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Weekly ETF Monitor for week ending 2 April 2021

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Apr 07, 2021

This week's highlights Global equity markets marched onwards to fresh highs last week even with a shortened trading week. ETFS Ultra Long Nasdaq 100 Hedge Fund (LNAS) was the best performing fund for the week up 10.2%, while VanEck Vectors Global Clean Energy ETF (CLNE) was up 8.1%. Precious metals were amongst the worst performers, with ETFS Physical Silver (ETPMAG) down 1.9% and ETFS Physical Gold (GOLD) down 1.1%. Total inflows for the week totalled A$226m which consisted of A$305m of inflows and A$76m of outflows. The best inflows on a fund basis were seen by BetaShares Australia 200 ETF (A200) which had A$79.9m of inflows and iShares S&P/ASX 200 ETF (IOZ) had A$31.5m. The biggest outflows were in SPDR S&P/ASX 200 Fund (STW) A$38.1m and iShares Edge MSCI World Minimum Volatility ETF (WVOL) had A$5.2m of outflows. Turnover for the week remains highest amongst vanilla equity ETFs. Vanguard Australian Shares Index ETF (VAS) had A$21.1m of turnover and SPDR S&P/ASX 200 Fund (STW) had A$16.4m. ETFS Ultra Long Nasdaq 100 Hedge Fund (LNAS) provides hedged leveraged target exposure to the Nasdaq-100 in the range of 200-275%.

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Five lessons on gold from the pandemic

Mar 31, 2021

Lesson #1. Gold does well in crises, acting like portfolio insurance Every investor wants an asset that offers downside protection, or insurance of a sort. And preferably one that is not suspiciously complicated or synthetic. Perhaps the major lesson from the coronavirus is that gold can provide this type of insurance as gold historically does well during collapsing equity markets, as the chart below illustrates. Gold has performed well in times of crisis Source: Bloomberg, ETF Securities, 1 March 2021 The onset of the coronavirus crisis is generally dated from 31 December 2019, when the virus was first officially reported by Wuhan health authorities in China. The worst of things for markets ended on 18 November 2020, when Pfizer and BioNTech published phase 3 trial results for their vaccine candidate (suggesting that a mass vaccination drive was possible.) Throughout this period, gold provided a return of 25%, compared to the 9% delivered by the S&P 500 in US dollars. Nothing comes for free of course. And gold can underperform during strong equity market bull runs; such as the dotcom boom of the 1990s. However, this is often the way with insurance policies: when times are good, they fall in price, leaving investors mulling over whether they need them at all. Yet when bad times return, as they inevitably do, policy holders can be glad that they kept them. Lesson #2. Gold has outperformed most asset classes long-term The market is a noisy place. And getting caught up in the daily sound, it is easy to lose sight of the long-term picture. For gold, there are two ways of looking at the big picture. First, its long-term returns. Second, the impact that a small allocation can have on a portfolio. The pandemic has highlighted both benefits gold can bring. Average annual return of key assets in Australian dollars'* Source: World Gold Council (*Returns from 31 December 2000 to 31 December 2020. In Australian dollars of total return indices for S&P/ASX 200, Bloomberg Aus Bond Bank Bill Index, Bloomberg AusBond Govt 1+ Yr Index, and Bloomberg Commodity Index.) The long-term performance of gold is something that can surprise investors, as received wisdom suggests that Aussie equities outperform other assets over the long term. However, for the two decades leading up to January 2021, gold has been the top performing of the major asset classes. Gold’s outperformance was accentuated by the pandemic, as the ASX 200 is yet to re-achieve its pre-pandemic peak. Gold’s ability to enhance portfolio’s risk-adjusted returns was also on display. As gold maintains a low correlation with shares and bonds, it can improve the overall returns of a portfolio. (“Push out the efficient frontier” in the jargon). This can be seen below, with some simulations we have run with Vanguard’s famous LifeStrategy funds. It can be seen that the portfolio with a small gold holding does better on almost every measure. Investors are welcome to try their own simulations, with a small allocation to gold. Growth of $10,000: Vanguard LifeStrategy Simulation Source: Bloomberg, ETF Securities, Vanguard. Time period: 1/10/2005-30/9/2020 Lesson #3. The gold price is driven by negative real yields The gold price correlates with the real yield on the 10-year US treasury, the pandemic has shown. Meaning investors who want a signal on the gold price’s future direction potentially have one. It makes sense that gold would correlate with real yields. As gold provides no income, it can become more appealing when bonds do not have a real income either. And when bonds provide a negative income – meaning bonds are mathematically guaranteed to lose value if held to maturity – it is logical to expect gold to be more appealing still. Negative real yields are made of gold Source: Federal Reserve; ETF Securities, 1 March 2021 Aiding golds tether to real yields has been the rise of ETFs, which have allowed more flexibility about how gold is used in portfolios. Prior to 2006, gold did not correlate with real yields. The correlation only emerged after the mainstreaming of gold ETFs in the early and mid-2000s. That gold ETFs should have this influence has caused some to raise an alarm. Campbell Harvey, professor of international business at Duke University, argues that gold ETFs driving the gold market could create larger drawdowns in the price of gold. He wrote: “The ETF financialization of gold ownership, in which the real price of gold may be correlated with the amount of gold held by gold-owning ETFs, could possibly lead to higher peaks and lower troughs for the real price of gold relative to the experience of the past.” From where we sit, the evidence suggests that the opposite is at least equally possible. Drawdowns in the gold price were larger in the 1980s and 1990s – prior to gold ETFs. What is more, it is hard to see how gold is different from some pockets of the bond market, such as local government bonds, where demand for ETFs can also set prices. This was in evidence in the March 2020 where bond ETFs provided price discovery on untradeable municipal bonds. Gold: Maximum Drawdowns Source: Bloomberg; ETF Securities, 1 March 2021 Nonetheless, if gold ETFs are part of the reason that gold follow real yields, and gold ETFs are also here to stay – then it follows that the relationship should be robust. And for investors wanting clues on the gold price: watch real yields on the 10 year. Lesson #4. Bitcoin is not the new gold Gold and bitcoin are sometimes lumped together – given their apparently limited supply and potential use as alternative currencies. Some analysts have taken the inverse flows between gold and bitcoin ETFs the past several months – gold has seen outflows at the same time bitcoin has seen inflows – as evidence of gold investors migrating to bitcoin. However, gold and bitcoin are very different, as the pandemic has shown. Past two years Volatility % of weekly returns lower than -2.5% 95% VaR per US$10,000 Bitcoin 9.9% 26.9% $1,382 Nasdaq 3.2% 8.7% $382 S&P500 3.3% 8.7% $306 Gold 2.2% 7.7% $291 Source: World Gold Council; ETF Securities, 1 March 2021 The most obvious difference has been their volatility—which hit fresh extremes in 2020. Gold for its part was far less volatile than equities throughout the most volatile trading days in February and March. As panic selling peaked, our gold ETF traded sideways, not sustaining any loss of value. The ASX 200, as measured by an ETF, fell quite significantly. So too, did the MSCI World. But bitcoin was another matter entirely. It dropped more than 50% in the panic in US dollar terms—in keeping with its reputation as a highly volatile asset. Bitcoin and gold behaved very differently. Gold was a safe haven during coronavirus panic Source: Coindesk; Bloomberg; ETF Securities, 1 March 2021 The second is that the sources for demand for gold are very different. Bitcoin’s use case is quite narrow, with most end demand coming from speculators. By contrast, most demand for gold comes from central banks and industry, according to the World Gold Council. Investment makes up a significant fraction of demand, but still a minority. This then feeds back into volatility: more diverse demand ensures that gold is, again, less volatile. Lesson #5. Tactically trading gold has risks While the gold price has crept steadily upwards over the past 50 years, the precious metal has had periods of sustained drawdowns. This cyclicality might suggest that gold should be traded tactically. In this way, some of the downtrend can be missed. However, the lesson from our own gold ETF throughout the pandemic is that tactical gold trading has risks. From 17 August 2018 – 6 August 2020 GOLD produced a return of 76% for those who stayed fully invested. But for those who missed the best 10 days in that two-year period, the return GOLD produced was just 29%. The consequences of missing the best days are not unique to gold. Burton Malkiel, Princeton professor and author of best seller A Random Walk Down Wall St, notes the same thing occurs in the share market. He takes it as evidence in favour of buying and holding an index fund. He wrote: “Buy and hold investors in the US stock market made an average annual return of 8% during the 15 years from 1995 through 2009. But if they had missed the 30 best days in the market over that period, their return would have been negative.” To be sure, tactical trading may also help avoid the worst days, which can then produce a better return. But knowing whether tomorrow will be a best or worst day is impossible. As we all know, no-one has a crystal ball.

