Latest news with #ZacharyEvens
Yahoo
4 days ago
- Business
- Yahoo
Fine Print: ETFs Born in Banner Year May Lack Staying Power
From leveraged funds that invest only in Robinhood to products built to combat anti-semitism, exchange-traded funds are having a banner year. ETFs — investment vehicles known for their low costs, tax efficiencies and transparency — had collected $540 billion in new money, and issuers had launched 464 new funds, through the first six months of 2025, according to market researcher Morningstar. The industry is on track to launch a record 726 funds by the end of the year. Issuers are pumping out funds to meet investor demand, but there's a growing risk that many of the new ETFs will have short shelf lives because they serve very specific purposes or incorporate traditionally niche investing strategies. 'If that purpose falls out of favor and assets dwindle, it may be difficult for the ETF sponsor to keep the lights on,' said Zachary Evens, Morningstar research analyst. 'As the space gets saturated, only a relative few will likely see sustained success.' READ ALSO: Tariffs 'The World Can Live With': US-Japan Trade Pact Pushes Markets to Record Highs and Amazon, Meta Wear AI-mbitions on Their Wrists Fund on the Bun Low-cost funds with broad market exposure typically have the most assets under management and are the most popular with new investors. However, so few of them have launched this year that they're almost being seen as novel in the current ETF landscape. 'Perhaps Vanguard and [Charles] Schwab's continued push into very-low-cost bond strategies is unique amongst the sea of leveraged, covered call and buffer ETF launches,' Evens told The Daily Upside. The Morningstar data showed: First Trust, BlackRock's iShares and Graniteshares were among the top issuers in the first half of 2025, launching 23, 20 and 19 funds, respectively. Plenty of the new ETFs have also been fairly costly. The average expense ratio of 2025 ETF launches is 0.74%, much higher than all ETFs' average expense ratio of 0.6%. Active-ish: Many ETFs launched this year are being labeled as 'active,' meaning a fund manager is at the helm, regularly making investment decisions in the hopes of outperforming a benchmark instead of just mirroring it. That title is a bit of a misnomer, however, as some of those funds are more reliant on algorithms than traditional discretionary strategies, Evens said. They're only being called active because they don't track an index. 'Managers essentially have a formula for how to execute a strategy, removing much of the judgement or discretion associated with traditional stock-picking funds,' he said. This post first appeared on The Daily Upside. To receive delivering razor sharp analysis and perspective on all things finance, economics, and markets, subscribe to our free The Daily Upside newsletter. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
6 days ago
- Business
- Yahoo
Best International Equity ETFs of 2025
Photo by Antoine Schibler via Unsplash ETFs are booming in the US, but that doesn't mean investors are keeping their investments stateside. International equity ETFs that invest in publicly traded companies have surged this year, posting returns of 20% or more and cementing international funds at the top of the heap of the best performing funds of 2025's first half. The massive gains were due to overperforming European markets and strong performing sectors in other countries. The outperformance in Europe, relative to both the US and international stocks more broadly, can be attributed to an 'increased willingness' for those countries to invest in companies that help drive economic growth, said Zachary Evens, a Morningstar research analyst. 'Banks and utilities and industrials and communication service companies, like telecoms, these companies are more boring,' he said. 'They don't typically grow very fast, but they benefit from broad economic growth, so a lot of the outperformance has been concentrated in some of those stocks.' READ ALSO: Why Invesco Wants QQQ to Become an Open-End Fund and Bitcoin with Bubblewrap: Calamos Preps Laddered ETFs Across The Pond European stocks have outperformed their US counterparts for the past three years, reversing a trend of US dominance that began following the Great Recession, with the MSCI EMU Index outpacing the S&P 500 by more than 35 percentage points since 2022, according to Schwab. International stocks in general have also beaten American stocks, as measured by the MSCI EAFE Index. Some of the top-performing international markets ETFs so far this year are: The Schwab International Dividend Equity ETF (SCHY), which tracks a market-cap-weighted index of foreign stocks and had YTD returns of 20.7%. The Vanguard Total International Stock ETF (VXUS), which has an expense ratio of .05% and holds more than 8,600 stocks in companies from both developed and emerging markets. It posted YTD returns of 18.3%. The SPDR Portfolio Emerging Markets ETF (SPEM), which tracks emerging markets in countries like China, India, Brazil, South Africa, and Mexico and had YTD returns of 14.3%. Still, diversification is key to avoiding region-specific downturns. 