exclusive limited licence to (i) download the App to your device from the app store where it is lawfully held; and (ii) use the App for the purpose of accessing our Site on these Terms. You are granted no other rights in relation to the App and all rights not expressly granted are reserved by us. You acknowledge and agree that Citywire has no responsibility for or in relation to the app store from which you downloaded the App and has no obligation to maintain the App. The App is supplied ‘as is’ and neither Citywire nor any anyone else makes any representation, warranty, condition or other commitment (whether express or implied, by statute, common law, collaterally or otherwise) of any kind in relation to the App. Neither Citywire nor anyone else will have any liability of whatever nature (whether in contract, negligence or other tort or otherwise) in relation to the App. You will not reverse engineer, decompile or otherwise endeavour to obtain the source code to the App (save to the extent that you cannot be prohibited from so doing under applicable law). 6. Contributions 6.1 Whenever you make any Contribution you must comply with the Content Standards. 6.2 Subject to these terms of use, Citywire acknowledges and agrees that you retain ownership of all your intellectual property rights to your Contributions, and no intellectual property rights shall be assigned from you to Citywire. 6.3 You grant Citywire a perpetual, royalty-free, non-exclusive, perpetual (which for the avoidance of doubt means continuing after this Agreement), irrevocable, transferable, world-wide licence to use, copy, distribute, display, disclose and sell to third parties any Contribution (in whole or in part) for any purpose. These activities include but are not limited to editing or creating derivative works of any Contribution. 6.4 To the maximum extent permitted by applicable law, you irrevocably and unconditionally waive all moral rights to any Contribution. 6.5 You acknowledge and agree that (i) we have the right to remove or edit any Contribution you make on our services, including modifying and adapting it for operational and editorial reasons, with or without showing or marking that the Contribution has been removed or edited; and (ii) we have the right to disclose your identity to any third party who is claiming that any Contribution constitutes a violation of their intellectual property rights, or of their right to privacy. 6.6 Citywire does not moderate or actively review Contributions. Therefore all Members and visitors to the Site should treat any Contributions with caution. You accept (i) that we are not responsible for content of Contributions; (ii) that we do not endorse any of the material contained in them; and (iii) Citywire does not check the accuracy of information supplied by Members in their profiles. 6.7 It is the policy of Citywire to respond to alleged infringement notices that comply with the Digital Millennium Copyright Act (“DMCA”). If you believe that your copyrighted work has been copied in a way that constitutes copyright infringement and is accessible via the Solution, please notify the Citywire copyright agent as set forth below. For your complaint to be valid under the DMCA, you must provide the following information in writing: a. An electronic or physical signature of a person authorized to act on behalf of the copyright owner; b. Identification of the copyrighted work that you claim has been infringed; c. Identification of the material that is claimed to be infringing and provide a link (where available) to where it is located on the Solution; d. Information reasonably sufficient to permit Citywire to contact you, such as your address, telephone number, and, email address; e. A statement that you have a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or law; and f. A statement, made under penalty of perjury, that the above information is accurate, and that you are the copyright owner or are authorized to act on behalf of the owner. The above information must be submitted to the following Citywire copyright agent: Ona Kviliute +44 (0)20 7840 5125 okviliute@citywire.co.uk 3 Spring Mews, London, SE11 5AN, United Kingdom UNDER FEDERAL LAW, IF YOU KNOWINGLY MISREPRESENT YOUR CLAIM, YOU MAY BE SUBJECT TO CRIMINAL PROSECUTION FOR PERJURY AND CIVIL PENALTIES, INCLUDING MONETARY DAMAGES, COURT COSTS, AND ATTORNEYS’ FEES. In accordance with the DMCA and other applicable law, Citywire has adopted a policy of terminating, in appropriate circumstances, the accounts of users who are deemed to be infringers. Citywire may also, at its sole discretion, limit access to the Site and/or terminate the accounts of any users who infringe any intellectual property rights of others, whether or not there is any repeat infringement. 