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Dave Nadig
2:59
Good afternoon and welcome 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 hands cramp up.
3:00
We'll post a transcript (and a video!) by the end of the day.
And I'll cut off the inevitable question: today's soundtrack is Is This It by the Strokes: https://open.spotify.com/album/2k8KgmDp9oHrmu0MIj4XDE?si=v_rhTXMNQ_OST...
Lets get goin...
Ben. Dillon
3:00
Must all new ETFs launch with seed money, or is that a new “trend”?
Dave Nadig
3:01
For an ETF to begin trading, it has to have some amount of money to meet minimum listing requirements at exchanges.
It has to be able to strike that first Net Asset Value -- in order to do that, it has to have some assets.
So historically, all ETFs launched with a deminimis amount -- say $5 million, sometimes even less.
I seem to recall some $2.5mm launches.
3:02
Many times, that money was put up by the firm itself (from capital) or it was provided by market maker, who would essentially "inventory" the initial shares and sell them as real investors find the fund.
More recently we've seen BIG seeds -- what Eric at Bloomberg coined "BYOA" or "Bring Your Own Assets"
thats a new trend, and it's allowed funds to come to market with $100mm or more.
3:03
That makes the rest of the market more comfortable, of course, and can be a real boon to initial asset gathering.  Usually, thats money from a big institutional client who was likely in a mutual fund or separate account of the same strategy.
Let's go to Todd:
Todd Rosenbluth - CFRA Research
3:03
Hi Dave. Great work putting together the nominations for last week's ETF awards that I was proud to be a judge for. Have you thought about a category like a "no longer hidden gem ETF". Funds that were under the radar initially but came out of their shell. In 2018, there were 11 ETFs that started with under $50M and climbed to more than $200M by year end. https://www.etf.com/sections/blog/no-longer-hidden-etf-gems
Dave Nadig
3:04
While I love this idea (and I truly do) Im only a bit worried that it might be hard to manage.  We'd for sure have to publish a "here are funds eligible" because we dont have something like "must be classified as equity by FactSet" to fall back on.
3:05
So it's definitely a cool idea.  More generally though, I think for 2019 you can expect us to "shake up" the categories a bit more than we have year to year in the past, and maybe make them a bit more ETF-user/investor focussed.
But stay tuned, we'll broadcast any changes loooong in advance, I promise.
Miller Matthis
3:05
I enjoyed your Inside ETFs/ETF.com Awards live blogs. Anything else you guys live-blog about?
Dave Nadig
3:06
Hi Miller!  Glad you enjoyed it!  We really did this for the first time in Florida at the big event, and we're looking to do more.  It's really hard on the hands (to be honest).
Lara Crigger did the live blog from the awards, and I think I saw her with icepacks after.
But we'll continue to expand this for live events where we're in attendance.  I'm glad you like it.  I think it's fun!
Matteo Juergen
3:06
What classifies WisdomTree as more of a takeover target than another ETF issuer?
Dave Nadig
3:06
Well, I'm not sure they're "more" than any other issuer, but they are unique in a few ways.
3:07
First, I should say I think their core research team (led by Jeremy Schwartz) is the bomb.
I read anything the produce, it's always good.
3:08
But they have traditionally been a bit of a "hit" shop -- like DXJ.  That makes them vulnerable to swings in the market and investor behavior.
And they are publicly traded -- really the only pure play I can think of.  That means all of us can dig through their financials and form opinions.
3:09
I think those last two pieces are really the core of it.  But in general: I'm a fan, and I think I'd be a bit surprised if they got gobbled up super quickly.
Dirk
3:09
HI Dave, when “the world’s first ETF” is referenced, are people talking about SPY or the original ETF from Canada?
Dave Nadig
3:10
Hi Dirk -- I think it's only deep ETF Nerds like me that break up the conversation with a "Well Actually!" about the Toronto 35 Index Participation Fund
People generally mean SPY ... fair or not.
Luther Anthony
3:10
Is there ever an instance where a mutual fund is more advantageous than and EFT?
Dave Nadig
3:10
For sure!  If you're in a retirement account with access to cheap index funds, there's not much an ETF is doing for you.
3:11
The big ETF advantages for most investors are tax efficiency, cost, and transparency.
and tradability
A lot of that is less relevant in your IRA or 401k.
3:12
Mutual funds are excellent in 401ks and other defined contribution plans for another huge reason: they can be bought in fractional shares with no transaction costs.
You can't really buy 1/2 a share of an ETF, and even if you could, if you were paying a commission to do so, it would be a bum deal.
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