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3 New ETFs to Make Headlines Over the Long Term

·4 min read

After a smashing 2020, the pace of ETF launches has been robust in 2021. In the first quarter, we saw about 85 ETF launches following 318 new ETFs in 2020. The momentum is in fine fettle even in the second quarter of 2021.

However, most of the ETF launches have been thematic lately. The investment objective has been pretty innovative as it suits changing macroeconomic dynamics and holds investors’ attention despite the peaks and troughs of the market.

Against this backdrop, below we highlight three new ETFs that have amassed huge assets within just days of debut. These ETFs have strong potential in their respective fields and will continue to make headlines in the coming days.

BlackRock U.S. Carbon Transition Readiness ETF LCTU – $1.28 billion in assets to date; launched on Apr 6, 2021

The fund offers broad exposure to large- and mid-capitalization U.S. companies focusing on those that BlackRock thinks will benefit from the shift to a low-carbon economy. The fund charges 30 bps in fees. Apple (5.20%), Microsoft (4.86%) and Amazon (3.43%) are the top three holdings of the 350-stock fund.

Massive asset gains happened probably due to huge institutional investor interest. LCTU's assets generation on its first day marked the biggest on record for an ETF, per etf.com.

BlackRock World ex U.S. Carbon Transition Readiness ETF (LCTD) – $585.4 million in assets on date; launched on Apr 6, 2021

The actively managed ETF looks to tap long-term capital appreciation by investing in large-and mid-capitalization World ex U.S. equity securities that intend to benefit from the transition to a low-carbon economy.

The fund holds 392 stocks in the portfolio. No stock accounts for more than 2.07% of the portfolio. Nestle (2.07%), USD Cash (1.67%) and Roche Holding PAR AG (1.49%) are the top three holdings of the fund. It charges 35 bps in fees.

ARK Space Exploration & Innovation ETF (ARKX) – $579.8 million in assets till date; launched on Mar 30, 2021

It is one of the most successful launches. The ARK Space Exploration & Innovation ETF’s investment objective is long-term growth of capital. ARKX is an actively managed ETF that will invest in domestic and foreign equity securities of companies that are engaged in the Space Exploration and innovation, i.e. stocks that will benefit from technologically enabled products and services beyond the surface of the Earth.

The fund’s top holdings are Trimble (8.94%), THE 3D Printing ETF (6.03%), Kratos Defense & Security (5.91%). The fund charges 75 bps in fees.

Bottom Line

The sheer success of the above-mentioned ETFs can be credited to the investment theme and the issuers’ reputation. Low-carbon ETF or the ESG ETFs are in vogue globally. In the United States too, the Biden era calls for a rally in the clean-energy ETFs. This makes it clear why those two BlackRock’s ETFs made hefty asset base just after the launch.

On the other hand, Ark Investment Management founder Cathie Wood has been dominating the headlines lately for seeing massive inflows into her ETF line-up. In fact, it has managed a spot among the top 10 issuers in the $5.5-trillion ETF industry, thanks to solid asset gain in 2020, per a BloombergQuint article.

In mid January, the Ark Investment Management oversaw about $41.5 billion in ETF products compared with $39.7 billion for WisdomTree, according to data compiled by Bloomberg. Its star product Ark Innovation ETF ARKK has added 163.3% in the past year. Understandably, Ark Investment’s brand name and a unique concept like Space Exploration made ARKX a winner right after the debut (read: Are You a Fan of Ark ETFs' Cathie Wood? Follow This Portfolio).

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