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Weekly ETF Monitor for week ending 26 March 2021

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Mar 30, 2021

This week's highlights Defensive stocks came to the fore last week as some big technology names took a hit. Infrastructure fund VBLD was the week’s top performing ETF, up 4.3%, followed by consumer staples fund IXI. Global quality (QUAL), income (INCM) and high yield/low volatility (ZYUS) funds were also amongst the top performers. Biotech fund CURE saw the biggest drop for the week, down 6.7%, while gold miners (MNRS), Asia tech (ASIA) and FAANG stocks (FANG) also declined. Precious metals were mixed, with silver (ETPMAG) amongst the biggest decliners, but other metals advanced. The Aussie dollar dropped below US 77c, with strong dollar fund YANK amongst the top performing ETFs and strong AUD fund AUDS amongst the poorest. Total reported flows into domestically domiciled ETFs were $302m, while outflows totalled $98m. Domestic equity fund A200 and cash fund AAA saw the week’s biggest inflows, followed by a range of equity and fixed income funds including XARO, BNKS, SUBD and ILC. Hedged S&P 500 fund IHVV and cash fund BILL saw the largest outflows for the week. VAS was the most traded fund for the week, followed by A200 and IHVV. VAP saw above average volumes. ETFS S&P 500 High Yield Low Volatility ETF (ZYUS) returned 3.4% for the week. ZYUS invested in a portfolio of 50 U.S. stocks selected on the basis of being strong dividend payers and exhibiting historically lower volatility. As such, ZYUS tends to have a more defensive sector allocation, with overweights to utilities, consumer staples and real estate companies. Year-to-date ZYUS has outperformed the S&P 500 Index by 9.8%.

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Volatility in technology companies is increasing

Mar 29, 2021

Technology companies’ share prices have hit some turbulence. Thanks to rising interest rates, volatility in the tech sector is picking up. And as the Nasdaq-100 – a popular gauge used to follow the US tech sector – is retreating from its all-time pandemic-induced highs, investors are wondering how to profit from or protect against this influential sector. Nasdaq-100 up days and down days year-to-date Source: ETF Securities, (Dates: 1 Jan - 24 March 2021) Short and long Nasdaq 100 funds issued by ETF Securities offer one solution. In this article, we look at how they work and the benefits and risks they offer. What do short and long funds do? Long and short funds magnify the ups and downs of the Nasdaq-100. They are kind of like mirrors and magnifying glasses. ETFS Ultra Short Nasdaq 100 Hedge Fund (SNAS) ETFS Ultra Long Nasdaq 100 Hedge Fund (LNAS) The short fund, known by its ASX ticker SNAS, is like a mirror. It moves in the opposite magnified direction to the share market, rising in value when the Nasdaq falls, and falling when it rises. In this way, SNAS, like short selling, can provide a way to profit from or hedge against a falling share market. Performance of LNAS and SNAS since inception Source: Bloomberg, 25 March 2021 The long fund, or LNAS, is the magnifying glass. It follows the Nasdaq up and down – but to a magnified degree. In this way, LNAS gives investors a tool for expressing strong views on the movements of technology stocks. The graphs above and below illustrate what the results can look like. The graph above shows the performance of both funds since inception. As the Nasdaq 100 has strongly rallied the past year, LNAS, the long fund, has outperformed. The short fund by contrast has strongly underperformed over the same period. SNAS performed strongly when the Nasdaq fell Source: Bloomberg, 25 March 2021 However, over shorter periods the results can look very different, as the graphs above and below indicate. In times when the Nasdaq 100 falls, SNAS performs strongly. The first fortnight of September 2020 was one such period. By contrast, in periods where the Nasdaq falls, LNAS falls further. Late-February early-March this year was one such period. LNAS falls more than the Nasdaq during dips Source: Bloomberg, 25 March 2021 These funds have advantages over derivatives – like options and CFDs – in that they are more transparent and easier to trade. They are also potentially safer, as we discuss below. How do they work? Leveraged long and short funds use Nasdaq 100 index futures to achieve their aims. SNAS sells Nasdaq index futures. Whereas LNAS buys them. To magnify the ups and downs, these futures are traded “on margin”, by our trading desk. Our trading professionals monitor the exposure to the Nasdaq 100 to keep gearing within a set band of 200% to 275% of the fund’s net asset value. When gearing becomes too low, they increase the exposure to bring it back up. When gearing becomes too high, they reduce exposure to bring it back down. This means the actual degree of gearing varies day to day—but is always actively managed. The level of gearing can be viewed on our website every day. Crucially, all gearing is managed within the funds. This means that investors never face margin calls. It also means SNAS and LNAS can never cause investors to lose more money than they put in. This makes LNAS and SNAS different from – and potentially safer than – outright short selling and derivatives trading, where investors can face margin calls and losses of potentially more than their original investment. How are the prices determined? As the funds use futures, their prices follow the futures market. It is important to note that futures markets can move in different directions to the share market—especially for Australian investors. This tends to occur for two major reasons: time zone differences between Australia and the US; and the more flexible trading hours that the futures market allows. Unlike shares, futures are traded almost 24 hours a day six days a week. This can mean, for example, that even when the Nasdaq-100 index falls throughout the Chicago trading day, the Nasdaq-100 index futures held in our funds rise throughout the Sydney trading day. This could occur, for instance, because traders believe that the Nasdaq 100 will rise the following morning in Chicago. What are the risks? It is important that investors understand that LNAS and SNAS are not like index-tracking exchange traded funds (ETFs). Instead, they are actively managed hedge funds, and come with a higher degree of risk than ETFs. As leveraged short and long funds magnify both the profits and losses investors experience, they are only appropriate for short term trading and any holdings should be actively monitored. They should not be used as buy and hold investments.

