You are viewing the chat in desktop mode. Click here to switch to mobile view.
X
ETF.com Live Chat!
powered byJotCast
Prev Page View Full Chat Next Page
Dave Nadig
2:12
So a barrell of oil is worth X, but a bushel of corn is worth X/100, for instance.
As for the ETF likelihood, the best thing I can say is that i know conversations -- real conversations about details -- are still happening with the relevant regulators.
2:13
As long as its not a "hard no" then I think theres still a good chance.
I had a bet with Todd Rosenbluth, if I recall, that we'd see one this year approved. I still think that's possible, but I'd give it 50.50 odds at this point.
Pierre
2:13
Good morning Dave. What’s an “underlying” as regards ETFs?
Dave Nadig
2:14
So we use the word "underlying" to mean "what does this thing actually own" usually.
So SPY is an S&P 500 ETF.  Which means the "underlying" securities are the actual 500 stocks in the index.
Which goes to this question:
Clement
2:14
Hey Dave: what does the phrase “…in an ETF wrapper” mean?
Dave Nadig
2:15
This is the converse: The ETF, SPY in this case, can be seen as just a container or wrapper for underlying securities.
The same is true of a regular old fashioned mutual fund: its just a wrapper for a bunch of underlying securities as well.
Where it can get tricky is with something like an Exchange Traded Note, like say, VXX.
2:16
VXX doesn't "own" anything.  It has no "underlying" and it's not a "wrapper" of anything else.  It's just a note - a promise to pay a pattern of returns based on some math.
(The math in VXX case being a notional basket of VIX futures contracts).
JD
2:16
What are non-transparent ETFs? I thought transparency was one of ETFs’ selling points.
Dave Nadig
2:16
Yes, Transparency IS a key feature of ETFs.
2:17
However, there are many active managers (particularly active stock pickers) who believe that if they showed their full hand, they'd get front run, and thus they'd lose their source of excess returns.
For that reason, the mutual fund industry has been looking for a way to put their active strategies into the ETF Wrapper, without having to show absolutely everything.
2:18
There are 4-5 versions of how you might do that.  The one making headlines has been Precidian, because they got preliminary approval for their approach (which uses a blind trust in between the ETF itself, and the Authorized Participant who does creations and redemptions).
Whether this is valuable for INVESTORS remains to be seen!
Troy
2:18
Which annoys you most: headlines (and tweets) about tat-for-tat tariffs, or headlines (and tweets) about bond ETFs and the potential for a liquidity mismatch?
Dave Nadig
2:18
for SURE the weird/bad ETF headlines.
Tarrifs are real.  Whether I agree with them or not, imposing/removing tarrifs is as real an economic factor as interest rates.
2:19
But most of the scare-mongery ETF headlines are just noise, and thus, annoying.
The E in ESG
2:19
Why do so many ESG ETFs, including ishares lineup, have such a high percentage of their underlying holdings in fossil fuel related companies? The 'E', in a lot of cases, is the most important part of ESG investing.
Dave Nadig
2:19
Well this is mostly a definition problem.
2:20
For you, carbon impact and being fossil fuel free may be the important part.
For someone else, board-diversity or social welfare may be the most important part.
Perhaps more than any other corner of the ETF market, ESG is extremely personal and wildly divergent.
2:21
Even more to the point: both a "left leaning" and a "right leaning" version of a single issue -- say, gun control -- can be seen as ESG.  Just in opposite directions.
Its FAR to personal to be uniform.  Which is one reason I think direct indexing will take off in ESG before anywhere else.  No two people can even agree on it.  Its more complex and nuanced than even smart beta.
Speaking of which:
Samantha R.
2:21
Is smart beta’s popularity declining?
Dave Nadig
2:22
I think some of the Hype has fallen off, but Cinthia Murphy did a great piece last month on this:
She points out that while we may be slowing down a bit on the hype, from an assets perspective, Smart Beta is doing quite well.
2:23
Here's the juicy quote:
"While vanilla funds saw total assets under management (AUM) grow 4.3% in the time period, smart-beta fund assets grew 10.9%, according to FactSet data."
(the time period was TTM at the end of february)
Tactical ETF
2:24
Pacer released some new ETFs this week.  One of which tracks the S&P Developed Ex-US Large Cap Local Currency Total Return Index.  What is this index.  Simply Developed International or Developed International Large Cap? Not much info is out on the web.
Connecting…