7. Acceptable Use Policy 7.1 You may use our Site only for lawful purposes. You may not: (i) use our Site in any way that breaches any applicable local, national or international law or regulation; (ii) use any materials, data or information which you have obtained from the Site in any manner which, in Citywire’s reasonable opinion, is derogatory, damages Citywire’s reputation or takes advantage of it in any way; (iii) use our Site in any way that is unlawful or fraudulent, or has any unlawful or fraudulent purpose or effect; (iv) use our Site to send, knowingly receive, upload, download, use or re-use any material which does not comply with the Content Standards; (v) subject to Clause 5, deep-link to any portion of our Site for any purposes without the prior written permission of Citywire; (vi) perform any automated use of our Site, such as, but not limited to, using robots, spiders, scripts to create Contributions, to extract any of the content of our Site through such means as ‘screen scraping’, ‘database scraping’ or otherwise; (vii) violate the restrictions in any robot exclusion headers on this website or bypass or circumvent other measures employed to prevent or limit access to our Site; (viii) use this service as research or support for, or to inform your own or your company’s or employer’s subscription based service, or any subscription based service without obtaining a licence from Citywire in writing, such licence to be on commercial terms agreed by the parties; (ix) use our Site (or any of the Content) for the purpose of building a database or to use this for your own commercial exploitation by its inclusion in your own activities and/or services without obtaining the written approval of Citywire in advance of its publication; (x) access, use, or distribute the Site, App (or any Content) to develop (or assist any third party in developing) a product or service (including events) that competes with any product, service, or event of Citywire, or for any other competitive purposes. (xi) interfere with, disrupt, or create an undue burden on our services or the network or services connected to our Site; (xii) engage in, either directly or indirectly, or encourage others to engage in, click-throughs generated through any manner that could be reasonably interpreted as coercive, incentivised, misleading, malicious, or otherwise fraudulent; (xiii) collect information from our Site and incorporate it into your own database or products; or (xiv) use our services to knowingly transmit any data, send or upload any material that contains viruses, Trojan horses, worms, time-bombs, keystroke loggers, spyware, adware or any other harmful programs or similar computer code designed to adversely affect the operation of any computer software or hardware. 7.2 Use of the Printable Version facility is for private purposes only EXCEPT ONLY In the case of financial intermediaries, wealth managers or other entities or individuals providing investment advice to clients the printable version can be used to aid such services. 8. Content standards 8.1 These content standards apply when you make a Contribution to the Site. These content standards apply to each part of any Contribution as well as to its whole. 8.2 Contributions must: (i) be accurate (where they state facts); (ii) be genuinely held (where they state opinions); and (iii) comply with applicable law, rules and regulations, in the U.S. and in any country from which they are posted. 8.3 Contributions must not: (i) infringe or promote infringement of any copyright, database right, trade mark or other intellectual property right of any other person (including, promoting or offering pirated computer programs or links to such programs, information used to circumvent manufacturer-installed copy-protect devices, including serial registration numbers for software programs, rights management information or any type of cracker utilities); (ii) contain intentionally made false or misleading statements; (iii) offer to buy, sell or broker an investment; (iv) violate applicable laws, rules or regulations, including without limitation, rules or regulations of any applicable stock exchange or breach insider dealing regulations or confidentiality agreements; (v) involve commercial activities and/or sales without prior written consent from us such as contests, sweepstakes, group-buying, advertising, or pyramid schemes; (vi) be made in breach of any legal duty owed to a third party, such as a contractual duty or a duty of confidence; (vii) contain any material or link to material which: a. is defamatory of any person; b. is obscene, vulgar offensive, hateful or inflammatory; c. is likely to harass, upset, embarrass, alarm or annoy any other person; d. is threatening, abusive or invade another’s privacy, or likely to cause annoyance, inconvenience or needless anxiety; e. contains or promotes sexually explicit material or violence; f. promote discrimination based on race, sex, religion, nationality, disability, sexual orientation or age; or g. is likely to deceive any person; (viii) use invalid or forged headers to disguise the origin of any Contribution, or otherwise misrepresenting yourself or the source of any Contribution; (ix) use our Site to transmit, or procure the sending of, any unsolicited or unauthorised advertising or promotional material or any other form of similar solicitation (spam); (x) be used to impersonate any person, or to misrepresent your identity or affiliation with any person; (xi) give the impression that they emanate from Citywire or a Citywire employee, administrator or moderator, or another user of our Site; or (xii) advocate, promote or assist any illegal activity. 