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There is no dotcom bubble in tech stocks

Mar 24, 2021

For some years, commentators have been comparing the thundering run in technology stocks to the dotcom bubble of the 1990s. For the past three years, technology has outperformed all other sectors, as promising new technologies have captured investors' imaginations. But comparisons of the present day to the dotcom era are arguably misguided. And claims that technology stocks are in a dotcom-style bubble are most likely wrong. Today’s tech rally vs dotcom The first difference between the two eras is the strength of the tech rally. Simply put: the dotcom rally in technology stocks was far more powerful than today’s. Had you invested $1 into the S&P 500 Information Technology Index, the major gauge of US tech stocks in June 1997, it would have turned into $3.20 by March 2000—a whopping 320% return in just two and half years. Not dotcom - today's tech sector rally in perspective Source: Bloomberg, (Data from 1/1/1998 - 1/3/2000 and 26/11/2018 - 25/02/2021) Had you put $1 into the index in mid-2018, it would have turned into $1.99 by the end of February 2021—thanks largely to the coronavirus driving up the value of technology stocks. That is still a very handsome return of 99%. But it pales in comparison to the dotcom era. We see the same thing when we look at specific companies. Microsoft, Amazon and Apple were three of the major drivers of the dotcom boom. In the 1990s, the market judged them to be world-leading tech companies, with profits swelling well into the future (a correct conclusion, as things turned out). By all appearances, the market is making the same conclusion about these three companies today. Not dotcom - Microsoft, Amazon, Apple Market-weighted price return. Source: Bloomberg But again, we can see that the rally in these three sector-defining businesses has been weaker. And weaker despite Microsoft, Amazon and Apple being better businesses today – stronger profits, fewer competitors, more diversified – than they were in the 1990s. And despite interest rates being much lower today. We can also contrast the “darlings” of each era. In the dotcom era, Qualcomm, Cisco and Oracle were among the darlings. They were great businesses then; they are still great businesses now. Today, the “FANGs” – Facebook, Amazon (again), Netflix, Google – are said to be the companies of our time. But here again, the dotcom boom was very different. Qualcomm, Cisco and Oracle – and the rally they enjoyed – was of an order of magnitude greater than Facebook, Netflix and Google’s. In fact, Facebook and Google have underperformed the tech sector index over the past two and five years. It is hard to see any dotcom-style boom in these businesses today. Dotcom darlings versus the FANGs Source: Ycharts, (Market weighted price return. Dates from 2/6/1997 - 28/2/2000, and 4/6/2018 - 26/2/2021) Dotcom era lesson: valuations matter While it is hard to see a dotcom-style bubble in technology today, the lessons of that era still apply. The first is that when rallies are too strong, a correction can follow. The second more important lesson is valuations matter. During the late 1990s, the revenue and profits of tech companies were growing rapidly. In five years leading up to 2000, the earnings of Qualcomm, Oracle, Cisco, Intel, Microsoft and other tech leaders more than quadrupled. But investors got too optimistic. They projected these profits too far into the future. As the rally peaked in early 2000, Oracle, Cisco and Qualcomm were all on triple-digit price-to-earnings ratios and double-digit price-to-sales ratios. These valuations may have been justified on a very long-term outlook. (Qualcomm and Oracle went on to exceed their 2000 peaks). But they proved unsustainable in the following decade. June-99 Revenue (Quarterly YoY Growth) EPS Diluted (Quarterly YoY Growth) PE Ratio PS Ratio Amazon 171% Unprofitable Unprofitable 19 Cisco Systems Inc 45% 800% 119 21 Oracle Corp 22% 31% 41 6 Qualcomm Inc 15% 800% 223 6 Dec-20 Revenue (Quarterly YoY Growth) EPS Diluted (Quarterly YoY Growth) PE Ratio PS Ratio Facebook 33% 53% 27 9 Amazon 44% 118% 74 4 Netflix 22% -8% 89 10 Google 23% 46% 30 7 Source: Ycharts Today by contrast tech stocks are on far more modest valuations. Suggesting that many investors have taken the lesson about valuations to heart. And perhaps suggesting that investors can become suspicious these days when tech stocks rally strongly (which could also explain the headlines). Investing in technology today Any technology investor should exercise caution when making stock selections – especially after a long rally. Caution is something that we have built into our own tech ETF, which takes a different approach to garden a variety market-weighted ETFs. Our tech fund – ETFS Morningstar Global Technology ETF (ASX Code: TECH) – uses a valuation filter to exclude overvalued companies. When picking tech stocks Morningstar’s team of researchers, who control the index, remove companies that they believe are overvalued. They look at many valuation metrics, including price-to-earnings, price-to-sales and monitor them continuously. As such, stocks that are on dotcom-style 100+ PE ratios almost never make the cut. How technology companies fare as the global economy “reopens” from the coronavirus we will have to wait and see. But for now, at least, it seems the lessons have been learned and tech stocks are safe from a potential bubble.

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Weekly ETF Monitor for week ending 19 March 2021

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Mar 23, 2021

This week's highlights Global equity markets experienced heightened volatility last week as quadruple witching occurred. Precious metals rallied and were the best performers over the week. ETFS Physical Palladium (ETPMPD) finished the week up 10.9%, ETFS Physical Precious Metals Basket (ETPMPM) up 4.5% and ETFS Physical Silver (ETPMAG) up 2.8%. The worst performers over the week were energy funds. VanEck Vectors Global Clean Energy ETF (CLNE) was down 8% and BetaShares Crude Oil Index ETF - Ccy Hedged (OOO) was down 6.4%. Total inflows for the week were A$206m which consisted of A$257m of inflows and A$50m of outflows. The best inflows on a fund basis were seen by BetaShares Australian High Interest Cash ETF (AAA) which had A$30m of inflows and VanEck Vectors MSCI World Ex-Australia Quality ETF (QUAL) had A$23.5m. The biggest outflows were in BetaShares Australian Bank Snr Floating Rate Bond ETF (QPON) A$12.5m and BetaShares Global Sustainability Leaders ETF (ETHI) had A$6.7m of outflows. Turnover for the week remains highest amongst vanilla equity ETFs. Vanguard Australian Shares Index ETF (VAS) had A$18.7m of turnover and SPDR S&P/ASX 200 Fund (STW) had A$16.4m. ETFS physical palladium (ETPMPD) returned 10.9% for the week. ETPMPD is fully-backed by physical holdings of palladium and provides exposure to the supply and demand dynamics for palladium in areas like the automotive industry.

