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Dave Nadig
3:13
FYI, I THINK you mean this article
I highlighted 5 key trends, which are honestly not that insightful - to me they see pretty obvious:
Choices for investors are increasing rapidly.
Assets in ETFs may surpass mutual funds in 5 years.
Rising competition offers challenges for new ETFs.
Actively-managed ETFs should become more common.
Technological advances will reshape the asset management industry.
3:14
To me they all interact
So CHoice improves because of competition, active, and tech.  Assets will rise because investors respond, etc...
SO to me that's really just a "state of play" list, not some sort of rank ordering.
3:15
I think we underestimate how much the tech side matters.  Software opens up all sorts of new product ares -- just look at the defined outcome space, or the cool AI based products we're seeing.  And tech will also enable the ESG/Direct Indexing move we talked about in the previous questions.
It's easy to think "this is the end state" but it never is.  It's ALWAYS shifting, which is why its exciting.
Merv Alwyn
3:15
What types of investors benefit from ETFs?
Dave Nadig
3:16
Hi Merv!@
So the pat answer from a dude who's business card has "ETF" on it would be "everyone!" but that's probably oversimplifying.
THe real question is: how much do the ETF advantages matter to you.
So briefly: Tax Efficiency, Low Cost, Tradability, Transparency, Choice.
3:17
If you are investing just in IRAs, and you trade once a quarter, and your doing simple asset allocation, well, ETFs still might be helpful on cost, but most big indexes are available just as cheap in mutual funds.
3:18
But, if your investing taxable money, or your trading even a little bit, or your doing something more tactical than my dumb-and-boring portfolio, ETFs have advantages.  Whether thats a billion dollar endowment, or a 10,000 individual.
Don Hagan
3:18
I saw a press release last month that the SEC approved in kind transactions for the new ETFs that hold flex options, yet I see a number of the Buffer ETFs just published Short term and Long term Capital Gains. I thought In Kind transactions eliminate capital gains?
Dave Nadig
3:18
Hi Don!
3:19
So, the key thing for the ETF tax advantage is specifically In-Kind Redemptions.  That is, when money comes OUT of an ETF, the ETF pushes out low-basis securities, to avoid having to later sell those and book the gains.
That takes time, and it takes redemptions!
3:20
So going forward -- say, 2020 tax season -- I would expect Innovator to really be able to minimize or eliminate distributions of gains.  But it can't just happen over night, it takes time.
So for example, I'm sure that when someone redeemed back in, I dunno, August, before this was all approved, the funds had no choice but to sell positions at gains, and those are now booked capital gains.
You can't then wash those away, unless you ALSO sell something for a loss.
3:21
And there just hasn't been time (or market conditions) for that to be likely.
So: big deal going forward, but needs time to work.
Todd Rosenbluth - CFRA Research
3:21
Hi Dave. Are you surprised that SSGA expects to have zero ETFs with capital gains in 2019?  While iShares and Vanguard have minimal, that is impressive.
Dave Nadig
3:22
Well, iShares has (checks notes) a billion ETFs.  So of course some of them are going to have some gains.  Speaking broadly, Vanguard's the land of buy and hold, and if everyone holds, it's harder to do the redemptions to raise your basis (see above).
It's particularly hard in tenored bond funds, which have to sell when bonds get to their lower maturity bound (selling 2 year paper in a 3-7 year fund, for instance).
3:23
Also generalizing, MANY of the SSGA products are used aggressively by traders and have big volumes.  That tends to translate into a lot of two way flow, as APs arbitrage out price discrepancies.  That in turn makes it easier to keep the gains out.
So in short: not too surprising, just based on their product lines, and how those product lines tend to get used by investors.
B. Moe
3:23
Hello Dave. Amazon seems to be the biggest FAANG co. in most consumer discretionary ETFs. Is that something you think will “hold” or would, say, Google usurp that position?
Dave Nadig
3:25
I was looking quick for the link, but Rob Arnott (Research Affiliates) has a great chart where he shows how the top 10 market cap stocks shuffle positions shockingly fast.
So history would suggest, not that Amazon is going to tank or something, but that they're reign at the top of any list would be shortlived.
There's a real question of whether companies can just get too big to be well run.
3:26
People used to think GE was going to be the conglomorate that took over our lives.  That fell apart.  Same with MSFT.  Heck im old enough to remember dotcom darlings that were at the top as well.
So I guess my answer is: I don't think anything ever holds for long, measured in years.
OK, one last question before my tennis elbow kills me:
George Ralls
3:26
With the US markets reaching what is considered by leading market info sources overpriced and recommend investors focus on international markets. Is etf.com planning to expand its geographical boundaries by helping subscribers identify international etf opportunities?
Dave Nadig
3:27
So this question confuses me a little bit.  We certainly cover international investing all over ETF.com.  I mean, we have a country map on the front page.
3:28
If what your askign is: are we going to cover ETFs listed in other countries, the short answer is "a bit."   While we don't have the dataset to reproduce our big fund screener or the individual ETF pages for every market, we do cover big issues in other markets -- a little.
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