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Dave Nadig
3:14
It's part of a trend towards asset management being "free" and advice being charged for appropriately.
But its a big, big phase shift for the industry
Punching Above My Weight
3:15
Should Fund AUM matter when choosing to invest in a fund? There are no cash flow issues like in mutual funds, we assume that newly launched ETFs have funding to be a going concern, and if aa fund does close, I can redeem via in-kind. I just dont't get it.
Dave Nadig
3:15
Well, no, not really.  For an index based ETF, having just the initial 5 or 10mm in assets is usually enough to run the strategy and deliver the returns you expect.
3:16
The reason people get hung up on AUM or volume is because they're mostly worried about their funds closing.
But this is also a bit of a silly concern.  Literally the worst case scenario when a fund closes is that you get it "sold out from under you" and potentially have a taxable gain you didn't plan on.
It's not like a closed fund means you lose all your money.
Advisors, however, hate it, because it's an awkward conversation to have with a client.
3:17
"Hey, that awesome ZYX fund I found last quarter?  Well, its closing ... so here's what I want to do ..."
its not a good call.
OK, lets see if I can successfully grab a question from twitter:
3:18
So, the continuation is -- is this good or bad for the business of calculating INAVs (intraday NAVs) and indexes in general.
3:19
The dirty little secret of INAV/IOPV is that really, almost nobody uses them.
They are really only useful as a yardstick for small investors, who happen to be looking at trading a less-then-super liquid ETF, that happens to be holding nothing but US stocks.
if there are any international holdings, or even bonds, INAV just doesnt work well because of timing problems.
3:20
And institutions just run their own realtime calculations of fair value, so they ignore it too.
So in the wake of the new rules, I see it mostly going away, but I don't think indexing disappears.
3:21
There's a certaintly to indexing that's been appealing for 40 years or so, and I don't think it's going to go away anytime soon.  It's essentially always cheaper to index.  Maybe just a LITTLE cheaper, but indexes are simple, easy to explain, and somewhat predictable.
BitcoinETF
3:21
When should we expect to see a reject from the SEC for the VanEck/SolidX etf?  If it does get approved, why is each share going to be priced around $200k?  If this is the case, will anyone be able to afford 1 share?
Dave Nadig
3:21
Interesting question!  I know nothing about the internal timeline for this, but it's important to note that the SEC doesn't have an artificial clock to hit.
3:22
they have certain deadlines for responses, but it can go on and on and on forever, essentially.
I'm not convinced the handle-hack (the $200k) answers enough of the SECs issues to get through, but its clever.
The reason for the hack is to essentially guarantee that nobody who isn't an accredited investor can even buy in.
3:23
The current standard is I believe $1m in liquidity, or $200k in reported annual income.
3:24
So while this isn't EXPLICITLY off limits -- I suppose someone could have no income and a 300k portfolio, and sneak in -- it definitely sends a "no little guys allowed" signal.
And since the SEC is always looking after that little guy, it could make a difference.
I think their other issues (around pricing, functioning markets, etc. etc. ) don't get solved that easily though.
Lois Gregson, FactSet Research
3:24
During my 20+ years in working with ETFs, I can think of a handful of specific events when advisors pulled money from other products and directed the assets into ETFs.  One such time was when C share mutual funds were inappropriately being used.  The benefit to ETFs were that the advisor did not have to worry about A, B, C share classes; the advisor could just buy or sell the ETF. If ETFs were to create different share classes wouldn't that degrade the ETF structure?
Dave Nadig
3:25
Hi Lois!
So, this is really an adjunct of the vanguard question.
3:26
One of the follow on possibilities of Vanguard taking all comers on their NTF platform was suggested by Michael Kitces in a video a few days ago.  He posited that issuers would have to make new share classes of ETFs, with higher fees, that could then be put in, say, Schwab or TD.
I agree Lois, this would be AWFUL for investors.  Just the worst.
but then again, its EXACTLY what iShares did with their Core funds.
EEM and EFA are vastly more expensive then IEMG and IEFA, but they are almost (not completely) identical
3:27
And surprising nobody, we've seen assets positively FLOOD out of the expensive funds into the cheap ones this year.
So I don't think it would even work, honestly, to have someone like State Street start launching, I dunno, a "cheap" version of TOTL?  Or an "expensive" version of MDY?  Just to split platforms?
I see why it could happen, but I just think the industry is smart enough to see how awful it would be.  Fingers crossed.
Elphaba
3:28
Are there any ETFs that will benefit from the re-emergence of tariffs?
Dave Nadig
3:28
Good questoin.  The very short answer is that (my opinion here) tarrifs are essentially bad for everyone.
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