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How to invest in the value rotation

Mar 18, 2021

Value investing, which involves buying beaten up and unloved stocks, has underperformed for years now. With central banks keeping interest rates low and global technology giants on a tear, growth stocks have thoroughly outperformed. But are things about to change? Steepening yield curve may mean a higher discount rate The yield curve has steepened sharply in recent months, as investors take stock of the coronavirus vaccine rollout and weigh fears that Biden’s stimulus package could trigger inflation. US yield curve has steepened Source: Bloomberg as at 7 April 2021 When interest rates rise, in theory at least, the way companies are valued changes. This is because when interest rates rise, the “discount rate” – which is the interest rate investors use to value companies’ future profits – also rises. The higher the discount rate, the more “a dollar today is worth more than a dollar tomorrow”. And the more a company’s share price should, in theory, reflect their profits today over their profits tomorrow.  Higher discount rates can be a good thing for value stocks. This is because their valuations tend to be more heavily determined by their near-term profits. And indeed, over the past six months as the curve has steepened, we have seen value stocks outperform. Value has outperformed growth in recent months Source: Bloomberg as at 7 April 2021 Value stocks love a vaccine Another potential signal of a value stock recovery may be vaccine rollouts. Value stocks tend to be concentrated in sectors hard hit by lockdowns; oil, utilities, travel and entertainment. And as such, according to Goldman Sachs, they have “the highest correlation to vaccine distribution probabilities.” Said more simply: the better chances of reaching herd immunity via a vaccine, the better the chances value stocks have of outperforming. The below chart from Goldman shows the sensitivity of value stocks to vaccine rollouts in the US. Value stocks have been more sensitive to vaccine news Correlation to 10pp increase in COVID-19 vaccine distribution probability Source: Goldman Sachs Global Investment Research and GSAM. As at January 31, 2021 Yield – a real value strategy There are many ways to define and access value stocks. But one common way is to use dividend ETFs. This is because they tend to have lower price-to-dividend, price-to-earnings and price-to-book ratios than the total market. After all, this is what allows them to sustain their higher dividend payouts. Here, ETFS S&P 500 High Yield Low Volatility ETF (ASX Code: ZYUS) offers a solution. How the fund works ZYUS invests in the 50 least volatile high yielding S&P 500 stocks. This means that the primary filter for the index is yield (initially ranking the 75 highest yielding stocks) and the secondary filter is volatility (removing the 25 most volatile of these). These rules result in a 50 stock portfolio that targets high yield and that has an embedded value tilt, which is particularly meaningful in the current market. 2021 outlook The heavy impact of COVID-19 on high yielding sectors and the oil crash took a large toll on ZYUS’s performance last year, along with the fund's heavy underweight to the top performing tech sector. As we start to see early signs of a rotation to value, in the last 6 months ZYUS has begun to outperform the S&P 500 Index. Whilst ZYUS’s performance significantly drags over 12 months, particularly due to the big tech underweight vs the S&P 500, if the rotation to value continues there’s potential for a continued recovery in ZYUS.

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Weekly ETF Monitor for week ending 12 March 2021

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Mar 16, 2021

This week's highlights Small cap US equity fund IJR was the top-performing ETF last week, returning 6.2%, followed by leveraged funds GGUS and LNAS. Biotech (CURE), midcap (IJH), agriculture (FOOD) and Europe (HEUR) funds were all amongst the top performers. China and Asia funds were the poorest performers, with CNEW, ISS, IAA, CETF, and IKO all declining by more than 2%. Precious metals mostly declined, though platinum fund ETPMPT was amongst the week’s top performers. Leveraged US dollar fund YANK was amongst the poorest performers on the back of the rising AUD. Total reported flows into domestically domiciled ETFs were $342m, while outflows totalled $209m. Domestic equity fund IOZ and composite bond fund IAF saw the week’s biggest inflows, followed by a range of equity funds including ETHI, NDW, QUAL and FAIR. Cash fund AAA and silver fund ETPMAG saw the largest outflows for the week. VAS was the most traded fund for the week, followed by AAA and BBOZ. ASIA saw above average volumes. ETFS Physical Platinum (ETPMPT) returned 4.4% for the week. ETPMPT is fully-back by physical holdings of platinum and provides exposure to the supply and demand drivers of the global platinum market, such as the demand for vehicles that use platinum as an aid for emissions reduction.

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Weekly ETF Monitor for week ending 5 March 2021

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Mar 09, 2021

This week's highlights Equity markets saw a week of sector rotation with cyclical stocks outperforming and technology-related companies lagging. Top performing equity ETFs were in the energy (FUEL), and financial (MVB, QFN, OZF and BNKS) sectors. Low volatility (ZYUS) and value (VVLU) factors outperformed. India funds (IIND and NDIA) were also amongst the top performers. Biotech fund CURE was the poorest performing equity fund for the week, with FANG, ROBO, ESPO and HACK also amongst the poorest performers. Precious metals mostly declined. Platinum (ETPMPT), silver (ETPMAG) and gold (QAU and PMGOLD) were amongst the poorest performers. Palladium (ETPMPD) posted a small gain. Oil fund OOO gained 7.5% for the week and was the overall top performing fund. Total reported flows into domestically domiciled ETFs were $369m, while outflows totalled $252m. Domestic equity fund IOZ and Australian government bond fund AGVT saw the week’s biggest inflows, followed by a range of equity funds including A200, IEM, FAIR and IJR. Cash and variable interest funds AAA, QPON and FLOT saw the bulk of the week’s outflows. VAS was the most traded fund for the week, followed by AGVT, which saw above average volumes. ETFS S&P 500 High Yield Low Volatility ETF (ZYUS) returned 5.5% for the week. ZYUS provides exposure to a selection of 50 names from the S&P 500 based on dividend yield and volatility criteria. ZYUS’s portfolio is typically tilted towards traditional “value” sectors, such as utilities and consumer staples, and may be well positioned to benefit from a prolonged sector rotation in the U.S. market.

