ETF Inflows & Outflows
Performance Leaders & Laggards
Source: ETF Action; flows and performance data as of 10/10/24; performance data excludes leveraged and inverse products
Weekly ETF Reads
New titans of Wall Street: how Jane Street rode the ETF wave to ‘obscene’ riches by Will Schmitt and Robin Wigglesworth
“Jane Street is particularly strong in less mainstream ETFs.”
Do Vanguard, Blackrock, and State Street Run the World? by Nick Maggiulli
“While Vanguard, Blackrock, and State Street may not be controlling the world from behind the scenes, they do still have significant voting power at nearly every major U.S. public company.”
When Will Public and Private Equity Markets Finally Converge? by Jack Shannon
“Collectively, mutual funds would have been better off allocating their private stakes to public markets over the last 10 years.”
An ETF Strategy for Deferring Embedded Gains by Jeff Benjamin
“We’ve had a ridiculous number of inquiries. My inbox has been smashed and we haven’t even sent it out to our email list yet.”
Investment Industry Loves Active ETFs. You Probably Shouldn’t. by Jon Sindreu
“To be sure, it makes sense for active ETFs to replace equivalent mutual funds.”
‘100%’ Yields Are Fueling a Retail Boom in New Quick-Buck ETFs by Denitsa Tsekova and Vildana Hajric
“The most important thing the industry can do is make sure clients understand what to expect in these strategies. That’s actually what keeps me up at night.”
Mutual fund to ETF conversions pose difficulties, Deloitte finds by Daniel Gil
“At a high level, you have to make sure your clients can actually hold the ETF.”
Investors increasingly using ETFs for CLO bets, says BofA by Scott Carpenter
“The proliferation of CLO ETFs is helping bring more retail investors into the market, and is helping pull spreads tighter.”
(Note: Catch my in-depth conversation on CLO ETFs with Palmer Square Founder Chris Long on the most recent ETF Prime.)
Four Reasons Ether ETFs Have Underperformed by Tom Carreras
“One of the challenges for ether ETFs in penetrating the 60/40 Boomer world is distilling its purpose/value into an easy-to-understand soundbite.”
ETF Tweet of the Week
Wrapping private assets in an ETF is the latest hot button topic. Long-time industry veteran Dave Nadig and I recently discussed the challenges this poses, particularly around conflicts of interest. I agree with many of Dave’s concerns.
On the other hand, another long-time industry veteran – Armada CEO Phil Bak – makes some compelling arguments in favor of private asset ETFs. I encourage you to read Phil’s entire piece, but this particular passage jumped out:
“By allowing these assets to trade on public markets through the ETF vehicle, valuations would be determined by the point at which buyers and sellers meet. Buyers incentivized to pay the lowest possible price, sellers incentivized to get the highest price, and liquidity providers incentivized to connect them and to close any arbitrage gap. It is a beautiful system that works in real-time every single trading day.”
Phil also notes how private funds typically charge significantly higher fees than ETFs and can have performance fees, selling commissions, lockups, and the ability to gate investors.
Whenever I see two smart industry veterans disagreeing on a topic, that’s my signal that this could actually be the next big thing in ETFs. Why? Because they care… and because ETFs (and the smart people associated with the industry) have a way of working out these kinks to the ultimate benefit of investors.
🚨 Just posted:
— Phil Bak (@philbak1) October 10, 2024
My public SEC comment letter on the use of private assets in 40-Act funds.
I'm disagreeing with Nadig on this, and taking a stance in favor of open market price discovery for private assets, and in support of SSGA & Apollo.https://t.co/u7MbOY7FLJ https://t.co/ZTye7hNtwv
ETF Chart(s) of the Week
Charles Schwab recently released their 2024 edition of “ETFs and Beyond”, an annual study of ETF investors. Once again, I highly recommend reading through all of the results, but I found the below findings particularly interesting. Schwab asked the following question of ETF investors:
“Which asset classes do you plan to invest in over the next year via ETFs?”
The number one response among Millennials? Crypto.
As a matter of fact, crypto was number two among all investors.
Times are a’changin.
