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Dave Nadig
2:59
Howdy folks, welcome back to ETf.com Live!
3:00
As always, you can enter questions in the box below, and I'll do as many questions as I can in about 30 minutes, more or less.
If you miss something or have to leave, we'll have a transcript up right afterwards.
With that let's get going.
First; soundtrack for the day has been this new beck track I like a lot:
3:01
Let's start in the DEEP end of the pool:
Taxes, Taxes, Taxes
3:01
Was the SEC's Rule 6.9 a game changer for ETF options strategies. Does this ruling now make Buffer ETFs a viable consideration for non-qualified accounts?
Dave Nadig
3:01
So, Rule 6.9 is a filing made by the various exchanges to allow for funds that hold options to do creation redemption in kind.
3:02
Until this point, a fund that was invested in options (say, all of the defined outcome ETFs from Innovator, or now First Trust) couldn't do anything in kind
You basically had to give them cash on creations.
This meant, among other things, a lot of inefficiency, particularly around taxes.
3:03
Rule 6.9 changes that.  The impact is mostly around the edges -- theoretically it means these kinds of products can be more tax advantaged than they are right now.
So yes, it means they may be more appropriate for taxable money going forward.
3:04
Of course actually achieving the tax efficiency means having steady two way flow in and out of these funds -- because it's the act of redemption that makes the tax liability goes away.
But all else equal, its a good thing.  I'm not sure its a "game changer" - but its positive for sure.
Cecily James
3:04
Hi Dave, Do you think we’re in a huge asset bubble? If so, what do you think can fix/change that?
Dave Nadig
3:04
Oh, boy, talk about a big topic.
3:05
I have a pretty middle of the road opinion for the next year (and I should point out I'm not an economist).  I think it's very unlikely we have another huge year in the markets.  I just don't see the upside.  Yes, we have the chance for some short term upside surprises around the trade deal
but we also have the massive uncertainty of an election cycle, and mixed underlying fundamentals.
3:06
Im not a permabear - i dont think we're headed into a 10-quarter recession.  But I think a few-quarter recession probably has to be planned for sometime soonish.  
What does that mean?  Honestly, probably "stay the course" and stay diversified.
it strikes me as a bad time to be making BIG CALLS.
Pamela
3:07
Greetings Dave: In your opinion, are more ETF investors buying niche funds, or are they mostly investing in total market ETFs?
Dave Nadig
3:07
By flows it's still low-cost, plain vanilla ETFs that are getting the lions share.,
We occasionally see something more interesting pop to the top of the leaderboard: Minvol has had a good asset gathering run, for instance.  Cannabis ETFs were hot for a while and so on.
But month after month its big, cheap and boring that gets the flows.
3:08
and honestly, that's pretty appropriate.
The niche funds get a lot of headlines, and they get a LOT of the new-fund attention.  But again, that seems appropriate.  Not a lot of folks launching new S&P 500 funds at this point.
The only exception there has really been JP Morgan, who came out with a broad, cheap beta line that's done very well
Bill Donahue
3:09
Congratulations on breaking the news on periodically disclosed active ETF models by Fidelity, T Rowe Price, Natixis and Blue Tractor receiving SEC approval today.  How do these match up in comparison to the Precidian model in your opinion?  Do you view it as a 5 horse race?  If so, does Precidian have a big advantage given that its model was approved last spring?
Dave Nadig
3:10
Hi Bill!  Yeah, hat tip to old friend Tony Baker for sending me the filings today.  I don't want to take too much credit.
I know the folks behind the structures will HATE me saying this, but I mentally lump the "proxy" approaches together here, vs. the "blind trust" approach being used by precidian.
3:11
I'm not 100% convinced one or the other is the hands down winner here.  I think it's largely going to come down to how well individual launches are supported by the market making and AP community.
At the end of they day, if we have funds using all of these approaches and structures, and they all trade well, then for investors it's sort of a non issue: they just want exposure.
3:12
I think it's a safe bet that the Precidian-based funds will hit the market first (they've had more runway) and thus it sort of comes down to those first few weeks/months.
If everything works and it all trades well, well, then the proxy folks will need to show they can trade at least as well, and then argue for their advantages.
3:13
Ultimately, the products would (and should) matter more than all this plumbing.
Todd Rosenbluth - CFRA Research
3:13
Hi Dave. Both on ETF Prime podcast and in other content you published, you talked about deadbeat uncle aspect of traditional index based bond ETFs. So what are some examples of alternatively weighted ETFs you think warrant more attention.
Dave Nadig
3:14
Yeah, bonds are definitely weird.  And bond indexes doubly so.
My point which your referring to is that most bond indexes are issuance weighted - so whomever issues the most debt gets the biggest place.  Which is like giving the most money to the guy you know who is ALWAYS asking for money.  Which fails the common sense test.
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