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5 battery tech companies you should know about

Mar 09, 2021

Renewable energy is in the spotlight and the battery technology supply chain is key to the transition. Wind and solar energy are forecast to supply around 48% of world electricity needs by 2050, with battery technology, gas peakers (turbines or engines that burn natural gas) and dynamic demand anticipated to drive market penetration of solar and wind by more than 80% according to BloombergNEF1 . The same report also suggests the costs of renewable energy will undercut coal and gas in most parts of the world by 2030 – a compelling reason for countries to focus on it. While investors may be well aware of Tesla’s credentials in battery storage, the supply chain for battery technology extends far beyond one company and covers mining companies, manufacturers of battery storage and storage technology providers. Here are 5 companies fuelling the transition. 1) SolarEdge Technologies Inc (NASDAQ: SEDQ) SolarEdge are a US-domiciled manufacturer of energy technologies, including power optimisers, solar inverters and monitoring systems for photovoltaic arrays (solar cells which convert the light to electricity). It has a global customer base, but also has a majority market share in the US, with 60% of the residential solar inverter market2. SolarEdge have also ventured into the electric vehicle (EV) market by producing the world’s first EV charging inverter, which has the ability to charge EVs up to 2.5 times faster than current models3. 2) NGK Insulators (TYO: 5333) NGK Insulators are a Japanese ceramics company responsible for battery systems, insulators and equipment. They were responsible for the world’s first commercialised battery storage system capable of megawatt level electrical power storage. This system is in use in more than 200 locations worldwide4. They produce lithium-ion rechargeable batteries with high heat resistance and are also researching and developing an alternative in the form of zinc rechargeable batteries. 3) LG Chem (KRX: 051910) LG Chem is a Korean chemical company with a portfolio across petrochemicals, advanced materials and life sciences. It was the first to mass produce lithium-ion batteries in Korea and has the leading market share in automobile batteries. LG Chem also produce carbon nanotube (CNT) which is used for lithium-ion battery cathodes. It supplies some of the world’s major car manufacturers such as Renault and Volkswagen as well as supplying battery materials to companies like Hitachi. 4) Galaxy Resources (ASX: GXY) Galaxy Resources is an Australian mining company focused on lithium. It has mines in Australia, Canada and Argentina. The mine is Argentina has the potential to be the lowest cost producer of lithium in the world through oil brine extraction. Lithium accounts for 85% of commissioned utility scale battery storage5 and Galaxy Resources is likely to benefit from the continuing demand for lithium to support battery storage. 5) EnerSys (NYSE: ENS) EnerSys is a US based manufacturer of power storage solutions for industrial applications and has 21% worldwide market share in this field. Its products include batteries, charging and power modules, monitoring and fleet management and energy systems used in industries such as telecommunications and transportation. Investing in battery technology Investors can access battery technology exposure in a range of ways looking across the battery technology value chain. This may mean focusing on components such as lithium by using mining companies like Galaxy Resources or looking at battery manufacturers like EnerSys. Investors could also look at companies with more diversified capabilities not purely restricted to battery technology such as Tesla or Panasonic. Investors could alternatively look at a fund like the ETFS Battery Tech & Lithium ETF (ASX Code: ACDC) which offer exposure across the battery technology supply chain globally. All the companies referenced in this article are included in ACDC.

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Five innovative global biotech companies you should know about

Mar 09, 2021

Biotechnology came into the spotlight in 2020 as many companies raced to test and register vaccines for COVID-19, however, the potential and growth of this industry extends far beyond the pandemic. Biotechnology is transforming the way we treat and manage a range of health concerns and diseases and can be a highly lucrative space. What is biotechnology? Biotechnology specifically refers to technologies that use biological processes, capturing companies that focus on research, development, manufacturing and/or marketing of products based on biological and genetic information. The different types of biotechnology include biological drugs, vaccines, immunotherapy, gene therapy, orphan drugs and genetic engineering. While Australian companies like CSL Ltd (ASX: CSL) are no slouches when it comes to innovative biotech, the US is typically viewed as the global centre. The dominance of the US market is partly due to the world-renowned US Food and Drug Administration (FDA) approval process and to the size of its customer base. As a result, many companies base themselves in the US for easier access to the process and more efficient ability to distribute and market to US consumers. Global innovators Most investors are now well aware of the global companies who have been successful in developing vaccines and treatments for COVID-19 but may be less familiar with some of the other innovators in the field. Here are five you should know about: 1) Exelixis (NASDAQ: EXCEL) Exelixis are focused on oncology therapeutics with three approved treatments covering kidney and liver cancer, thyroid cancer and melanoma. In January 2021, they also received FDA approval for a combined treatment using one of their existing medications and a newer product as a first-line treatment for the most common form of kidney cancer. 2) Regeneron (Nasdaq: REGN) Regeneron have eight FDA approved medications across cancer, asthma, pain management and infectious diseases. A particular success has been Eylea, which is a treatment for a range of eye diseases, including age-related macular degeneration. Regeneron has an extensive pipeline in research, development and testing. Approximately seven treatments are currently in phase 3 testing. It also has a patented DNA sequencing technology known as VelociSuite® Technologies which is one of the largest human sequencing efforts in the world. 3) Sage Therapeutics (NASDAQ: SAGE) Sage Therapeutics specialises in therapies for brain disorders and currently has depression, neurology and neuropsychiatry franchise programs. It offers the first and only approved post-partum depression (PPD) product known as Zulresso® and is also in phase testing for treatments covering PPD, major depressive disorder, treatment resistant depression, Parkinsons Disease, Alzheimer’s Disease, Dementia and Huntington’s Disease. Further to this, Sage has formed a global collaboration with Biogen (NASDAQ: BIIB) related to two of its treatments in phase testing. 4) Gilead Sciences Inc (NASDAQ: GILD) Gilead covers three primary disease areas, including viral diseases, inflammatory diseases and oncology. It has 16 FDA approved medicines for HIV, oncology and hepatitis C. Gilead recently acquired Immunomedics in October 2020 which has an approved treatment for metastatic triple-negative breast cancer. Gilead has a range of products in research, development and testing, one of which is anticipated to extend the existing successful HIV treatment program and another, Filgotinib, anticipated to be a breakthrough treatment for rheumatoid arthritis. 5) Vertex Pharmaceuticals (NASDAQ: VRTX) Vertex is primarily known for its cystic fibrosis medications and currently has four FDA approved treatments for this disease. The most recent of these, Trikafta, could assist up to 90% of patients with improved lung function. It has also acquired other biotechnology companies to expand its expertise and now has a pipeline of products in research, development and testing covering diseases and concerns such as diabetes, sickle cell disease and beta thalassemia. Ways to invest in biotechnology Australian investors are typically well-exposed to the concentrated Australian biotechnology market including CSL but may consider the US for exposure to a more diverse and far larger biotechnology market. Investors could consider direct shares though it is worth being aware of the high failure rates of drug testing and long periods of development (i.e. long periods where there may be no or a limited return on investment). This can mean it can take a long time to see returns (if at all). Alternatively, managed investments can assist with diversification and the risks inherent in the biotechnology industry by spreading the investment over a larger number of companies. ETFS S&P Biotech ETF (ASX Code: CURE) offers broad and focused exposure to US biotechnology. All the US companies referenced in this article are included in this ETF.

