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Dave Nadig

1:12

Yes, I actually do. The very worst thing that can happen to an investor in the ETP space is you buy an ETN and it delists. You have basically no recourse but to wait decades for them to mature (and get an NAV payout) or to sell at whatever price you can find on the pink sheets.

I like to hope that most investors are smart enough to notice their ETN is getting delisted.,

but I'm sure some folks don't get the memo, and there are millions of $ tied up in some of these delisted ETNs.

1:13

Pretty much all new ETNs feature a call provision, but some of these old ones just don't actually give the issuer discretion to pull them back in.

SunnyWindy

1:13

To me, the SEC approval of a non-transparent ETF structure is a BIG deal. Do mutual fund and/or ETF companies think this is a BIG deal? (I was slightly surprised that the media didn't make a BIG deal about the news.)

Dave Nadig

1:13

So, it's a big deal for ETF nerds like us, but there's no actual PRODUCT you can buy yet.

Until there is, I don't expect much mainstream coverage.

1:14

THere are some mutual fund companies in the wings that think this is a very big deal, and have been waiting for this before entering. So I suspect by year end we'll see some actual products, and then we'll be writing articles about what it means for investors, and the mainstream financial press will catch on.

Whether any money flows in? Remains to be seen.

DFA

1:14

What are your thoughts on Betterment announcement of its partnership with DFA? Does it make sense for Betterment to start using mutual funds now in 2019 or should they have considered building out models using John Hancock's sub-advised DFA ETFs?

Dave Nadig

1:14

I thought this was a it of a weird announcement

1:15

here's a version

https://www.wealthmanagement.com/technology/betterment-adds-dimensiona...

Essentially, all their doing is allowing betterment-linked advisors to get their DFA funds through the platform

1:16

DFA funds are broadly available through most RIA custody platforms (like Schwab, for instance)

although not always without a transaction cost.

So I guess there's a SMALL edge here. but the barrier to entry for DFA is that they require RIAs to go through their training before they can even put the order in.

1:17

It's almost cult-like -- you have to join the club to invest. Luckily, DFA is a solid shop, and worthy of the love many RIAs give them.

So, good PR move for Betterment, but I don't think it actually matters all that much.

Todd Rosenbluth-CFRA

1:17

Hi Dave. Great piece on ETF.com this week on most shorted ETFs. We got inquiries that I handled about if the impact of the stocks inside XRT and others is limited. But would love you to offer your take. Thanks.

Dave Nadig

1:17

I'm not sure I can type fast enough for the real answer here.

1:18

XRT is one of the ETFs that got grandfathered when Reg SHO happened. So any "naked" short positions held by market makers that didn't have a locate got to just "hang" in the system.

So if you look, XRT has been hugely short literally forever.

what you need to watch is the delta on shares actually short.

1:19

THAT would give you some small bit of info. If a ton of NEW shares go short, then that potentially puts a bottom in, like any other large short position -- 'cause all shorts become buys eventually.

(the other interpretation is one of sentiment, in the other direction, of course).

So for the half dozen or so "perpetually short" ETFs, this really doesn't mean anything.

1:20

It's a ghost in the machine.

Muller

1:20

A zero-fee ETF, I get. But how can ETFs cost less than that; does the issuer pay you somehow?

Dave Nadig

1:20

Well, that's what Salt Financial is trying to do - they're kicking $50000 into the fund.

While I give them props for finding something clever to get headlines, there's no way to interpret but as a gimmick to raise assets.

1:21

Nothing wrong with that -- raising assets is a noble goal.

But yea, they'd have to basically just pay you. And they do it for the same reason dotcom companies don't charge for things for years -- to build a base they can charge or sell things too later.

Its dotcom meets fintech.

mike

1:21

is there a micro cap etf

Dave Nadig

1:21

A nice easy question. There are three:

1:22

https://www.etf.com/channels/micro-cap-etfs

Although only one has any significant assets, IWC

Its a super volatile space, so do your research. Microcaps sometimes become google. They often become zerocaps.

Anon