9. Non-reliance 9.1 You agree that you are responsible for your own investment decisions and that you are responsible for assessing the suitability and accuracy of all information and for obtaining your own advice thereon. You recognise that any information given on our Site is not related to your particular circumstances. Circumstances vary and you should seek your own advice on the suitability to them of any investment or investment technique that may be mentioned. (a) We do not provide, and no Content constitutes, investment advice; (b) You will not treat or represent Content as investment advice; (c) We do not recommend or endorse any product; (d) Content is not intended to address your particular requirements. We are not aware of circumstances specific to you and which could influence which financial products are more or less suitable for you and do not represent that we are aware of any such circumstances. We do not recommend that any particular product is suitable for you; (e) No Content constitutes or should be interpreted as a solicitation to engage in any investment activity; (f) Any investment decision made by you is entirely at your own risk; (g) Subject to paragraph 11, we shall not be liable for any losses, cost or expenses which may be incurred by you as a result of any investment made; (h) You may not use the Content in, or generate based on the Content, any advice, recommendations, guidance, publications or alerts made available to your clients or other third parties; (i) Whilst we try to ensure the Content is accurate and up to date, we cannot be responsible for any inaccuracies in Content. We are under no responsibility to provide you with access to any additional information or to update the Site, even if inaccuracies become apparent. 9.2 The fund manager performance analyses and ratings provided on this website are the opinions of Citywire as at the date they are expressed and are not recommendations to purchase, hold or sell any investment or to make any investment decisions. Citywire’s opinions and analyses do not address the suitability of any investment for any specific purposes or requirements and should not be relied upon as the basis for any investment decision. 9.3 Persons who do not have professional experience in participating in unregulated collective investment schemes should not rely on material relating to such schemes. 9.4 Past performance of investments is not necessarily a guide to future performance. Prices of investments may fall as well as rise. 9.5 Persons associated with or employed by Citywire may hold positions or take positions in investments referred to in this publication. 9.6 Citywire operates a policy of independence in relation to matters where the operators may have a material interest or conflict of interest. 10. Limited Warranty 10.1 Citywire will use reasonable endeavours to maintain the Site. You will not be eligible for any compensation because you cannot use any part of the Site or for any failure of the Site as a result of an event beyond Citywire’s reasonable control. 10.2 Neither Citywire nor its employees assume any responsibility or liability for the accuracy, completeness or availability of the information contained on our Site. 10.3 Neither Citywire nor anyone else makes any representation, warranty, condition or other commitment of whatever nature in relation to any information obtained by you through use of this Site. You acknowledge and agree that any information that you receive through use of the Site is provided “as is” and “as available” basis without representation or endorsement of any kind and is obtained at your own risk. 10.4 You agree that you are solely responsible for any damage to your computer system and/or loss or damage to your data files through use of this Site or by the use of links on the Site to external information. 10.5 To the maximum extent permitted by law, Citywire excludes all representations, warranties, conditions or other terms, whether express or implied (by statute, common law, collaterally or otherwise) in relation to the Site or otherwise in relation to any Content or Feed, including without limitation as to satisfactory quality, fitness for particular purpose, non-infringement, compatibility, accuracy, or completeness. 11. Liability To the maximum extent permitted by law, Citywire will not be liable in contract, tort (including negligence) or otherwise for any liability, damage or loss (whether indirect, consequential, special or otherwise) incurred or suffered by you or any third party in connection with our Site, or in connection with the use, inability to use, or results of the use of our Site or App, any websites linked to it or any materials posted on it or otherwise in relation to any Content or Feed. Citywire does not limit liability for fraudulent misrepresentation or for death or personal injury arising from Citywire’s gross negligence or willful misconduct. HOWEVER, YOUR EXCLUSIVE REMEDY FOR ANY CLAIM ARISING FROM A BREACH BY CITYWIRE OF THESE TERMS IS CESSATION OF USE OF THE SITE, APP, OR CONTENT. FURTHER, TO THE GREATEST EXTENT PERMITTED BY LAW, THE TOTAL LIABILITY OF CITYWIRE IS LIMITED TO THE GREATER OF $50 OR AN AMOUNT NOT EXCEEDING THE TOTAL AMOUNT ACTUALLY PAID BY YOU TO CITYWIRE DURING THE PRIOR SIX (6) MONTHS IN CONNECTION WITH YOUR INDIVIDUAL USE OF THE SITE OR THE APP. In addition, you may bring a claim only on your own behalf. You will not participate in a class action or class-wide arbitration for any claims covered by these terms. 12. Changes to our Terms Citywire may change the Terms from time to time. Any such changes will be incorporated on our Site. Changes will take effect 30 days after notification. Your continued use of any part of the Site following such change shall be deemed to be your acceptance of such amended Terms. You acknowledge that you are solely responsible for checking these Terms from time to time to see the changes which have been made to these Terms. If you do not accept any such changes you should stop using our Site. 13. Breaches; Term and Termination 13.1 The Terms will take (re-take) effect at the time you access and use the Site. You agree that Citywire may terminate your membership or the agreement constituted by these Terms (as Citywire may choose) and restrict your access to the Site (or part thereof) without prejudice to any other rights or remedies that Citywire may have if Citywire is of the reasonable opinion that you have breached these Terms or acted inconsistently with the spirit of these Terms. The provisions concerning Intellectual Property Rights, The Site, Contributions, Non-Reliance, Limited Warranty, Liability, Breaches; Term and Termination, Enforcing Security, Governing Law, Arbitration, Injunctive Relief, Waiver and Severability and Entire Agreement the Solution Feedback, Confidentiality, will survive the termination of these Terms and Conditions for any reason. 