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Dave Nadig
3:15
the problem is most alternative approaches haven't actually done better.  Which is annoying and perhaps paradoxical.
3:16
As for specific funds doing something different, well?
3:17
I think Invesco's PCY (their EM sovereign debt fund) does some interesting things.  It's got a tiered methodology, and it uses some valuation screening too.
Its pulled in over 3B, so I'm not the only one who noticed.
3:18
But most of the interesting approaches in bonds just sort of end up under the umbrella of active management
honestly
Whether thats something like ETC's HYLD, or Natixis LSST, or all the PIMCO products, etc...
there are now a LOT of active bond approaches that seem viable.
3:19
But I'd love to see more on the fundamental side - there just hasn't been the kind of data and research to drive it we've seen in equities.  Like I said, bonds are hard.
Dead as a Doornail?
3:19
Mutual funds that is.  What's left for Mutual funds now that trades are free?
Dave Nadig
3:19
Hah!  I've been asked this question almost daily lately.
With the advent of free trading (and potentially fractional shares) the last few advantages for mutual funds do seem to be going a bit the way of the dodo.
3:20
All that's REALLY left is that you can close a mutual fund to new money, but you really can't/shouldn't close an ETF for new money.
So if you had, say, a small cap value manager who took big, controversial opinions on small companies, there's probably a capacity cap.
In a mutual fund, you can just stop taking money when you think your edge is gone.
in an ETF? Not so much.  You'd break the connection between fair value and market prices.
3:21
But thats a pretty edge case.
With no commissions, fractional shares, and the periodic-disclosure active structures coming, its getting really hard to be a booster of the traditional model.
3:22
THey wont go away - there's too much entrenched defined contribution money, and too many funds that still support the old loaded way of selling.  It'll take decades for all that to roll off.
By that point, we'll all just be direct indexing anyway (I say half in jest!).
SRIGUY
3:22
Assets into SRI funds seem pretty anemic.  Is this all hype and no substance?
Dave Nadig
3:22
I think Eric Balchunas tweeted out today that the growth rate in SRI/ESG ETFs was 100%!  But the base is only $7B, so .... not so exciting.
3:23
It's a fair comment.
I think what we'll see is that ESG is a slow burn.  Flows will continue to be positive, month after month, as people make long term allocations.
And as we see this 15-20 year window of generational wealth transfer happen, more and more will end up in SRI/ESG funds.
3:24
it seems somewhat inevitable to me.  But it wont be spikey.
I dont think we're going to wake up one morning and see a Trillion in ESG ETFs.  Its going to grow bit by bit.  It wont be like a fad.  It'll just grind it's way higher.
OK, that wraps it up for today.  As always, thanks everyone for joining us.  Next week I think we're moving to Wednesday, so we'll see you then!
3:25
Have a great Friday and weekend!
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