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Dave Nadig
3:00
Good afternoon, and welcome to ETF.com Live!
You can enter your questions below, and I'll bang out as many answers as I can in the next 30 minutes.
We'll post a transcript up right after, hopefully with a quick video to boot.
With that, let's get rolling.
Bob
3:00
Soundtrack for the day is ...?
Dave Nadig
3:01
Heh.  So I've been in a bit of a modern prog-rocky mode, so I've been listening to Glass Animals all day.
H. Tyler
3:01
Good morning Dave. What’s the difference between an index fund, and an ETF, since ETFs (mostly?) track indexes
Dave Nadig
3:01
Well, in some cases not much at all.
3:02
You can, for instance, find S&P 500 mutual funds that are essentially identical to S&P 500 ETFs, with the sole difference being how you get access to them, and potentially taxes.
Something like iShares IVV, for instance, is in fact a mutual fund under the hood. It just has exemptions that allow it to trade on an exchange (hence exchange-traded fund).
3:03
So you get the trading (which can be good or bad -- some folks like knowing they're getting NAV at the end of the day, and thats fine, mutual funds still work!)
ETFs generally are more tax efficient than their mutual fund counterpart, because of the creation redemption process.
but index mutual funds have such low turnover that honestly, they're pretty tax efficient too.
3:04
So if youre sticking with passive indexes, there's nothing "wrong" with mutual funds, you just need to make sure you understand the true costs, and are comfortable only trading at NAV at the end of the day.
Grady
3:04
Any tips you’d impart to ETF investors regarding the current IPo frenzy?
Dave Nadig
3:04
There are really two funds in this space: IPO and FPX.
3:05
IPO is a bit more "pure" in that it ages out it's holdings after 2 years.  FPX lets them linger longer, and also can end up owning the acquiring companies when a small recent IPO gets acquired
Consequently you have some very very large companies in FPX you wont see in IPO.
In both cases, however, recognize that these funds dont get IPO allocations -- they buy in the open market some days after the IPO.  So you aren't buying "pop potential"
your hoping to catch the next google
Richard Rankin
3:06
I appreciate the informative videos you make here in Live Chat. Can we submit requests for topics here? It’s a great format for more in depth details than a typed Q&A can provide here … Thanks.
Dave Nadig
3:06
Of course!  I take questions from this very chat window and usually just expand on the answer that I type.
I don't do one every week, if either I run out of time to record, or if its a question i've basically done on video already.
But questions are always welcome!
Janine Dillon
3:06
Should where the Fed sets interest rates affect how investors buy/trade bond ETFs?
3:07
(or Treasury ETFs)?
Dave Nadig
3:07
Well, sure, in the sense that Fed Policy has a big impact on bond prices and overall returns.
All else being equal, if we're in a declining rate environment (which it looks like we're heading into) you'd expect the prices of bonds to go up.
3:08
A lot of the great bull run in bonds was because of that.
But the challenge is always that the market prices in these expectations in seconds.
Again, in the general case, lower interest rates for bonds means lower expected total return from bonds.
Ultimately, its the coupon on the bond that matters most.
3:09
So with low interest rates, stocks look more attractive
thats why we always read about the market "wanting" a rate cut.  The market ALWAYS wants a rate cut, because treasuries are competition for investor dollars.  Making treasuries less attractive makes stocks more attractive.
Geoff
3:09
How are e-sports doing so far as an ETF asset class? It’s not too “nichey” to succeed, do you think?
Dave Nadig
3:10
Hi Geoff -- So I'm a big fan of esports, both literally (I watch them and play them badly) and as an investment.
There's no question it's a niche, and the pureplays are a bit hard to ferret out.
But we've now got some healthy competition between ESPO and NERD, which have slightly different approaches.
3:11
Just recognize what your buying is Tech+Media, essentially.  Esports is part of it, but very very few of these funds holdings are 100% tied to esports.  Most are more broadly videogame or game community companies.
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