13.2 You agree to indemnify Citywire against any and all actions, claims, costs, proceedings, losses, damages or liabilities arising from your use of the Site or App (including without limitation Contributions or Content) and/or in relation to any information or data you use or access by means of the Site. 13.3 You acknowledge that a breach of these Terms may give rise to civil damages and criminal penalties. Citywire reserve the right to take action against you to uphold these Terms and its rights, which may involve pursuing injunctive proceedings, as further set forth below. 14. Enforcing Security You may not use the Site, App, Content or any of Citywire’s data, systems, network, or services to engage in, foster, or promote illegal, abusive, or irresponsible behavior, including, without limitation, accessing or using data, systems, or networks in an unauthorized manner, attempting to probe, scan, or test the vulnerability of a Citywire system or network, circumventing any Citywire security or authentication measures, monitoring Citywire data or traffic, interfering with any Citywire services, collecting or using from the Site email addresses, screen names, or other identifiers, collecting or using from the Site information without the consent of the owner or licensor, using any false, misleading, or deceptive TCP-IP packet header information, using the Site to distribute software or tools that gather information, distributing advertisements, or engaging in conduct that it likely to result in retaliation against Citywire or its data, systems, or network. Actual or attempted unauthorized use of the Site may result in criminal and/or civil prosecution, including, without limitation, punishment under the Computer Fraud and Abuse Act of 1986 under U.S. federal law. Citywire reserves the right to view, monitor, and record activity through the Site without notice or permission from you. Any information obtained by monitoring, reviewing, or recording is subject to review by law enforcement organizations in connection with investigation or prosecution of possible criminal or unlawful activity through the Site as well as to disclosures required by or under applicable law or related government agency actions. Citywire will also comply with all court orders or subpoenas involving requests for such information. In addition to the foregoing, Citywire reserves the right to, at any time and without notice, modify, update, suspend, terminate, or interrupt operation of or access to the Site, or any portion of the Site in order to protect Citywire. 15. Governing Law; Void Where Prohibited All offers for all functions, products or services, which are made on the Site, are void if they are prohibited by applicable law. You access the Site on your own volition and are responsible for compliance with all applicable laws with respect to your own access and use of the Site and its offerings. These Terms have been made in and will be construed and enforced in accordance with the laws of the State of New York, U.S.A. as applied to agreements entered into and completely performed in the State of New York (without effect to its conflicts of law provisions). 16. Arbitration Subject to the right of Citywire to seek injunctive relief, disputes will be will be resolved by binding, individual arbitration under the American Arbitration Association pursuant to its Commercial Arbitration Rules or pursuant to its International Centre for Dispute Resolution (ICDR) Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having competent jurisdiction thereof. There is no judge or jury in arbitration, and court review of an arbitration award is limited. For any arbitration, the arbitrator(s) selected shall have a minimum of ten years of experience with and knowledge of the subject matter of the claim and dispute. The place of arbitration shall be in New York, New York. The arbitrator shall be bound by the provisions of these Terms and base the award on applicable law and judicial precedent. The arbitrator may award money or equitable relief in favor of only the individual party seeking relief and only to the extent necessary to provide relief warranted by that party’s individual claim. Similarly, an arbitration award and any judgment confirming it apply only to that specific case; it cannot be used in any other case except to enforce the award itself. However, the arbitrator(s) may award to the prevailing party all of its costs and fees. “Costs and fees” mean all reasonable pre-award expenses of the arbitration, including the arbitrator’s fees, administrative fees, travel expenses, out-of-pocket expenses such as copying and telephone, court costs, witness fees, and attorneys’ fees. Upon rendering a decision, the arbitrator(s) shall state in writing the basis for the decision, including the findings of fact and conclusions of law upon which the decision is based. The decision of the arbitrator(s) shall be final and binding upon the parties, and shall not be subject to appeal. You and Citywire have agreed to execute this Agreement in the English language, and all dispute settlement proceedings and communications, written and oral, between you and Citywire shall be conducted in the English language. 