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Weekly ETF Monitor for week ending 26 February 2021

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Mar 02, 2021

This week's highlights Equity market saw a volatile week with most major benchmarks finishing lower. Short Nasdaq-100 fund SNAS was the top performing fund for the week followed by BBUS. Australian resources funs QRE and OZR were the top performing unleveraged equity funds. LNAS was the biggest decliner for the week, followed by a range of tech-heavy funds including ATEC, ASIA, ESPO and HACK. Precious metals were mixed, with palladium (ETPMPD) and silver (ETPMAG) posting positive weeks, while gold declined. Platinum (ETPMPT) was the biggest mover, ending the week 5.5% lower. Oil fund OOO gained 3.6% for the week. Currency funds YANK, EEU and USD were also amongst the top performers in the back of a lower AUD. Total reported flows into domestically domiciled ETFs were $339m, while outflows totalled $147m. Nasdaq-100 fund NDQ and domestic property fund MVA saw the week’s biggest inflows, followed by a range of equity and fixed income funds. Hedged S&P 500 fund IHVV saw the biggest outflows or the week. VAS was the most traded fund for the week, followed by IHVV and NDQ, which saw above average volumes. ETFS Ultra Short Nasdaq 100 Hedge Fund (SNAS) returned 11.7% for the week. SNAS provides inverse exposure to the Nasdaq-100 Index within a target range of -200% and -275% of its net asset value. Furthermore, SNAS is currency hedged to reduce exposure to movements in the AUD/USD exchange rate.

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Weekly ETF Monitor for week ending 19 February 2021

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Feb 23, 2021

This week's highlights Equity markets eased off the accelerator last week and treasury yields climbed. ETFS Physical Platinum (ETPMPT) was the best performer over the week up 4.5%. Sector wise, financials and resources also performed well. BetaShares Global Banks ETF (Hedged) (BNKS) was up 3.2% and VanEck Vectors Australian Banks ETF (MVB) up 2.7%. The worst performers for the week were gold miners and healthcare. VanEck Vectors Gold Miners ETF (GDX) was down 7.6% and ETFS S&P Biotech ETF (CURE) was down 4.4%. Net flows for the week were A$242m, comprised of A$329m of inflows and A$84m of outflows. The largest flows were seen into BetaShares Australian High Interest Cash ETF (AAA) and BetaShares Asia Technology Tigers ETF (ASIA). The strengthening Aussie dollar looks to be encouraging investors into unhedged ETF variants. iShares Core S&P 500 (IVV) also had strong inflows whilst iShares S&P 500 AUD Hedged (IHVV) had strong outflows. Vanguard Australian Shares Index ETF (VAS) and SPDR S&P/ASX 200 Fund (STW) continue to have the largest turnover of products with ETFS Physical Gold (GOLD) rounding out the top ten. ETFS Physical Platinum (ETPMPT) offers investors a simple, cost-efficient and secure way to access platinum by providing a return equivalent to the Australian dollar price movement of platinum less a daily management fee.

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Weekly ETF Monitor for week ending 12 February 2021

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Feb 16, 2021

This week's highlights Equity markets hit new record highs last week, with the technology and China funds leading the way. CETF was the week’s top-performing equity fund, followed by FANG, ASIA, TECH and CNEW. Domestic property funds (SLF and MVA) and equity yield funds (RDV and DVDY) were amongst the biggest decliners, alongside biotech fund CURE, which gave back some of its gains from the previous week. Precious metals were mixed, with palladium (ETPMPD) returning 7.6% to be the week’s overall top-performing fund. Gold and platinum declined, while silver gained. Oil fund OOO was also amongst the top performers, gaining 4.6%. Total reported flows into domestically domiciled ETFs were $508m, while outflows totalled $207m. Low volatility fund WVOL saw the week’s biggest inflows, followed by international equity funds including IEU and IVV. Hedged S&P 500 fund IHVV saw the biggest outflows for the week. VAS was the most traded fund for the week, followed by AAA and IOZ. IEM saw above average volumes. ETFS FANG+ ETF (FANG) returned 3.7% for the week. FANG offers investors exposure to a concentrated portfolio of global innovation leaders in the tech and tech-enabled space, including Apple, Alphabet (Google), Amazon, Netflix and Tesla, amongst others.

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Weekly ETF Monitor for week ending 5 February 2021

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Feb 09, 2021

This week's highlights Equity markets bounced-back last week, with high-beta plays outperforming. ETFS S&P Biotech ETF (CURE) was the top performing unleveraged fund for the week, adding 9.4%. India (NDIA), Asian technology (AISA), innovation leaders (FANG), esports (ESPO) and battery technology (ACDC) funds were all amongst the top performers. ETFS Ultra Long Nasdaq 100 Hedge Fund (LNAS) was the overall top performing fund, returning 13.0%. Major precious metals declined last week, with gold (GOLD, QAU and PMGOLD) ending the week lower. Silver (ETPMAG) also ended the week down, having been more than 8% higher in Reddit-inspired trading earlier in the week. Platinum (ETPMPT) and palladium (ETPMPD) both posted modest gains, while oil fund OOO gained 8.9%. Total reported flows into domestically domiciled ETFs were $318m, while outflows totalled $143m. Silver fund ETPMAG saw the week’s biggest inflows, followed by a range of equity funds including IOZ, IHVV, QUAL and NDQ. Domestic equity fund A200 saw the biggest outflows for the week. IOZ was the most traded fund for the week, followed by IHVV and VAS. IHVV and ETPMAG saw above average volumes. ETFS Reliance India Nifty 50 ETF (NDIA) returned 8.8% for the week. NDIA aims to track movements in India’s benchmark the NSE Nifty50 Index and provides investors with exposure to the growth potential of India’s rebounding economy, which the IMF predicts will grow by 11% in 2021.

