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Dave Nadig
3:24
So as always -- good trading hygiene, no matter how big the fund looks from an AUM perspective.
3:25
(Oh, and answering LOC's Second questoin - yes, I've been playing the new WoW expansion, but haven't had more than an hour or so in the evening!)
Hector
3:25
Hi Dave, glad you're back from vacation! I've seen a few articles going around discussing how private equity / venture capital is becoming a more popular or lucrative alternative for funding new companies. This got me thinking, would it theoretically be possible for an ETF to invest in private equity, since the usual creation/redemption mechanisms don't really apply?
Dave Nadig
3:25
GREAT question here.
The short answer is "not really."
Most ETFs are organized as pretty boring, traditional 1940 act mutual funds underneath the hood
3:26
and there are significant restrictions about the kinds of things those funds can invest in.  This was actually part of what was behind the rise of some of the public/private equity firms back in the dotcom boom, like Softbank.
3:27
So unfortunately, the process works -- the whole point of being publicly traded is to provide certain constraints to make investments appropriate for average investors.
If you dont/cant do that, then you are very limited in whose money you can take as a company -- whole different process.
and ETFs can't REALLY play.
3:28
That said, there ARE ETfs that have "Private Equity" in the headline:
But these generally go through listed private equity firms
Like, as I said, Softbank and its ilk.
3:29
OK, last question before we wrap:
J
3:29
What effects, if any, will clients see from the upcoming GICS changes?
Dave Nadig
3:29
So, these changes hit I believe end of September.
The biggest shift happens in and around tech.
Lara Crigger wrote a GREAT summary piece on this and which funds are most affected here:
3:30
Facebook and Google are the big ones that get shoved around.
So if you have a big tech or comms fund, you should for sure check and see if the exposures are going to be quite what you expected.
That's gonna wrap it for me.  Be sure and check out the weekly podcast here:
This week we look at how Fidelity's mutual fund gambit (taking two to zero) is the new Free Toaster of investing.
We'll have a transcript up here shortly in case you missed something, and we should be back next week, same time, same place.
3:32
Have a great day everyone!
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