17. Injunctive Relief Notwithstanding the arbitration provision above, you acknowledge that any breach, threatened or actual, of these Terms, including, without limitation, with respect to unauthorized use of Citywire’s proprietary assets and especially, any Content, will cause irreparable injury to Citywire. Such injury would not be quantifiable in monetary damages and Citywire would not have an adequate remedy at law. You therefore agree that Citywire shall be entitled, in addition to other available remedies, to seek and be awarded an injunction or other appropriate equitable relief from a court of competent jurisdiction restraining any breach, threatened or actual, of your obligations under any provision of this Terms. Accordingly, you hereby waive any requirement that Citywire post any bond or other security in the event any injunctive or equitable relief is sought by or awarded to Citywire to enforce any provision of these Terms. 18. Waiver and Severability Failure to insist on strict performance of any of the terms and conditions of these Terms will not operate as a waiver of any subsequent default or failure of performance. No waiver by Citywire of any right under these Terms will be deemed to be either a waiver of any other right or provision or a waiver of that same right or provision at any other time. If any part of these Terms are determined to be invalid or unenforceable pursuant to applicable law including, but not limited to, the warranty disclaimers and the liability limitations set forth above, then the invalid or unenforceable provision will be deemed superseded by a valid, enforceable provision that most clearly matches the intent of the original provision and the remainder of these Terms shall continue in effect. 19. Notice; Consent to Electronic Communications When you visit this Site or send e-mails to us, you are communicating with us electronically. You consent to receive communications from us electronically. We will communicate with you by e-mail or by posting notices on this Site. You agree that all agreements, notices, disclosures and other communications that we provide to you electronically satisfy any legal requirement that such communications be in writing. 20. Entire Agreement You and Citywire are independent contractors. No joint venture, partnership, employment, or agency relationship exists between you and Citywire as a result of these Terms or your utilization of the Site. These Terms represents the entire agreement between you and Citywire with respect to your individual use of the Site. These Terms may not be assigned, transferred, conveyed, delegated, or granted by you to another party or person without the prior written consent of Citywire.
This communication is by Citywire Financial Publishers Ltd (“Citywire”) and is provided in Citywire’s capacity as financial journalists for general information and news purposes only. It is not (and is not intended to be) an any form of advice, recommendation, representation, endorsement or arrangement by Citywire or an invitation to invest or an offer to buy, sell, underwrite or subscribe for any particular investment. In particular, the information provided will not address your particular circumstances, objectives and attitude towards risk. Any opinions expressed by Citywire or its staff do not constitute a personal recommendation to you to buy, sell, underwrite or subscribe for any particular investment and should not be relied upon when making (or refraining from making) any investment decisions. In particular, the information and opinions provided by Citywire do not take into account your personal circumstances, objectives and attitude towards risk. Citywire uses information obtained primarily from sources believed to be reliable (such as company reports and financial reporting services) however Citywire cannot guarantee the accuracy of information provided, or that the information will be up-to-date or free from errors. Investors and prospective investors should not rely on any information or data provided by Citywire but should satisfy themselves of the accuracy and timeliness of any information or data before engaging in any investment activity. If in doubt about a particular investment decision an investor should consult a regulated investment advisor who specialises in that particular sector. Information includes but is not restricted to any video, article or guide content created or provided by Citywire. For your information we would like to draw your attention to the following general investment warnings: The price of shares and investments and the income associated with them can go down as well as up, and investors may not get back the amount they invested. The spread between the bid and offer prices of securities can be significant in volatile market conditions, especially for smaller companies. Realisation of small investments may be relatively costly. Some investments are not suitable for unsophisticated or non-professional investors. Appropriate independent advice should be obtained before making any such decision to buy, sell, underwrite or subscribe for any investment and should take into account your circumstances and attitude to risk. Past performance is not necessarily a guide to future performance.
Citywire Investment Warning
