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Dave Nadig
3:01
Hey folks, thanks for joining etf.com live!
3:02
I just jumped off a webinar, so coming in hot here.  Let's get started with a super easy one.
(As always, we'll have a replay up shortly after this, and you can always enter questions anonymously as we're going)
Ehud
3:02
Is any etf for cobalt
Dave Nadig
3:02
Super easy: nope.
3:03
but the longer answer: there are a bunch of narrow commodities and such where we don't have good products, but usually for good reason
like, there's no good way to invest in steel directly
thats more a function of the underlying market, and it being tough to securitize.
in the case of cobalt, or even rare earth metals, the reality is the markets are so thin that the demand likely wouldn't be there.
3:04
OK, next up:
Ira Artman
3:04
I thought I read somewhere that leverage was not permitted in the design of indices that were permitted for ETFs. (Perhaps in May 2017 ETFReport?). How then do we have leveraged ETFs, with all degrees of leverage?
Dave Nadig
3:04
You may be remembering the back and forth with the SEC on the 4X leveraged S&P 500 ETF that was filed about a year ago.  That was approved, then unapproved.
Similarly, there is still hanging a proposed limit on the use of derivatives to generate leverage, which would effectively have created a cap of 150% derivatives exposure, and thus 250% total exposure.
3:05
This would make 3X funds either go away or be quite tricky to manage (theres some clever math that could probably keep them alive).
But that's all by the wayside at the moment.
I don't think there's a lot of momentum to implement these rules right now (or the liquidity rules that were proposed.)
3:06
(Now someone will prove me wrong, but I don't think there's been much movement."
We continue to see products get filed and come to market.  And with exchange traded notes, issuers can kind of launch whatever pattern of returns they want.  Heck BMO launched the 3X FANG stock ETN this year (FNGU) and it has like, 50mm in it!
3:07
So in general, I believe that if investors want to put money in it, the industry will find a way to make it, unless the regulators step in with strong will.
Guido
3:08
I was looking to the overview of the Theme ETFs and missed the SOCL from Global. How is thh list composed to understand why some ETFs are not listed. I found via your tool 64 Theme ETfs
Dave Nadig
3:08
Hi Guido -- yeah, this is a bit of a tricky one.  There's really no common way of defining what a "thematic" ETF really is.
in general, the methodology is that themes cross sectors.
So if a fund is really just, for example, a tech fund, but with a thematic name on it, the Factset methodology will call it a tech fund
3:09
But it's a reasonable point.  THere's a similar issue with ESG.
I mean, "solar energy" is a legit segment of the market, regardless of whether its an ESG fund or not.
so do you call it ESG? Even if it doesn't itself call it ESG?
I wish I had super clean answers for it, but its these edges that keep me up at night.  But also make the space interesting!!!!
An Investor
3:10
Thanks for the 101 Webinar, it was super helpful.  One lingering question I have ... do I actually have to care about what's going on in terms of creating/redemption?  Does it actually matter to me?
Dave Nadig
3:10
Drew hit on this a bit, but the short answer is - not really.
Your individual trades of 500 or 100 or even 10,000 shares aren't directly going through the creation/redemption process.
3:11
theoretically, you're just part of the pressure on prices in a given day.  If you're buying 100 shares, and thousands of other small investors are buying 100 shares, well, you'd expect the price of the ETF to get SLIGHTLY rich vs. the value of the underlying securities.
3:12
When that happens, that's when the AP steps in, and does a creation.  THey'll sell a big block (say, 50,000 shares, over multiple trades), and then buy the underlying.  That will drive the price of the ETF down, and the price of the stocks up.
But yeah, as the individual investor, you don't have to worry much, other than to know its going on in the backgroudn.  Now...
3:13
if you're an institution - and you are personally trading 50k shares - then you care more.
because you can call the AP and have them do the trade for you, effectively accessing the creation/redemption window, and getting a negotiated price very close to NAV.
but thats at the giant level.
John S.
3:13
Hi Dave. To follow-up on your last webinar comment about dollar-cost averaging... how do small robo advisors implement diversified ETF portfolios for clients without requiring account minimums? I'm thinking companies like Acorn...
Dave Nadig
3:14
Super good question!  So, there are a few things that can happen.
3:15
the first is that the Robo actually just has one pool of, say, SPY.  So they effectively run their own "fund" of SPY shares.  And they can keep track of which shares belong to who, even if they are fractional.
that's the same solution that different approaches to the 401k market have tried
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