You are viewing the chat in desktop mode. Click here to switch to mobile view.
X
ETF.com Live Chat!
powered byJotCast
Dave Nadig
2:59
Good afternoon folks!  Welcome to ETF.com Live!
As usual, you can type your questions in the box below, and I'll try and cram as much in as I can in 30 minutes.
3:00
There will be a transcript up later as well, in case you miss anything.
With that, lets get started!
Harold
3:00
Hi,  I have typically been a long term Mutual Fund Investor but am becoming a bit frustrated with the recent market volatility.   I am looking at possibly doing some short term trading of ETFs, hoping to buy when the market has taken a recent down turn but futures appear to be up.  Then if the market goes up, sell the ETF and capture any profit to reinvest next time the market takes a down turn.  Is this a very dangerous strategy?  It seems to make sense but almost too easy.
Dave Nadig
3:00
Hi Harold,
So, what your describing is essentially flat out market timing.
You're just betting that you will be correct in your entry and exit points -- buying low, and selling high.
3:01
In doing so, you're competing against literally every other participant in the market, and you're assuming that the price your buying at today is somehow the "wrong" price.
3:02
We know from history that investors are almost universally awful at this.  And anyone who's actually consistently good at it ends up running (and then closing for new money) a hedge fund somewhere, honestly.
I mean, take today as an example.
Market has been down a bunch, it's down a bunch more today.  So, what makes TODAY the day you say "well, it won't go down any more from here!"
3:03
So my honest answer is -- it's a terrible idea, unless you've somehow missed your calling.
Todd Rosenbluth - CFRA Research
3:03
We recently published a piece on the ETF leader board and noted the iShares and Vanguard were taking more share than normal. The feedback I got was "what are the smaller firms. How can they innovate?" Do you think there's still room for new product innovation from smaller firms as I do?
Dave Nadig
3:03
Hi Todd!
3:04
So, I do think there's still a LOT of greenfield space.  I don't think you somehow start an ETF company in a garage and kick Vanguard off the top of the flows leaderboard though.
The move to low cost vanilla isn't going to end anytime soon, and the big players have huge entrenched advantages.
But we've seen a lot of funds come to market with innovative, niche strategies and do very very well for themselves.
3:05
So, whether it's more themes, more sub-industries, ESG takes, smart beta, I think there's still a lot of room out there for new ideas.
3:06
Here's a great nerdy question:
J. Gross
3:06
I have a question with regards to the logistics of the creation/redemption process. Let's say that an ETF is trading at a premium. An authorized participant would sell the etf short and purchase the underlying securities. The authorized participant would then trade in the underlying securities for the ETF shares and use those ETF shares to close out the short position. When the authorized participant trades in the underlying securities for the ETF shares, when is this done? Is this done during the trading day or is this done after the 4:00 pm close?
Dave Nadig
3:07
So, two things.  First, the AP doesn't HAVE to necessarily do the create at all.  In fact, if they believe they could unwind that pair of positions (short the ETF, long the securities) through normal trading tomorrow, they might sit on it, to avoid paying the creation fee (a small but non zero amount).
As market makers, they actually have 5 days to deliver those ETF shares they sold short.
3:08
But, assuming they want to flatten their book, they generally have to get the order in to the issuer before the close (3, 3:30, it can depend on the issuer).  Sometimes it's literally a phone call, sometimes its a fancy automated portal system.
The actual order itself is processed through the NSCC overnight as part of the continuous net settlement process.
3:09
Note: the timing here doesn't actually matter.  The AP books the buy and sell whenever they like, and from that point on, they have no economic exposure, because they are long two things of identical value and exposure.
Renee
3:09
I'm looking to invest about 15,000 towards retirement, is today a good time to purchase a 500 index ETF to hold for at least 5, maybe 10 years?  I am considering IVV or VOO.
Dave Nadig
3:10
So, big caveat here is that neither I or ETF.com is a financial advisor, and we don't make market calls.  So I can't actually answer the "is today a good time" question for you.  That depends on so many things: your risk tolerance, what else you own, and so on.
3:11
But, if you're looking for S&P 500 exposure in particular, you aren't going wrong with either IVV or VOO.  If you can trade one of them without a commission (check with your broker) I'd have that be the deciding factor.
I'd also say: there are more funds out there that provide similar exposure to the US equity markets that are super cheap.  Schwab has the lead on cost there for the most part, and if you're a schwab customer already, free to trade.
Tina Margulies
3:11
A long time ago, Matt Hougan wrote a column about the wordls' cheapest ETF model portfolio being 0.16%. What's it down to now?
Dave Nadig
3:12
So cheap it's almost free: 0.05%
Here's the last time he hit the article I think: https://www.etf.com/sections/blog/worlds-lowest-cost-portfolio-hits-00...
3:13
Generally he emerges from his Bitcoin-coma every 6 months or so to give it a look again.
But I don't think it's changed much.
MerMan3000
3:13
I thought Vanguard had a long-standing reputation as a passive manager. Why did they get into the active arena? Just, too much competition NOT to be in it anymore, and/or...?
Dave Nadig
3:13
Vanguard's been in the active mutual fund space for decades, most people just don't actually know it.
3:14
In fact, I think last year Vanguard had the largest inflows of any ACTIVE fund manager in the mutual fund side of things.
They have solid expertise there, and many many billions in assets.
So it makes sense for them to start bridging into ETFs as they get comfortable being fully transparent.
Load More Messages
Connecting…