This week saw Vanguard warn investors it could see a restriction imposed by US regulators on its stakes in companies within certain sectors.
Vanguard filed disclosers with the Securities and Exchange Commission to highlight the possibility that the US regulator could enforce caps on its physical equity ownership.
If enforced, the caps could mean higher expenses and an impact on performance for index fund investors.
Vanguard said the new disclosures do not signal any imminent changes but are instead meant to educate investors on potential risks.
The news is part of a broader conversation about engagement with asset managers and regulators concerning passive ownership growth and its impact on corporate governance and market efficiency.
Regulatory shifts continue
Luxembourg’s Minister of Finance Gilles Roth announced actively managed ETFs will be exempt from subscription tax after 2025, matching the same tax exemptions as passive ETFs.
The move will be huge step for Luxembourg, said Olivier Gaston-Braud, partner at Dechert Luxembourg, showing the “direction of travel” for the country as a jurisdiction.
BaFin also started to use European Securities and Market Authority’s (ESMA) ESF fund naming rules ahead of the autumn deadline, with the German regulator mentioning it had “adjusted its administrative practise” as soon as the rules were introduced.
Meanwhile, regional regulatory dispersion has been tied to stagnating the growth of the market, with Irish lawyers calling for more harmony, particularly with the share class naming dispersion.
Stream of regionally focused launches
BlackRock launched a five strong range of active equity ETFs, targeting world, US, Europe, emerging markets and Asia ex Japan exposures.
The suite will be managed by BlackRock’s systematic equity investment team, aiming to outperform their respective regional MSCI index by taking small positions across a wide range of securities.
First Trust followed with the launch of a US momentum ETF – the First Trust US Momentum UCITS ETF (FTMO) – incorporating valuation considerations to guard against market exuberance.
Frankin Templeton also launched a Japan equity ETF, making it the second ETF to track the FTSE Japan index.