'If Spain grows by a lot, but France falters, then diversification will even that out… That also goes for the sector side,' said Evens. 'You would be better suited to be more diversified across sectors and countries to minimize those negative impacts.' All Hail the Sector. Sector performance tends to be the main driver of stock performance, with US markets leaning heavily on tech companies in recent years. Still, outside factors — inflation, political deals, tariffs — have an impact on sectors, which in turn affects markets, according to Evens. 'What impacts the performance of those sectors would be more idiosyncratic risks or geopolitical factors, or economic factors,' he said. 'Weighing those is how investors can think about potential outperformance or underperformance of the respective markets.' This post first appeared on The Daily Upside. To receive exclusive news and analysis of the rapidly evolving ETF landscape, built for advisors and capital allocators, subscribe to our free ETF Upside newsletter.
Yahoo
17-07-2025
- Business
- Yahoo
Morningstar: 3 ETF Trends to Watch During 2025's Second Half
In the first half of the year, investors poured $540 billion of new money into exchange-traded funds, and firms launched 464 new ETFs, according to data from Morningstar. Some of the research firm's ETF predictions for 2025 have already come to fruition, including active ETFs outnumbering their passive counterparts and the Vanguard S&P 500 ETF (VOO) surpassing the SPDR S&P 500 ETF Trust (SPY) as the world's largest ETF. But in the second half of the year, Zachary Evens, a manager research analyst for Morningstar, told that public-private ETFs, ETF share classes and even more active ETFs are the trends to watch. Growing Comfortability with Private Asset ETFs, PRIV A major discussion in the ETF space centers on the arrival of private market investing. State Street and Apollo Global Management introduced the SPDR SSGA Apollo IG Public & Private Credit ETF (PRIV) in February—a first-of-its-kind private credit ETF. The fund has $139.4 million in assets under management and, while flows were initially muted, they've since picked up. State Street filed for another private credit ETF, the SPDR SSGA Short Duration IG Public & Private Credit ETF, in May. Evens said he thinks investors will slowly become more comfortable with these relatively illiquid securities in such liquid vehicles as the ETFs establish track records and gain assets. 'Hopefully, we get more transparency also on what's going on behind the scenes to make investors comfortable—that the ETF is delivering what it says it delivers,' he added. Potential Approval of ETF Share Classes ETF share classes haven't been approved yet, but Evens expects that will change in the latter half of the year. Firms like Thornburg Investment Management are already seeking approval to offer these ETF/mutual fund hybrid structures. 'When that's approved, there should be a lot happening in the space,' Evens said, adding that it's unclear whether the SEC will approve filings one by one or in a batch. 'It will be interesting to see how fund companies react and how quickly they're able to attach those share classes to their existing mutual funds.' More Active ETFs By the end of the first half of the year, there were 2,226 active ETFs and 2,157 passive ETFs on the market. Evans said the acceleration of active ETFs is a trend investors should continue to watch in the second half of the year. 'Active ETFs only make up about 10% of the ETF universe, so despite having more active ETFs than passive ETFs, they still claim relatively little market share in the whole ETF universe,' Evans said. 'It will be interesting to see not just in the second half of this year but in years to come if assets will continue to gravitate towards active ETFs and if they can take out a meaningful chunk in passive ETFs' lead on the market share side.' He added that a lot of the growth has been in the less traditional active space. But more fund companies are launching more traditional discretionary actively managed funds, and there has been a select success among firms that have tried that path, so a trend to watch is whether more traditional active strategies in the ETF wrapper can achieve sustained success. Permalink | © Copyright 2025 All rights reserved Sign in to access your portfolio
