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Dave Nadig
3:39
and with limit orders and a little care, the answer is almost always "yes."
Curious and Confused
3:40
How can biblically responsible ETFs be considered part of socially responsible investing, considering these ETFs actively screen out things like the "LGBT lifestyle?" Deciding something is "Socially Responsible" seems a bit arbitrary at times-- who/what decides if a fund is a socially responsible ETF?
Dave Nadig
3:40
So, first, allow me to promote a webinar I'm doing on Tuesday on PRECISELY this topic.
3:41
Second, ESG suffers from pretty much the exact same problem as the Smart Beta question I answered a few minutes ago.  My version of it may be totally different than yours.
In fact, it might be literally opposite -- just like with factor funds. You may want to screen OUT gun stocks and booze companies.  That might be my actual target for investing.
3:43
It gets most complicated around the "S" - and again, there's no magic solution.  We use the ESG flag as a convenient bucket for funds that have, as their stated goal, something related to ESG -- whether thats a fund that excludes certain kinds of companies, or one that deliberately targets so-called "sin stocks"
(I admit, it's far from an exact science -- we don't call fossil fuel ETFs "environmental funds" even though they're the equivalent of a "sin stock" fund on the "social" vector.)
Marty
3:44
So you think we have reached product development peak?
Dave Nadig
3:44
See my comment about Woundcare!  But the short answer is - no.
While we keep seeing a lot of new, niche products, we also see a pretty healthy rash of closures.  I see that as mostly a good thing.
3:45
Ultimately, there's a natural limit on some parts of the market.  I don't think we're going to end up with 50 Robotics ETFs, for instance.
But there's certainly room for a few. Not only do exposure differences matter, there's a difference between, say, Schwab launching a new fund, and me launching "Dave's Excellent Fund."  Schwab has distribution.
3:46
So even in a seemingly crowded market, where it seems like all the obvious ideas are taken, I still think we'll see new products launch -- and thrive
I think there's a lot of room in thematic ETFs, I think we'll see a bunch of new active ETFs, and I think ESG will continue to be a slow, but steady trickle.
Cryp-To & The Snow Dog
3:47
It's tax season, so: What the heck is a K-1 form and why does it matter that some ETFs don't issue it?
Dave Nadig
3:48
We have an article going up on this shortly, but in a nutshell:
If a fund is organized as a partnership (like, say, a commodities pool is) then it has to issue a form showing your partnership interest. Form K-1.
In the commodities space, this both means more complex taxes, AND, critically, that you will have a reported gain (or loss) whether or not you have actually sold anything.
3:49
So you can theoretically be sitting on a nice gain in your, say, agricultural fund, get your K-1 form, and then have to write a check to pay the taxes on that unrealized gain.
3:50
And I don't know anyone who likes paying their taxes or filing them.
So ditching all of that is generally a pretty good deal.
Eli Krohner
3:51
What do you think of Grantham from GMO saying to invest most of your money in EM and the rest International?
Dave Nadig
3:51
Hi Eli (and sorry, I dont think ill get to the rest of your questions)...
3:52
So, first -- I'm not a "market call" guy.  I used to be an active mutual fund manager, and I was bad at it.  My portfolio is incredibly boring.
That being said, ...
I read those comments though, and his argument seems to simply be "Boy, this all looks really expensive"
3:53
My experience has been that getting those kinds of calls right is essentially impossible.  Of course SOME people will get it right.  Everytime we have a major correction, stars are born.  Like clockwork.
3:54
But part of why I'm a boring investor is to not have to worry about that.  THere's no question in my mind that the markets will have several huge corrections before I'm dead.  But I also know theres no way I'll time them right.
So I'm a big believer in just being boring, allocating in over time, and re-balancing on a regular basis.  Re-balancing cures so many problems.
OK, a few minutes left, and I'm sorry if I didn't get to your question, I'm trying to just sort of mix them up.
paul
3:55
After the letter from SEC on 18th Jan do you still see possibility of an Bitcoin ETF ? Will the industry be able to tackle  issues mentioned by SEC ( Valuation, Liquidity, Custody, Arbitrage, Manipulation)
Dave Nadig
3:56
Well, I wont comment on what regulators will or won't do, but I will say that I appreciated the crystal clarity of the SEC memo.  It was frankly really unnusual to have that clear a delineation of things from them.
In general, I see this as primarily an ecosystem problem.
3:57
Ecosystem problems tend to be solved by time, more than by regulation.
So if we look at the challenges faced in crypto, in cannabis companies, even in corners of the market like green bonds -- its mostly just long term market forces that will solve these problems.
3:58
Sorry if that sounds like a cop out, but I genuinely believe thats the core issue -- it's not that any of these markets are broken, it's that they're just young.
I also think we're just at the beginning of seeing how this SEC is going to interact with the ETF issuer community.
Cryp-To & The Snow Dog
3:59
Do you think we'll see a regulatory crackdown on "closet indexing" in U.S.-listed active funds the same way we're seeing it overseas?
Dave Nadig
3:59
OK, last question.
Connecting…