You are viewing the chat in desktop mode. Click here to switch to mobile view.
X
ETF.com Live Chat!
powered byJotCast
Prev Page View Full Chat Next Page
Dave Nadig
3:15
I used to have all these slides in my "stump speech" deck where I explain ETFs, where I talk about the biggest disadvantages of ETFs being frictional: whole shares and per-trade or per-share comissions.
This was, for decades, the ONE big advantage mutual funds have.
3:16
And it's GONE, at least at Schwab, soon to be Schwab/Td/Voltron.
3:17
So what reason to mutual funds have left to exist?  12b1 fees to fund recordkeeping in defined contribution plans, they can be non-transparent (which is rapidly eroding) and they can close.
The latter is the only really important one in my opinion.
K-plans can be funded with explicit fees for the same net cost to participants.
3:18
So the ability to say "sorry, we're full, no new money" makes the mutual fund a good bridge for a high-intensity manager, between a hedge fund and an ETF.  So there remains a small niche.
3:19
but overall, once we have enough of a pullback for people to capitulate out of mutual fund positions with huge embedded gains, that taxable money is just going to flow into ETFs faster than ever.  It's exactly what we see in every market pullback.
Delvin
3:19
how can a retail investor without an advisor buy a balanced ETF portfolio?  is there an ETF for that or a provider of a bundled ETF product?
Dave Nadig
3:20
So, this really hasn't been a strong suit for ETFs.
There are a small handful of balanced ETFs.  Like AOM from iShares, but really, its a desert.
3:21
It's relatively easy to understand why: the vast, vast majority of balanced mutual funds are used in 401k plans.
There are literally no target date ETFs any more, and yet they're the number one most used selection in most 401k plans.
3:22
If you want a full portfolio of ETFs, but want just a tiny bit of handholding, consider a robo.  There are a ton out there now (from all the major brokers, and also independents like Wealthfront and Betterment.
Some are technically free (like schwab's) but there's usually a catch (house funds, too much cash), but still, they all get the job done, and even the ones that charge are very reasonable and provide real value.
Ted
3:22
Have you heard anything on a possible Crypto ETF?
Dave Nadig
3:23
So, most folks know Matt Hougan at Bitwise and I are pretty close, so we have several bets active on this front.  My current prediction is 2021 for approval.  I just don't see the movement in the next 12 months.
Matt's saying inside that.
3:24
I think EVENTUALLY it happens.  But the pressure is definitely off.  The SEC wants I think, more than anything, a bit of time to pass.  A few more boom/bust cycles to shake out. A few more custodial players, and so on.
So i wouldn't hold my breat.
NY Captain
3:24
Are you excited about Derek Jeter being named as a key note speaker at InsideETFs? Michael Lewis was outstanding last year.
Dave Nadig
3:25
I will show my stripes and just say: I'm not a baseball guy.  I like games live, but it's never been my sport.  For me it's F1, and e-Sports.  So if they had Lewis Hamilton coming to speak, I'd be knocking over old ladies to get to the front row, or possibly poisoning the moderators food so I could do it.
Todd Rosenbluth - CFRA Research
3:25
Hi Dave. Happy new year. These chats are always informative.  Most of the time ETF nerds like us get asked for what went well in 2019 especially given strong flows and performance. So let me flip it around. What has been a surprise disappointment to you in terms of lack of demand (despite a good product) or underperformance despite investor demand?
Dave Nadig
3:26
Boy thats tough, because I don't want it to sound like I'm down on something, but I'll give you my honest answer:
FRDM.
Thats the Alpha Architect Freedom 100 Emerging Market ETF
3:27
I absolutely LOVE this funds position, it's methodology, the portfolio you end up with, and the enthusiasm of the person behind it (Perth Tolle).
I genuinely BELIEVE in the approach.  And yet it's only managed to scrape together $15m in assets this year.
3:28
So I'm personally disappointed, but the product itself is NOT dissapointing.  I'm just sad more people haven't heard about it.
Curious George
3:28
Does the version of the SECURE Act that was passed allow for the inclusion of ETFs in 403(b) plans?
Dave Nadig
3:28
I was wondering if I'd get this one, or a version of it.
3:29
Here's the thing, as far as I can tell (and I could be completely wrong).  I troll congress.gov all the time (because I'm SUPER INTERESTING at dinner tables).  They have yet to post the full text of the half of the deal (the non defense side) that will actually be going for signature.
And I haven't been able to find a draft I believe is truly final yet.
From what I've read what's included is some/most of the original Secure act, along with parts of some other senate bills, but not all of it.
So I can't say definitively whats in or not.  There are several things that COULD be in that would be interesting.
3:30
The barrier to ETF inclusion inside plans hasn't been regulatory so much as structural (fractional shares).
What could be really interesting is if one of the inclusions allows variable annuities to own ETFs.
But I dont believe that will make it in.
3:31
The overall impact of Secure is going to take some time to flesh out.  On the surface, it's a gift to insurance companies, because it creates safe harbors for using Annuities in retirement plans.
Whether that's actually good for investors is a HUGE unknown, because the devils in the details.
Connecting…