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Latest Reddit campaign for Silver may be on the money

Feb 05, 2021

Demand for silver skyrocketed this week, off the back of the latest campaign from Reddit’s r/wallstreetbets group. Investors may wonder what’s beyond the frenzy and whether the Reddit campaign has unexpected substance to it. Download the complete article here The Reddit Story Following a bid to counter short-selling of GameStop, r/wallstreetbets turned its collective eyes to silver. With the claim from some segments within the Reddit group that silver prices were being held artificially low by bank and hedge fund manipulation and short-selling, amateur investors piled in to purchase silver ETFs and mining companies in a bid to push prices up. There were record volumes for trades into US silver ETFs on Monday 2 February 2021 and prices rose to eight-year highs. While the GameStop campaign may have been successful in pushing prices up, silver is a different story for a few reasons. Firstly, silver is a far larger, more complicated and more valuable market compared to the much smaller share pool of GameStop. Silver is used and purchased for industrial and investment purposes and only a portion of the world’s silver reserves is traded on stock exchanges. Effectively, there are more factors influencing the prices of silver than simply share trading. Secondly, there are only limited short positions in silver, in fact, most banks and investment managers hold long positions on silver and held a positive outlook on silver’s prospects prior to the Reddit rally¹. By contrast, there were concerns over GameStop’s future before Reddit warriors pushed prices up to levels that are now considered vastly inflated compared to the company’s financial position and prospects. While the rationale for the silver Reddit rally may be flawed (and there are questions over the extent Reddit really caused the rally), investors may have inadvertently selected an asset with a promising outlook and potential benefits to a portfolio. It is up to investors to take the time to assess the value of silver before selling up when the frenzy eases. The drivers of silver and it's outlook in 2021 Silver has a range of uses and more than 50% of demand is for industrial purposes, such as in cars, solar panels, medical equipment and electrical circuits². Annually, over 36 million ounces of silver is used in motor vehicle production³ and this is predicted to grow to nearly 90 million ounces by 20254 Silver is also antimicrobial, which makes it popular in medical use5. In 2020, silver supply and demand was affected by COVID-19 with lockdowns dampening industrial demand, while mining production also fell and impacted supply. Industrial production is tipped to ramp up in 2021, supported by government stimulus packages globally, the rollout of vaccines and the prospect of economic recovery. In turn, demand for silver is likely to increase in line with this. Further, silver is heavily used in renewable energy systems, such as solar panels and as part of electronics. Silver is also likely to benefit from the refocused efforts on climate change globally, with a number of major renewable energy projects announced, such as the NSW government’s $32 billion renewable energy plan6. Investment demand for silver was also trending upwards from late 2020, with investors looking for alternative safe-havens to gold. Silver-backed exchange-traded products (ETPs) surpassed 1 billion ounces for the first time7. Silver can be used as a store of value and traditionally offers positive performance during periods of low interest rates. With the prospect of continued low global interest rate and concerns over potential inflation, investors have shown increased interest in exposure to this precious metal. To read more download the complete article

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Weekly ETF Monitor for week ending 29 January 2021

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Feb 02, 2021

This week's highlights Major equity markets sold off last week on valuation concerns and Reddit-inspired short squeeze mania. Top performing equity funds were all short plays; SNAS, BBUS, BBOZ and BEAR. At the other end, Australian resources ETFs (MVR, QRE and OZR) were the poorest performers amongst non-leveraged funds. Battery technology (ACDC), energy (FUEL) and Asia tech (ASIA) were also all in negative territory. Precious metals had a strong week. Silver (ETPMAG) was the top performer across the market following Reddit-led buying across physical and ETF markets globally. Gold (GOLD), platinum (ETPMPT) and diversified precious metals basket (ETPMPM) funds were all amongst the week’s top performers. Leveraged US dollar fund YANK and pound sterling fund POU also posted strong weeks. Total reported flows into domestically domiciled ETFs were $680m, while outflows totalled $21m. Domestic equity fund VAS saw the biggest inflows, followed by a range of global equity funds including VGS, VDHG, VGAD and VGE. Cash fund AAA saw the bulk of the week’s outflows. VAS was the most traded fund for the week, followed by STW and BBOZ. VGS saw above average volumes. ETFS Physical Silver (ETPMAG) was the week’s top-performing fund, returning 8.9%. ETPMAG aims to track movements in the spot price of silver in Australian dollars by providing investors with an entitlement to physical silver bullion. The bullion is vaulted with JP Morgan in London and is independently audited twice annually.

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Weekly ETF Monitor for week ending 22 January 2021

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Jan 27, 2021

This week's highlights Technology and Asia focused ETFs dominated the list of top performers in a strong week for equity funds across the board. ETFS Ultra Long Nasdaq 100 Hedge Fund (LNAS) returned 10.2%, while ETFS FANG+ ETF (FANG), ASIA, IZZ and ATEC were all amongst the top performers for the week. Bearish funds (SNAS, BBUS and BBOZ) were the biggest decliners for the week, while global sector funds such as financials (BNKS), energy (FUEL) and infrastructure (MICH and VBLD) also posted negative weeks. Precious metals had a quiet week with gold (GOLD) adding 0.5%. Palladium (ETPMPD), which dropped by 3.1%, was the biggest mover for the week. Total reported flows into domestically domiciled ETFs were $242m, while outflows totalled just $2m. Domestic sustainability fund FAIR saw the biggest inflows for the week, followed by a range of global equity funds including QUAL, ASIA and ACDC. VAS was the most traded fund for the week, followed by STW and IOZ. ASIA saw above average volumes. ETFS Ultra Long Nasdaq 100 Hedge Fund (LNAS) was the week’s top performing fund, returning 10.2%. LNAS uses a portfolio of long Nasdaq 100 futures to gain a leveraged exposure to the Nasdaq-100 Index, which is actively managed at between 200% and 275% of the fund’s net assets. LNAS is also currency hedged to reduce the impact of any moves in the AUD/USD exchange rate.

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Three trends for 2021

Jan 25, 2021

Investors may be feeling a cautious sense of optimism as we enter 2021 with global vaccine rollouts. Last year, technology companies and commodities were investment winners, so what will 2021 hold for investment markets? There are three trends we see influencing ETF investments in 2021: the movement to value, thematic investing and short & leveraged investing. Download the complete paper here Movement to value As news of vaccines hit markets in late 2020, investors started to shift their approach away from a pure growth focus and towards value investments such as banks and industrials. This trend is likely to continue in 2021 as investors anticipate a return to ‘normal’ and start to view growth stocks, particularly in the technology sector, as overpriced. The Australian sharemarket is strongly skewed towards financials and resources, including companies typically falling into value investments. Investors could consider tailored Australian exposures such as ETFS S&P/ASX 300 High Yield Plus ETF (ASX Code: ZYAU). Thematic investing with climate and biotechnology Investors are increasingly interested in tailored investments accessing the growth themes of the future, as well as being able to invest according to their views and values. ETFs targeting specific themes should continue to be prominent in the coming year and investors are becoming more aware of how to use these as part of their portfolios. While themes like virtual connectivity will continue to be popular, dynamics in the coming year should mean climate change and biotechnology will be focus points for investors. Investors considering thematic investing may wish to look at ETF Securities’ Future Present Range of ETFs. Those specifically interested in biotechnology may consider ETFS S&P Biotech ETF (ASX Code: CURE). Alternatively, investors focused on renewable energy may consider battery technology which is a key supporter for the viability of renewable energy. ETFS Battery Tech & Lithium ETF (ASX Code: ACDC) is the only Australian-listed ETF to offer exposure to the global battery technology supply chain. Short and leveraged investments Across the volatility of 2020, many self-directed sophisticated investors took a short-term approach to trading and embraced short & leveraged funds. As the world continues to recover from COVID-19 and manages the ongoing tension in global relationships, use of short and leveraged instruments is likely to continue along with continued bouts of volatility. Some sophisticated investors may anticipate changes in growth sectors like technology as the world opens again and choose short-term investments reflecting their views. For more information on the short & leveraged investments offered by ETF Securities, please click here. Moving forward in 2021 The last year was unexpected and has shifted global investment behaviour and dynamics. The Australian ETF market will continue to grow and evolve to meet the needs of investors and if the past year is any indication, investors are looking for opportunities and increasingly using ETFs for their market exposure.

