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Dave Nadig
3:11
Both are big businesses, but they're not product issuers.
Hope that clears it up.
Esme
3:11
Lately I’ve been reading that some ETFs provide a better return depending on what time you buy and sell them. 1) How many ETFs does this affect? 2) Relatedly, is after-hours trading available to all investors?
Dave Nadig
3:12
Well, this is a bit tricky.
Technically, ALL investments can return better or worse based on when you trade them - if you buy a mutual fund on the "wrong" day you'll do worse than if you luck out and buy it on the "right" day (the right day being when its down).
3:13
If we're talking about TIME - as in, I know I'm buying EEM today, but WHEN do I buy it, then its a bit of a mugs game.
It is the case that the open and the close are often bad times to trade, as pricing can be fluid.
But in between, for the most part, you're going to get a "fair" price.  Your going to get a price based on what the underlying securities are trading at.
3:14
So if you buy QQQ at 11AM, it will be a "good time" if those 100 stocks happen to be trading down, and at a bottom.  It will be a "bad time" if the opposite is true.
None of those things are predictable or knowable, honestly, so tryign to game it is as likely to hurt you as help you.
3:15
As for after hours - that's based on your broker.  Some brokers have robust, trader oriented access to after-hours markets, some don't.  In all cases, BE CAREFUL.  Price discovery is a crapshoot in the after hours, and the market makers and APs are generally absent.
Todd Rosenbluth - CFRA Research
3:15
Hi Dave. Nice piece on innovation occurring in emerging market ETFs. Do you think there's a time when investors will become more targeted with their EM investments as they do in the North America. Thematic funds focused on Cannabis, Cyber Security, Cloud computing, etc. are being used to be more tactical in recent years. But well diversified EM ETFs like IEMG and VWO are most popular.
Dave Nadig
3:16
Hi Todd - so do I see a world where we have 400 Emerging Markets ETFs focussed on sub-industries and factors and all that?  Seems far off to me.
In general we see that at the local level.  EU investors have more narrow slices of EU markets to choose from than we have listed here in the U.S.
The reverse is also true: UCITS-based EU etfs have far fewer micro-slices than we do here in the U.S., of the U.S. markets.
3:17
So I think it's just about supply and demand.   Demand for thematic products here in the US is already sketchy: some themes catch (Cannabis) some don't (micro-targeted healthcare ETFs).
Until there's demand, there wont be products to meet it, is my guess (a pretty safe one).
TickerMan
3:18
How can interest rates be negative? Isn't that impossible?
Dave Nadig
3:18
Great question!
So, when a bond is issued, its generally got a par value - the amount of money going to the company/country issueing the bond, and a coupon, the interest rate payment.
3:19
So for instance, I could issue a 10-year $10,000 bond with a 1% coupon.  You give me $10,000 for 10 years, I'll hand you a check for $100 every year, and at the end of the 10 years, I'll give you the $10k back.
3:20
However, there's no rule that says just because I want $10,000, you have to pay that amount -- most bonds are issued in some form of an auction.
So lets say you REALLY NEED to own this bond, you could offer to pay me $11,000 for it.
In the end, you will have received $10,000 after 10 years, and $1000 in coupon payments.
You essentially just barely get your money back.
So the coupon is 1%, but the actual yield to buy it today is zero
3:21
and you could overpay, like in Germany, and have an implied yield that's negative.
even though the coupon could be positive.
Better question: Why?  Because if youre a HUGE institution, you cant park $50 million in an insured bank account.
Your "cash" has to go somewhere.  And in many cases, your investment policy may require you to buy government bonds.
3:22
Voila - you have irrational demand which results in irrational pricing.
RiskyMan
3:22
Is this a good time to consider buffer ETF's? Any update on First Trust's version?
Dave Nadig
3:22
So by Buffer ETFs you're talking about the Innovator Defined Outcome ETFs, which protect X% of downside but cap you at y% upside.
3:23
I'm a big fan of these products.  THey solve a real problem, and they're well designed.  THey're too expensive, but I still like them.
I haven't heard any updates on FIrst Trust's offerings, but my hope is that some competition drives prices down for everyone.
As for timing - the whole point of buying a buffered product is that you can sort of forget abotu the timing.
3:24
Because your outcome is, well, defined.  You know the boundaries, regardless of whether you buy now or next month.
Josh
3:24
Hey Dave, given how popular factor investing is these days, is there an easy way to track which single factor ETF is performing the best this year? And how do I know when I should be rotating factors?
Dave Nadig
3:24
Hi Josh.  I hate to send people to other websites but in this case, you simply CANNOT do better than the folks over at Research Affiliates.  Here's a link to their smart beta data:
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