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Dave Nadig
1:12
That ship has sailed.  It didn't get much coverage but John Hancock did an across the board 0.10% fee cut on their Dimmensional based smart-beta ETFs just a month ago.
I think anyone charging in the 0.60% range and higher is frankly going to have to either drop down into the 30s/low 40s, or they better have a really amazing story.
1:13
In talking to advisors, 0.30% seems like a magic number.  That seems like about the premium people are willing to pay over "dumb cheap beta" -- with so much of that now available for less than 0.10%.
1:14
Couple of bitcoin questions i'll squish together here.
Jameson
1:14
You don’t own any ETFs; do you own any bitcoin?
Danna
1:14
Is this the first month Cboe hasn't added a new bitcoin futures contract?
Dave Nadig
1:15
So no, I don't own any bitcoin futures, and yes, this is the first month Cboe declined to launch a new contract.  (disclosure, ETF.com is owned by Cboe Global Markets, but we're independent, so I don't really know much from that side of things).
In general, I feel like Crypto remains a bit wild west for most folks to think of as an asset class.  I think the process various issuers are going through with the SEC is actually super, super healthy.
1:16
It's forcing everyone to really dig in and think about the issues.  So whatever the outcome, I think the ETF process is great for advancing the maturity of the Crypto ecosystem.
Anonymous
1:16
When you're looking at a sector or thematic ETF, what weighting scheme do you think makes the most sense? Market cap, equal weight, fundamental, etc?
Dave Nadig
1:16
All else being equal, I actually think cap-weighting can do you more harm than good once you've decided NOT to buy the whole market.
1:17
So for instance, if you're buying a tech fund, do you really want to be 25% in Apple?  Or do you want to get some more exposure to smaller names?
After all, if you're buying a tech ETF, you clearly believe tech is undervalued vs. the broader market.  Otherwise you'd be shorting it.
So when things are undervalued (whether because growth isn't priced in enough, or because you believe something exogenous is going to change) what goes up?
1:18
Well sure, the big guys go up, but often its further down the cap spectrum where interesting things happen -- acquisitions, patents, FDA approvals, etc.
1:19
So at a minimum, I like something that breaks the cap-weighted link.  Whether thats fundamental, equal, etc, depends on the index methodology and the investment thesis, and I don't think there's a universal "best" once you've broken the link.
Let me bundle two mutual fund ones together here too:
Newb
1:19
What's the real difference between an ETF, and just a regular old index mutual fund?
Sammy P.
1:19
Hi Dave, WIth ETFs experiencing such ongoing popularity/success, you don't think they'll ever literally replace mutual funds, do you?
Dave Nadig
1:19
Great question.
In many cases, there's effectively very little difference between an index mutual fund and an index ETF.
1:20
So for instance, the difference between a schwab large cap ETF and a schwab large cap mutual fund is negligible.  They charge the same fee, they track the same index, the performance will likely be nearly identical.
BUT, the ETF, because of creation/redemption activity, will most likely not make any capital gains distributions.
1:21
If you're invested in a tax deferred account, thats mostly irrelevant of course.  But if your a taxable investor, the ETF will give you better control at minimum, and likely better after tax performance.
1:22
So do Mutual funds go away?  Nope.  Mutual funds have a few advantages.  If you're dollar cost averaging into your portfolio, say $300 a week from your paycheck, ETFs can be awful.  You can't buy half a share of something, so that $300 is going to be spread around unevenly, and with transaction costs possibly.
Mutual funds do fractional shares though, so you can buy 14 dollars of a mutual fund easily.
That makes them ideal for things like 401(k) plans.
1:23
So while I think we've reached peak mutual fund -- i dont see anything to drive much inflow in the next decade -- they don't actually disappear.  They just become a situational vehicle, largely for defined contribution plans.
Biff McDickie
1:23
Everywhere I look, I see experts saying that emerging markets are due for a turnaround. But the EM space isn't a monolith. Should I be looking at something like IEMG or VWO or digging down into individual regions/countries?
Dave Nadig
1:24
Hi Biff, so I was at the Research Affiliated conference this week, and Rob Arnott confided that 50% of his portfolio (fifty!) was in Emerging markets deep value and small cap stocks.
For most investors that sounds bananas of course, but the point he was making was sound:  on a valuation basis (almost however you measure it), the forward expected returns for emerging markets, adjusted for risk, are much better than the U.S., and much better than most of the developed markets.
1:25
I don't think 50% is the right number, but certainly most investors have enormous home bias, so even making a small adjustment -- say from 5% to 10% of your portfolio -- is probably warranted just on a relative valuation basis.
recognize this is a long term thing however.  The U.S. could still have a great year, and EM could still have a bad year.  But over the next 5?  I think Rob's right.
RAFI Fan
1:26
Saw you at the Research Affiliates event this week.  You talked a little bit about proxy voting. Is there a way to find out easily how a fund voted a particular company's proxy?
Dave Nadig
1:27
Honestly - no.  SOmetimes folks like State Street or Blackrock will discuss governance, but I don't know of an easy way to specifically look and see how BlackRock voted on a specific issue on a specific company without wading into each companies individual reporting.
I actually think theres probably a market for someone consolidating/analyzing these voting patterns (and I wouldn't be surprised if theres a quasi-institutional service that does this and I just don't know about it right now).
1:28
But personally I'd love to see a report from issuers on an regular basis about what positions they've taken on various issues.
After all, they're voting OUR money!
OK, time for one more questoin, and I'll just do this one because its fun:
Tucker Arnesson
1:28
You do webinars, podcasts, videos, interview, blogs, conferences … what’s your favorite part of your job?
Connecting…