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2021 trends for your clients’ portfolios

Jan 25, 2021

Investing may look a bit different in 2021 as the year starts with cautious optimism and global vaccine rollouts. The investment winners in the year of the pandemic were technology companies, but what lies ahead this year for your clients? Portfolios will be guided by five trends this year: economic drivers such as recovery from COVID-19 and low global interest rates, along with trends like the movement to value, thematic investing and short & leveraged investing. Download the full whitepaper Global economic recovery from COVID-19 We now have approved vaccines being rolled out in the US and UK, along with planned pipelines for the rest of the globe, but investors shouldn’t assume an instant return to normal. It takes time to vaccinate a population and many countries are still battling severe outbreaks. Governments globally have announced generous stimulus packages to revive business activity. The European Union approved a coronavirus stimulus package to raise 750 billion euros1 after being hard-hit by the pandemic, particularly Italy and Spain in the later stages but countries like the Czech Republic struggling in later waves2. Investors can access European recovery through an ETF like ETFS EURO STOXX 50® ETF (ASX Code: ESTX). Beyond this, many countries are considering or resuming broadscale projects to further economic growth, with infrastructure one option for this. For example, India, initially subject to the world’s toughest lockdowns to manage COVID-19, has forged ahead with its existing US$1.4 trillion infrastructure program3. Investors can access activity in India through an ETF like ETFS Reliance India Nifty 50 ETF (ASX Code: NDIA). Low interest rates globally Interest rates declined further in 2020 to support global economies dealing with the pandemic. It is likely cash rates will remain low through most of 2021 to support recovery with the potential of increases late in the year. Low interest rates are typically supportive of business development and growth activities however have also placed pressure on yield-focused investors. Many have been forced to consider asset classes outside of fixed income to support their needs and this trend is likely to continue across the year. Some will take a ‘riskier’ approach to their yield investments and look for dividend-bearing assets, including equities. Investments in “safe-haven” commodities including gold and silver have a low opportunity cost and offer stability so are likely to continue to be popular across the year. Precious metals also typically perform well in periods of low interest rates, with investors using these, particularly gold, rather than cash as a store of value and to protect against inflation4. Investors can access gold on the ASX through the ETFS Physical Gold (ASX Code: GOLD). Movement to value investments Investors tend to move away from growth investments like technology in periods of economic recovery or growth. As news of vaccines hit markets in late 2020, investors started to shift towards value investments such as banks or industrials. This is likely to continue across 2021. The Australian sharemarket is strongly skewed towards financials and resources, which include companies typically falling into value investments so investors may look towards broad Australian exposures, slightly tailored cross-market exposures like ETFS S&P/ASX 300 High Yield Plus ETF (ASX Code: ZYAU) or sector exposures to refocus on value investments. Thematic investing Investors have been increasingly interested in the themes of the future in recent years and being able to invest according to their views and values. This trend is likely to continue in 2021. Dynamics in the coming year, such as vaccine rollout or renewed focus on climate change are likely to see biotechnology and climate change related investments appeal in 2021. Investors interested in healthcare may take a thematic or sub-sector approach such as healthcare biotechnology through funds such as the ETFS S&P Biotech ETF (ASX Code: CURE). Investors focused on climate change may consider the growing range of ETFs capturing sustainability, or alternatively consider battery technology which is key to the viability of renewable energy. ETFS Battery Tech & Lithium ETF (ASX Code: ACDC) is the only Australian-listed ETF to offer exposure to the global battery technology supply chain. Short & leveraged investments Across the volatility of 2020, many self-directed sophisticated investors took a short-term approach to trading and embraced short & leveraged funds. The popularity in the previous year suggests we may see the range available in Australia continue to expand to support interest in investing based on high conviction views. Find out more about the short & leveraged products offered by ETF Securities here. 1. EU leaders finally approve coronavirus stimulus package (cnbc.com) 2. How COVID-19 upended life in Europe throughout 2020 | Euronews 3. Source: India 2030: exploring the Future; National Infrastructure Pipeline 4. Gold investment demand remains well supported in 2021 – report - MINING.COM

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Weekly ETF Monitor for week ending 15 January 2021

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Jan 19, 2021

This week's highlights Markets came off slightly last week from fresh highs. Small caps, low volatility and biotechnology all performed well over the week. iShares Core S&P SmallCap ETF (IJR) was up 2.9%, ETFS S&P 500 High Yield Low Volatility ETF (ZYUS) up 2.6% and ETFS S&P Biotech ETF (CURE) up 2.5%. The worst performers over the week were gold miners, with BetaShares Global Gold Miners ETF (Hedged) (MNRS) was down 5.4%. Net inflows for the week were A$236m. iShares S&P/ASX 200 ETF (IOZ) had the biggest inflows of A$60.2m, while ETFS Physical Gold (GOLD) had A$26.7m. The biggest outflows were seen in BetaShares Australian High Interest Cash ETF (AAA) totalling A$33.9m. The most-traded ETFs over the week were Vanguard Australian Shares Index ETF (VAS), BetaShares Australian High Interest Cash ETF (AAA) and BetaShares NASDAQ 100 (NDQ). ETFS Battery Tech & Lithium ETF (ACDC) continues to remain the best 12 month performer up 64.4%.

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Weekly ETF Monitor for week ending 8 January 2021

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Jan 12, 2021

This week's highlights: As the electric vehicle revolution gains more momentum, Battery Technology and Miners soared. ETFS Battery Tech & Lithium ETF (ACDC) was up 9% and BetaShares Global Energy Companies ETF (Hedged) (FUEL) up 8.8%. Global real estate and Australian Tech had a poor week. SPDR Dow Jones Global Real Estate Fund (DJRE) was down 2.6% and BetaShares S&P/ASX Australian Technology ETF (ATEC) down 2.3% Australian domiciled products maintained strong inflows of A$268m over the week. Beta domestic equity products and Global Tech saw most of the inflows. iShares S&P/ASX 200 ETF (IOZ) had A$32.4m of inflows for the week and SPDR S&P/ASX 200 Financials ex A-REITS Fund (OZF) A$14.1m of outflows. The start of 2021 has continued a strong rebound in equity markets as investors continue to support emerging megatrends such as Battery Technology and Lithium. ETF Securities’ ETFS Battery Tech & Lithium ETF (ACDC) is up 71% over 12 months. Currently the best performing Australian listed ETF.

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