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 back to ETF.com Live!
As always, you can enter your questions in the box below, and I'll get to as many as I can before my fingers cramp up.
3:00
We'll post a transcript up (same URL) when we're done, in case you missed anything.
Lot's going on, so let's get rolling:
This makes me laugh:
Newbie
3:00
... and today's soundtrack is ...?
Dave Nadig
now to REAL questions.
Larry
3:00
Are ETNs a dying breed? Only banks use this form of ETP and of the 161 ETNs listed, more than half have less than $100 million in AUM and only 40 have an ER less than 0.75%. Viewing this in terms of ETF trends, it doesn't seem like a recipe for success.
I accidentally hit return on my post, but I want to add that an ETN like CAPE would be very successful in ETF form. Seems like a wasted opportunity!
Dave Nadig
3:01
Hi Larry - so there's no question ETNs - Exchange Traded Notes -- aren't in much favor.
For those new to them: ETNs are just pieces of corporate debt that trade on an exchange like an ETF or a stock.
What makes them interesting is that the promised return from the note can be anything: the mean temperature in australia, you name it.
3:02
So ETNs are great when the pattern of returns is hard to package up in a clean wrapper like an ETF just owning stocks.
that's why we've seen them in certain niche markets, like some leveraged applications or volatility and so on.
The problem is - someone has to issue the note and back it up.
3:03
And increasingly, the banks that do that are just not that interested in taking on that kind of balance sheet.
(if they promise, say, the return of VIX futures, they have to go hedge that).
So I don't see them coming back in a huge way, except these narrow cases.
3:04
(FWIW, ETNs are super tax efficient too, because they get treated just like a stock).
Sal
3:04
Uwt is that is good buy n hold stock
Dave Nadig
3:04
Ooof!!!
UWT is triple leveraged oil.
It's the successor to the old UWTI which closed i think two years ago.
3:05
It's nearly the definition of something you DON'T buy and hold.  It will give you 3X the return of oil over one day.  So oil up 5%, your up 15%.
Of course, oil down 5%, your down 15%.
Worse, because oil tends to be fairly volatile, you'll experience decay over time (because of how leveraged rebalancing math works).
3:06
So, this is a SUPER speculative tool.  A very sharp knife in the drawer.  If you use a tool like this, you need to REALLy stay on top of it, and know why you own it, and for how long you plan to.
and monitor it daily.
Nemo
3:06
How do the notional exposures of NTSX and SWAN compare? Both are using light  leverage (explicit or implicit) with some combination of S&P 500 and Treasuries. However, they have different correlations to each of those assets and daily standard deviations. Are those variations based on the allocation of the levered exposure or is the mechanism of leverage making a notable impact?
Dave Nadig
3:06
So this is a deeply nerdy question about two deeply nerdy funds.
On the surface, they seem very similar, because they use derivatives to give you a managed pattern of returns from stocks and bonds, but they do it in very different ways.
3:07
SWAN to me is the simplest, because it's essentially just a big treasury position and a bunch of Long Term options (LEAPS) on the S&P 500.
The end result is most of the upside of being in equities, but a lot of stability of being in all those treasuries.
3:08
NTSX just takes a 60/40 portfolio and leverages that up to be 90/60.
In terms of what they do: if you compare them during the recent draw down, Swan did a much better job of keeping you out of trouble.
3:09
but then, NTSX rallied much faster off the december lows.
just depends on what pattern your looking for.  SWAN will be much more muted.
Conference Man
3:09
Are you looking forward to any specific sessions at the Inside ETFs conference next month?
Dave Nadig
3:09
Wow, man, so many.  It's a crazy good agenda this year.  Obviously I'm excited to hear some of the big keynotes: Michael Lewis and such.
Load More Messages
Connecting…