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Dave Nadig
3:11
I suspect at leas tone of these funds will survive for the long term.  Of course, how they perform will have a lot to do with it.
3:12
But betting against gaming?  that would be a bad bet I think.
Schuyler
3:12
The “interval fund” aspect can’t be used in exchange traded funds, right?
Dave Nadig
3:12
Great nerdy question.  So Interval Funds are a weird hybrid that's in the 1940 act.
Like a closed end fund, you don't have daily liquidity.  You get generally a quarterly offer from the issuer to buy back your shares.
3:13
But, unlike a closed end fund, you can usually give them money any time, and also unlike a closed end fund, they don't trade on an exchange, so theres no way to get out at ALL in between intervals.
So why bother? It lets them invest in private companies and less liquid securities.
Fidelity had filed for a weird Interval fund - meets - etf thing, as a solution to the nontransparent active problem.
It was very clever, but I don't think it's going to go anywhere.
3:14
ETFs really don't share much in common with interval funds.  They have to be even MORE liquid under the hood than a mutual fund, because you really can't, or at least shouldn't, ever close an ETF for creations or redemptions.
With a mutual fund, you can "close the window" for either new money, or redemptions in an extraordinary environment.
3:15
Doing that in an ETF is very rare and will cause it to trade out of whack with fair value.
It really only happens in situations where the underlying market breaks (think Egypt during the arab spring).
Jenna Wong
3:15
Is the sky the limit for what’s in the bucket of securities that ETFs hold, as issuers mull their next filings? I see there are “ETFs of ETFs” or they can hold sectors, or countries; what HASN’T been done yet in constructing new ETPs, that we might see next?
Dave Nadig
3:16
So, in the normal structure -- an ETF based on a mutual fund skelleton -- pretty much anything a mutual fund can hold is fair game.  So that means some limits on derivatives, generally, but any kind of stock or bond portfolio is fair game.
If the strategy needs futures, then it becomes a commodities pool like USO, but you can put any futures in an ETF wrapper (but for Bitcoin, right now).
3:17
And worst case, you can make an Exchange Traded Note on almost anything you can imagine.  Because it's just a promise from a bank to pay a pattern of returns based on some math/
That math could be weather patterns or baseball scores.
3:18
The limiting factor is much more what the market will actually want than anything else.  Again, there are some exceptions.  The SEC isn't approving huge leveraged ETFs (10X the S&P!!!) or Bitcoin ETFs right now.
Nobody's filed for a U.S. bitcoin ETN, but I imagine they'd stomp on that right now as well.
Ryan
3:18
HI Dave: twofold question for you. Given gold’s at a 5 year high right now, does it stand to reason ETF investors should buy funds like GLD and IAU? And how does one decide if they should buy gold funds, or, buy gold miner funds?
Dave Nadig
3:18
Hi Ryan, so a few things.
3:19
As a tactical matter, waiting for an asset to be at a 5 year high as your buy signal strikes me as a bit of a bad idea.  I'm not a big fan of market timing in the best case, but here there'd be a real argument for getting the timing pretty wrong.
As a more general matter, if your looking to own gold throuhg an ETF for the long term, they all get the job done.
3:20
The cheapest is BAR, and its pretty much the same ETF as GLD or IAU.
Miners aren't gold -- they're natural resource companies.  Obviously they're somewhat tied to how gold is doing, which is why for decades investors used miners as a gold proxy
3:21
but with the advent of the ETFs, you don't NEED that proxy.  So as yourself why your interested in miners?  Do you think they're businesses are undervalued?  Or are you just trying to get gold exposure through the back door.
Theo
3:21
What would incentivize an investor to choose a non-transparent ETF? Seems counterintuitive/
In my question about non-transparent ETFs, I forgot to ask, what perks do they have that might make investors select them over transparent ETFs?
Dave Nadig
3:22
So, non transparent active solves an issuer problem, not an investor problem.
For example, there's nothing inherently better about an NTA fund vs a transparent doppleganger.  They're the same assets.  The big difference is that you don't get to see whats in it.
That's not an investor issue.
3:23
The reason many active mutual fund managers aren't in the ETF space, however, is that issue - they dont want daily transparency because they think it hurts their strategies performance
so in that sense, if you WANT a given strategy, and you want it in an ETF, well, this could help get that for you
It remains to be seen what products actually launch and whether ETF investors are clamoring for them.  Really only time will tell
Todd Rosenbluth- CFRA Research
3:24
Hi from Italy. Do you think investors can build a country rotation strategy or is it better to just stay diversified in Europe?
Dave Nadig
3:24
Greetings Todd!  So, I know quite a few advisors focus heavily on picking their country bets.  It's a core part of Dave Garff's Accuvest business, for instance.
3:25
And he's done, and I know other folks have done, quite well, picking the winners, lookign for value, buying PIIGS stocks when they get slammed, etc.
Personally, it seems very very hard to be smarter than the global market, so when I see people succeed, I never really know if they just got lucky, or if they're wicked smart.
3:26
For most investors (or idiots like me) it seems like a muggs game, and broad developed markets diversification will win out over trying to get the calls exactly right.
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