News Round-up: Does BlackRock's S&P 500 top 20 ETF pose unnecessary risk?

News Round-up: Does BlackRock’s S&P 500 top 20 ETF pose unnecessary risk?

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This week, fund selectors reacted to the launch of BlackRock’s S&P 500 top 20 ETF, a curiously timed launch given the swell of flows into equal weight S&P 500 strategies over Q3. The unveiling forced fund selectors to confront whether the benefits of a more concentrated portfolio outweighed more diversified strategies, with some arguing the ETF provided a more “efficient” way to gain exposure to the US market. Others were less sold, stating the ETF’s narrow exposure adds unnecessary risk. Ultimately, investors saw this exposure as a compliment to portfolios and not a new core allocation. Read the full story here.

Smart beta ETFs have fallen out of favour for a shinier exposure, systematic active ETFs, which dominate the active ETF landscape in Europe. Comparisons were previously sparked this year when a Morningstar report aligned the two strategies on the basis of both their “systematic” and “benchmark aware” approaches. Despite some similarities, stark differences remain – such as an fundamental research driven approach - which instead makes the title, “a modern version of smart beta”, as identified by Yvan Roduit, head of investment advisory at Raiffeisen, more fitting. Lauren Gibbons has the full story.

Finally, fund selectors were bearish on their view for small caps over the near, with lack of support for small caps tied to unfavourable monetary policy. Small cap earnings are also declining while large caps continue their rise. However, Stephan Kemper, chief investment strategist at BNP Paribas Wealth Management said small caps have a “fair chance” of outperforming large caps over the next year and is bullish on small caps over the medium term too. Toby Lawes has the full story.

Most read stories on ETF Stream:

1. BlackRock S&P 500 top 20 ETF: Targeting quality or unwarranted risk?

2. Is systematic active the new smart beta ETF?

3. Small cap ETFs: Is the stage set for the return of size?

4. Active ETFs to hit $1trn in Europe by 2030, Janus Henderson suggests

5. Fideuram’s Zaffuto: ‘Our purpose is not to compete with the big players’

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ETF Insider: Small cap ETFs: Stage set for the return of size? Read here