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Dave Nadig
3:00
Good afternoon! Welcome to ETF.com Live!
As always you can ask your questions in the window below. I'll get to as many as I can before my fingers cramp up.
3:01
I'll dispense with the formalities: jamming on the new Green Day drop this afternoon:
Now let's get to work:
L. Brynne
3:01
Hello Dave, I’m wondering if the Saudi refinery attacks and ensuing supply situation have affected oil ETFs.
Dave Nadig
3:01
For sure.  The main ETF tracking crude (USO) immediately traded up 12%, but its come down a bit as the market has realized the impact will actually be a bit muted for US consumers.
3:02
OIH, the big services ETF, also traded up sharply on the day, but not as much (maybe 8%).
Obviously nobody is "happy" when things like this happen, but the reality of US energy consumption is radically different than it was, say, during the gulf war.
3:03
Between fracking, natural gas, and increased alternative usage, the US is just much less dependent on middle eastern oil than it used to be.
But of course, the GLOBAL impact will ripple through.  It's not like the U.S. is completely immune.  We're just not catastrophically dependent like we used to be.
Eric
3:03
When choosing from foreign ETF (ex-US), there are so many! How to chose the winners? Thanks.
Dave Nadig
3:04
There are indeed a LOT of international funds out there!
I think the premise is a bit misleading however.  I don't think the point of investing is necessarily to pick the "winner."  The "winner" say, over the next year, will be a single country fund in a market with a lot of volatility and risk.  That's almost always the case.
One year it's Brazil, the next year it's Russia, etc...
3:05
but your getting an enormous amount of concentrated risk in ETFs like that.  I think most investors are better off simply working off their home bias first.
So core allocations into a developed markets ETF, and maybe an emerging markets ETF, is where you should start.
3:06
THere are tons of great, cheap options there, whether you go with something like the ishares core products (IEFA and IEMG) or equivalents from Schwab and Vanguard.
If you THEN get the macro-econ bug and want to start really researching specific countries, or different approaches, that's great! But its more about doing your global macro research than the specific ETFs, initially.
Janus Holssen
3:07
Good morning Dave. Do the results of presidential elections in other countries ever have an effect on the US economy?
Dave Nadig
3:07
Lots of big macro questions today!
So for sure, we live in a global world, so geopolitics definately matters to the US economy.
3:08
So for example, what's going on in the UK right now has a direct impact on us, because the UK is a reasonably big trading partner for us.  If they have a hard brexit, well, that makes life really tricky for U.S. companies exporting to the UK.  Not necessarily bad (who knows what treaty might get done quickly) but very hard to plan for.
that uncertainty means companies here are less likely to make big investments, and that in turn is bad for growth.
3:09
Thats the main argument against the trade war -- not the tarrif per se, but the HUGE amount of uncertainty it puts in the business environment.  Any time one of our big trading partners has political upheaval, there's an effect.
Eric
3:09
How to compare similar ETFs from different issuer? How to find out which one is the best? Thanks.
Dave Nadig
3:10
This is actually one of the thorniest issues in ETF due diligence, believe it or not.  One of the reasons we built our analytics engine (which we sold to FactSet, then licensed back for our fund pages) was precisely because the "old way" -- going to fund pages at different company websites -- is really confusing.
Take something as simple as P/E ratio.  A reasonable thing to do would be to compare the P/E ratio of, say, a bunch of Value funds from different issuers.
3:11
But one issuer might include negative earnings, and another might not.
So you'd get radically different P/E ratios even if the funds held PRECISELY the same thing.
3:12
So, the more direct answer to your question would be: look at the core vectors of analysis for each fund: efficiency (mostly expense ratio and tracking difference), tradability (liquidity metrics) and most importantly, fit (the exposure differences).
Exposure differences will generally overwhelm the other two, assuming they're all basically in the ballpark.
(obviously, if one fund charges 90bps and another charges 9bps, you might shortcut the whole decision!)
3:13
But mostly, legwork.  We're actually launching a "fund comparison" tool hopefully by year end or early next year that should make this even easier.
Todd Rosenbluth - CFRA Research
3:13
Hi Dave. I know you are similarly excited for the long awaited ETF rule to move forward next week at the SEC. Can you recap the big impact this will have on industry since you have done eloquently in the past? Easy to file/launch, elimination of preferred status for oldest ETFs, etc.
Dave Nadig
3:13
Hi Todd!  So, yes, the SEC has the ETF rule on the agenda for wednesday.  one assumes they'll vote on it.
3:14
I also assume it will pass, but you never know HOW it will pass - it could be tweaked, it could be phased in, etc.
My assumption however is it goes pretty cleanly with a 2020 start date, maybe with phased in reporting requirements on a few things.
3:15
The immediate impact is that it will make filing new stuff a bit easier -- essentially "by right" for most ETFs.  That should help newcomers get to market faster.
The more important impact is leveling the playing field around custom baskets.
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