Investment Professionals

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The ACDC ETF has recently experienced a rebalance on Friday 20th May. With approximately $500 million in assets under management (AUM), the fund removed 9 stocks and added 6 stocks, reducing the total number of holdings in the fund to 30 from 33. Below is a summary of the 6 stocks that was added to the fund, and the 9 stocks that were removed. As part of this rebalance, updates to the index were applied. These index changes have been introduced by index provider Solactive to improve aspects of ESG and liquidity in the fund. Details on the Solactive Battery Value Chain Index changes can be seen below: A Negative ESG screen has been enforced. Any company on the ESG exclusions list will be removed from the index universe. The screen excludes companies based on fossil fuel production, UN Global Compact violations, weapons manufacturing, and tobacco. A liquidity cap has been introduced, replacing the tiered liquidity system. Previously, the index used arbitrary averaged daily traded value (ADTV) thresholds to determine how much weight a company could take. The new system prevents ETFs tracking the index collectively taking more than 90% of the ADTV of a single company. This is designed to limit potential market impact when ETFs tracking the index rebalance and manage inflows/outflows. A maximum ownership limit has been added. This prevents ETFs tracking the index from collectively owning more than 7.5% of a company. This prevents potential governance issues, caused when ETFs own a lot of a company’s stock. ...
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Regulations on asset managers and financial advisers have increased in number and scope over the past 10 years. Much of which has been for the better. New Design and Distribution Obligations (DDO) which came into effect on 5 October 2021 will change how many types of financial products, including ETFs, can be sold. Under the regulations, ETF Securities is both a product issuer (a company that builds funds) and a distributor (a company that sells funds). We understand our obligations under the new regulations. Which include the below. What is DDO? Put simply, it tries to make sure that fund managers are creating funds that are “fit for purpose” and built with investors’ interests in mind. It also tries to ensure that companies selling or recommending funds – including financial advisers, stockbrokers and wrap platforms – are accurately presenting them to investors. DDO covers many types of financial products—not just funds. It also covers credit cards, insurance, some superannuation, home loans—and more. It was brought into being thanks to both the 2014 Financial System Inquiry and the Hayne Royal Commission. Both found that some financial products had been badly built and sold. ...