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Dave Nadig
3:13
If your holding period is only, say, a few weeks, a pure speculative trade, then those costs may matter a lot more than the difference in expense ratio.
3:14
Similarly, they both trade basically as well as anything can
a penny spread.
but a penny on GLD is less than .01%
a penny on IAU is .09%.
if you're trading a lot, that will matter.  A lot.
we see this even in the S&P funds.  SPY vs IVV/VOO.
Derek Kim
3:15
Expense ratios seem to be the most transparent cost for ETFs, but I hear there are also hidden fees. What are those, and how can investors best find them/
Dave Nadig
3:15
Good follow on question
THe trading costs above aren't "fees" -- in the sense you aren't paying them to the ETF issuer.  But they are real costs to you as an investor.
Even if you pay zero commissions.
3:16
Once you get INSIDE the ETF wrapper itself, there aren't really any "hidden fees" -- the advertised expense ratio rolls them all up, transparently.
A given Expense Ratio of, say 0.50%, might include a bunch of smaller fees (a management fee, a transfer agent fee, etc) but the ER rolls it all up into the number you should care about.
3:17
BUT ... that doesn't mean that your experience as investor will be preciseuly 0.50% behind whatever index you think your tracking
On our fund pages, we show a stat called "Tracking Difference"
if a fund is PERFECT, it will lag the index its tracking by exactly its expense ratio - because indexes are "free"
3:18
but no fund is perfect, so there can be slippage, because of things like optimization, or internal trading hiccups.
you can also do BETTER than you expect, again because of internal trading, or optimization, or getting fees for loaning out portfolio holdings.
3:19
So its good to look at both: ER and tracking difference, and then separately, trading costs.
Here's a piece on this:
Jacques
3:19
ESG seems like a great way of not only investing but also ensuring that your investments help the planet (and perhaps even align with your own personal values). Why do you think the ESG space has not grown in recent years? Is it simply a matter of investor education or is there a lack of diverse ESG ETF offerings?
Dave Nadig
3:19
Hi Jacques, I'm a big fan of ESG ETFs.
And I do think we'll continue to see a slow trickle.
3:20
I think the challenge is you have to, as an advisor or as an issuer, make two sales.
First you have to sell the investment strategy (buy U.S. Largecaps!)
Then you have to sell the ESG strategy (we kickout the gun stocks! We avoid carbon offenders!)
thats not an impossible sale, but it is a delaying issue.
3:21
So I think we see the slow trickle.  A lot of institutions have ESG mandates, and we'll continue to see them "drive the bus" here for the next few years.  But I predict in 10-15 years, ESG will be a very large chunk of flows, month after month.  It'll just take some time.
Bill Donahue
3:22
Good afternoon, Dave. What are your thoughts on the SEC Sub-committee recommendations about ETP labels?  Any significant positives or negatives?
Dave Nadig
3:22
Hi Bill!
So, there have been a lot of "labelling" initiatives over the years.
And I'm all for clarity.
But the problem is - we already have some of these labels, and for the most part, the market ignores them.
3:23
I mean, (points thumbs at self) we're called "ETF.com"
but we cover Exchange-Traded Notes.
We've chosen not to cover "Exchange Traded Managed Funds" or ETMFS.
there are other folks out there who chose not to cover leveraged or inverse ETFs, etc....
3:24
So while in general, I'd love some clear delineations just to make life easier, I worry that not many folks will use them.
And where they do get used -- say, for gating products at a big wirehouse -- they could have unintended consequences.
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