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Dave Nadig
3:23
53 are actively managed
3:24
I find that a shockingly large contingent.
Whats changing a bit is how these funds are marketed.
Many times, you wont see the phrase "smart beta" anywhere near them.
3:25
Like, the Invesco Strategic Emerging Markets ETF (ISEM) launged in Setpember
but I dont think they slap "Smart" all over it.  THey just describe the strategy.
So I guess the trend is "thematic" and "clarity"
Jason11
3:25
I note Cliff Asness was dropping f-bombs on twitter.  Didn't really occur to me folks who write white papers would do such. Is this common, or a rarity?
Dave Nadig
3:26
Well, depends.   Back in the day (early 90s) on trading floors, the language (and behavior, frankly) was embarrassingly crass. I was never a big fan.
Most public pundits are pretty constrained in language, as you suggest, but I think it slips out sometimes from folks who've just been through it a lot.
3:27
Cliff doesn't surprise me.  Josh Brown from Ritholtz doesn't surprise me.
But if I start seeing Rob Arnott or Bob Pisani letting loose, I'll probably just hang up my hat and retire!!!
Personally, I think the world is plenty messy without me dirtying it up more.
Anonymous
3:27
Hello Dave. I'm assuming the main reason ETFs close is they failed to gather a certain amount of AUM by whatever time frame the issuer may have had in mind. Whta are other reasons for fund closures?
Dave Nadig
3:27
So, as you suggest, the BIG reason is not enough assets.
3:28
That makes it actually a money loser if its open long enough, so we see issuers pretty willing to pull the plug on ideas that don't catch.
MOSTLY that's it.  Sometimes we see "cleanup" closures from M&A activity -- iShares shut down some larger funds after the Blackrock acquisition, and so on.
3:29
But really, its a popularity contest.  Sad, but true.  I appreciate it when firms are pretty thoughtful about what they launch, and then give those funds a good few years to prove themselves.  Getting assets is HARD.
Dag Stinson
3:29
HI Dave, So what, if any, implications does the retirement bill the house just passed have on ETFs? Or is it too soon to know?
Dave Nadig
3:29
Hi Dag, I read the summary but not the whole thing.
3:30
My take is a: this will never pass, as it's far to broad and covers way to many areas.  I don't think a 300 page bill on tax minutae is going to plow through the lame duck inertia.
3:31
b: even if it did, the only real investment implication is around the safe harbor provisions.  Employers could add lifetime annuity options to their 401k plans, so retirees could just opt in to that instead of taking distributions.
I think thats on paper a cool thing -- decumulation is a huge issue.
But its a bit of a giant Xmas present to the insurance industry.  It needs WAY more guiderails around costs and transparency.
Bill
3:32
Are mutual funds going to eventually be rendered extinct at the hands of the ETF?
Dave Nadig
3:32
Doubtful, because Defined Contribution plans are here for good.  And they just don't match well with ETFs (fractional shares are impossible with an ETF without convoluted structures).
But I think most retail/inst money ends up in ETFs.
J. Gross
3:32
Hi Dave. I was under the assumption that all of the "low hanging fruit" regarding ETFs has already been covered. I was looking for a diversified commodity ETF that is low cost and deals with roll yield (contango) and yet couldn't find one (they are all in the 75-85bps range). I'm astonished no ETF issuer has happened upon this. I was hoping graniteshares was on the case, but doesn't seem to have happened. Any thoughts (including which diversified commodity ETF you would choose for a diversified porfolio of assets)?
Dave Nadig
3:33
So, part of the issue is that commodities have been so out of favor for years now.  So not a lot of competition.  Hence not a lot of fee pressure.
3:34
The contango killers are out there (DBC and so on)
But the only real fee pressure has come from GraniteShares.
They have two cheap ETFs covering broad futures
3:35
COMB and COMG
I don't THINK they specifically work against contango (I'd need to check).
But they're cheap - 25-35 bps.
Lennart
3:35
Hi Dave. Lennart here from the Netherlands. Do you think this is a good time for ETFs that have a low volatility focus? Like Vanguard Global minimum volatility
Dave Nadig
3:36
So, in general MinVol did just what it was supposed to do in October/November, which is it went down a bit less than the overal market.
3:37
I think it's not 100% proven that Minvol works in all markets - the explanations for the Minvol anomaly often lead to speculation about what institutional owners are doing, which breaks down a bit when you head into, say, emerging markets.
So it's an intriguing idea, and I don't think you'll get your fingers burned (as by definition, these tend to be slightly lower risk strategies than pure beta) -- the question will just be how much upside you give up, and what your costs are.
3:38
and one of those is an unknown!
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