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Dave Nadig
3:17
Great question.  In general, if you're not comfortable with learning the basics of trading, ETFs may not be for you -- you DO need to learn to make trades, use limit orders, accept the variability of pricing in the middle of the day, and so on.
Second, if you're dollar cost averaging small amounts frequently.  Say you put 100 bucks a week into an IRA, or your employer contributes to yoru 401K.
all those trades -- even if they are comission free -- can add a lot of friction to your portfolio.
3:18
with a mutual fund, you can both get the assurance of end of day NAV, and you can invest in whatever small-dollar amounts you want.
and of course, if you shop around, you can get pretty low cost, index-based mutual funds, like you see in most of ETF land.
3:19
So why bother with ETFs?  Well, increased transparency, generally lower costs, and better taxes.  And of course, trading is a boon for some investors.
Todd Rosenbluth - CFRA Research
3:19
Looking forward to our Inside Smart Beta panel in June https://finance.knect365.com/smart-beta/agenda/1. What smart beta ETF is flying below the radar to you?
Dave Nadig
3:19
Thanks for the plug todd -- yes, that should be a fun session at Inside Smart Beta in NY next month.
Sumit Roy just did an article for us on the raging Small Cap market (one sec for link):
and theone that jumps out at me there is the First Trust Small Cap Growth fund FYC.
3:21
FT was actually one of the first real "Smart Beta" players, and they offer just dozens of factor and multi-factor products, some of which have been real winners over time.
FYC is a pretty standard growth fund in what it looks at: Price-Sales, Sales Growth, Momentum, etc...
but its a pretty active methodology.
3:22
and it's really just CRUSHED a lot of other approaches to the small cap growth sector -- it's high beta, but that's kind of what you want if your taking a flier on little growth companies
I think "Smart Beta" can often be most effective in the corners - like small cap growth, and that's the best example i've seen in a while
3:23
Of course, high beta means if small caps go south for 6 months, you'll get crushed in the wrong way but that's the price of taking a flier ....
Sallie Lockwood
3:23
Hi Dave, Is that proposed fiduciary rule completely dead in the water, or do you envision it being resurrected? What are plusses and minuses you see, either way?
Dave Nadig
3:24
Hi Sallie -- well, it's not COMPLETELY dead.  My understanding is that the DOL basically let it die at the end of April.
(there was a court case and they lost).
3:25
But, several states (CA and a few others if I recall) are independently trying to revive it.
I think in general we're at an interesting place on this front -- I could see stated getting pretty agressive here, essentially taking things into their own hands
we've seen the SCOTUS supporting that recently with other rulings
3:26
so while the DOL rule may be dead (and the SEC rule is better than nothing, if it happens), I could see, for instance, NY and CA having their own versions.
the end result would be that most national brokers (which is the vast majority) would likely just work companywide to the highest-common-standard.
3:27
in reality, a LOT of company policy was already changed a year or so ago just on the presumption that the DOL rule would go into effect, so a lot of the good that would have come from full implementation has already been "banked"
that could erode, of course, but these things move slowly, and its hard to un-wind something thats an investor benefit.
Great questions, a few more and we'll wrap it up.
Anonymous
3:28
I can’t recall your past ETF assets prediction. Was it $10 trillion in 2020? Or pass mutual fund assets in 2025? Anyway my question is: are you on track? Also, do you watch Billions? If yes, did you catch the ETF/ index reference a couple episodes ago?
Dave Nadig
3:29
So, the core prediction is passing mutual funds by 2025, which gets is to I think 15T?  We've made various versions of the chart over the years -- but never lowered it.  We've been right on track year after year since Matt Hougan and I made those predictions back in 2009
3:30
The flows have continued
and continue to be strong -- this year is less than last year, but we also had a less than bull market this spring.
Mutual funds continue to be stagnant, etc..
So I think were on track, assuming no MONSTER correctoins
Grace Hopper
3:31
Why don't all the issuers who want to launch bitcoin ETFs just make a fund that puts all its assets in GBTC?
Dave Nadig
3:31
well, among other things, GBTC isn't really direct bitcoin exposure in the sense that you get guaranteed 1-for-1 tracking of it.
3:32
second, there are SEC diversification requirements -- you cant make a fund that just buys all of one thing.  You can do it in things like a commodity pool, but the IRS and the SEC have some pretty strict rules around it.
Last, let's not forget that GBTC isn't even exchange listed -- it's pink sheet.  That created huge issues for most investment firms and boards.
3:33
So even the one fund that I know invested in GBTC -- I think it's ARKK, or it could be another ARK investments ticker -- has a pretty small position
3:34
Also, the SEC made it pretty clear they're paying attention for anyone trying to dodge the rules here.
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