You are viewing the chat in desktop mode. Click here to switch to mobile view.
X
ETF.com Live Chat!
powered byJotCast
Prev Page View Full Chat
Dave Nadig
3:28
HI Terrance, there was actually a great one just last week from Schwab:
For those of us that track this day in and day out, I will say we tend not to see big surprises.
ETFs get used more and more by younger investors, they get used because of cost and brand recognition
3:30
There are nuances, but sure, a lot of the headlines are obvious.
What we do occasionally see, however, is some interesting trend-shifts.
3:31
For instance, ESG is "all of the sudden" a bigger issue than anytime I can recall in my career.  We saw that start bubbling up the surveys in the past few years.
So I still find them all valuable -- both the ones we've done with advisors here at ETF.com, and the ones I read from other industry groups.
It may be a bit navel-gazy, but I think its interesting.
Anonymous
3:31
Why are so many Vanguard ETFs seeing such huge inflows right now?
Dave Nadig
3:31
Well, in a word, cost.
3:32
The ETF flows story has been almost overwhelmingly about people abandoning high-cost underperformance in favor of low-cost beta.
some of the high cost is active, sure, and a lot of the low-cost is plain vanilla indexing.
Vanguard has been in that game for a very long time, so the trend has really been their friend.
3:33
AS a firm, they've also been very cautious in product launches historically, so when they DO launch something new, investors who are already Vanguard loyalists seem pretty willing to pile in.
Jon R
3:34
What are your thoughts on ETFs powered by AI? Is this the future, or a flash in the pan?
Dave Nadig
3:35
So back in my day (get off my lawn) we just called these "quant strategies."
But in all seriousness, really, the whole "AI" thing just means "we have a fancy way of training our black box."
I am inherently skeptical of black boxes, and I think thats a healthy thing.
It's not that they CAN'T do what they say -- of course some will.
3:36
but I worry about about things like machine-learning systems, because almost by definition it's automated data-mining, and one thing we know about finance is that often what worked yesterday isn't going to work tomorrow.
3:37
So I find it all very intriguing, and I love reading the research, but I'm not convinced that as a class, AI will just systematically be "smarter" than the pricing mechansims of the market.
3:38
ok, last question:
Elphaba
3:38
The actively managed factor funds from Vanguard have been pretty dormant since their launch. Why do you think that is?
Dave Nadig
3:38
Man, aren't these interesting products?
From Vanguard of all people - actively managed factors.
3:39
A few things.  First, the main reason I think these funds are active is so that they can adjust their portfolios fluidly without having an insanely complex ruleset.
Meaning -- if a stock drops off the momentum screen on a tuesday, the fund doesn't have to wait for a month to "reballance" it out of the Momentum portfolio.
3:40
So that means a few things.
unstable portfolios, and a truly active track record
3:41
They're not appealing to just a normal vanguard low-cost investor from the previous question.
I think that means you're going to see a real wait-and-see attitude by investors - just like investors tend to have around any active manager.
But, I think Vanguard is in this for the long haul.
they just don't shut products down very often.
3:42
So maybe it takes a year, maybe it takes 3, but these funds will ultimately live or die based on their performance vs. other issuers low-cost passive factor funds.
It's a super interesting -- and somewhat odd -- position for vanguard to be in.  But I wouldn't count them out.
3:43
OK, that's going to wrap this week.  As always a transcript will be up shortly.
We should be on for same time next thursday.
Thanks everyone, and see you next week.
Connecting…