ETF Flows are Golden

Oct 16, 2019 11:25:41 AM / by Toroso Investments

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Flows arguably reflect investor decisions and sentiment. Eric Balchunas pointed out on Twitter recently that gold ETF flows are just shy of the $10 Billion record set in 2009 which is a, “notable feat given the increase competition (and attacks) from crypto, as well as the fact that in 2009 gold was up 10% more than this year.” However, according to Bloomberg, even more notable is the fact that gold was up about 30.14% over the previous 2 years when the S&P 500 was down 20.15% (December 31, 2007 to December 31, 2009). Could it be that these flows are telegraphing market sentiment for risk management is changing? Over the past 10 years investors in U.S. equities have been lulled into a form of complacency as a result of exceptional returns and tactical investors have been criticized for missing upside. However, during weak periods of time, such as 12/31/07 to 12/31/10, an allocation to gold helped portfolios. For illustration purposes, we highlight that GLD increased in value 68.23% versus a negative 8.12% for the S&P500 during this period of time.  Meaning that that at times, in the past, tactical decisions towards gold have added value to portfolios, so this change in flows should be monitored closely.  They could be indictive of a change in investor sentiment.  

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Free for All & All for Free

Oct 9, 2019 10:30:00 AM / by Toroso Investments

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The world of investment management is evolving rapidly and driven by advanced technologies and innovation. Last week, commission-free trading of ETFs and equities expanded monumentally with announcements from Charles Schwab, TD Ameritrade, and E*Trade.

etftradefee

Welcome to a world with free ETFs and Index Funds, free Robo-Advisors and free trading.  

Is Free a Bad Thing?

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The “ETF Rule,” like crypto, blockchain and active management, signals more industry innovation

Oct 3, 2019 1:05:36 AM / by Toroso Investments

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We celebrate the SEC’s decision to expedite the launch of  ETFs with its approval of the “ETF Rule” (Rule 6C-11).  Innovation and disruption for the benefit of investors has led the success of the ETF evolution and its growth has been reflected in investors’ transparent ability to save money on both fees and taxes. We expect this decision to make it easier for many smaller issuers to come to market - but getting to market is only a small part of the battle. It is for this reason we focus this week’s commentary on the trajectory of active management and the blockchain.

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What We're Reading Now

Sep 25, 2019 3:26:41 PM / by Toroso Investments

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What's Hot in the ETF Industry

This week, we’ve hand-picked what we believe to be the most impactful news about the ETF industry at large and provide some insights on how you might be affected. Below you'll learn about the impact of ETFs on the Wealth Management Industry, the latest from Kitces, and more.

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A Ridiculous Question on Passive Investing

Sep 17, 2019 1:23:17 PM / by Toroso Investments

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Fear mongering in the financial media

Over the past month, the financial media has once again engaged in ETF fear mongering with a constant barrage of articles about the “passive bubble.”  This renewed focus and blame-game was sparked by a few out of context quotes from Michael Burry in a Bloomberg article:

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August Risk Off Pauses ETF Growth Metrics

Sep 13, 2019 12:19:13 AM / by Toroso Investments

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Fixed Income was the Flow Story in August

It was clear from ETF flows that investors and or traders were concerned about a risk of recession. However, we caution that ETFs flows can reflect short-term tradability and liquidity for decision makers so they can be misleading at times. Unless you know the who and the why, you can’t always be certain about the impact and the reason. From an Ecosystem perspective, the trend towards investors embracing more fixed income ETFs makes a great deal of sense. The first Bond ETF was launched in July 26, 2002 by iShares Blackrock, roughly a decade after the first equity ETF. (A Nerd challenge: Why was LQD and TLT launched before the AGG on September 26, 2003 – Maybe Mathew Tucker at Blackrock knows?) Either way – it sure didn’t hurt the success of the iShares Core Aggregate Bond ETF, which today sports $65.5 billion in AUM.

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Finding the signal in the noise

Aug 24, 2019 2:40:00 PM / by Toroso Investments

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Introduction

Geared markets: When consensus erodes and assumptions grow

The list of things investors can not agree on is growing despite the agreements by market pundits. Consensus can be wrong and when constituencies have different agendas there is the potential to have bifurcating outcomes. In addition, given that everything seems to be negotiated in social media and market liquidity is optimized through ETFs we think market participants should be prepared for volatility. The disconnect can be compared to the divergence between the actual state of our U.S. economy and that of the global market. One thing is clearer than ever; Perspectives matter when approaching any question in deeming an answer to be right or wrong. We’ll get to where we are in the market, but to simplify our message there are five things we would like you to focus on.

 

1. What is a reserve currency?

2. What will the idea of nations mean in 2050?

3. What is negative yielding debt?

4. What is a debt super cycle?

5. The forgotten workhorse of the global economy. The consumer. How’s the consumer feeling?

 

Before we get to the questions, let’s talk assumptions, specifically assumptions regarding the middle class. Assumption #1; The middle class has experienced many periods in history with prosperity and growth. In fact, over history, the middle class as often struggled. The last 50 years in the US (or maybe the last 50 minus the last 10) may very well be the outlier and not the norm. Now back to the questions.

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ETF Industry 2019: Growth Metrics To Follow

Aug 14, 2019 4:52:34 PM / by Toroso Investments

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Welcome to the ETF Think Tank Weekly Research, a communication written by our team of ETF Nerds on a mission to educate investors and empower financial advisors. Read on for our perspective on the benefits of ETFs, highlights in the industry, and noteworthy innovations.

 

In the last research note, we considered looked into transparency as it relates to the structure of mutual funds and ETFs.

 

This week, we share our research on the growth of the ETF industry including our usual key performance indicators (KPIs) on number of ETFs listed, assets, revenue, exchange market share and number of issuers. In this halftime report, we cover the state of the ETF industry in 2019 by reviewing how these KPIs have changed through July 9, 2019.

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Embracing Innovation with ActiveShares

Aug 1, 2019 7:10:43 PM / by Toroso Investments

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Welcome to the ETF Think Tank Weekly Research, a communication written by our team of ETF Nerds on a mission to educate investors and empower financial advisors. Read on for our perspective on the benefits of ETFs, highlights in the industry, and noteworthy innovations.

 

Two weeks ago, we talked about client alignment and innovation as reasons behind ETF assets reaching the $4 trillion milestone. In our experience, the most successful financial advisors are those that put their clients’ interests first. We believe using ETFs in client portfolios fosters client alignment and provides a cost-effective way to meet investment objectives, allowing advisors to act in the capacity of a true fiduciary. As a refresher, we’ve identified 4 client alignment factors of ETFs that can benefit both advisors and their clients. They are: transparency, liquidity, lower cost, and tax efficiency.

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Over $4 Trillion Served

Jul 16, 2019 11:04:07 AM / by Toroso Investments

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In last week’s ETF Think Tank Research note we covered the key performance indicators (KPIs) of ETF growth in the first half of 2019. Last week, that growth surpassed yet another milestone with US ETF assets exceeding $4 trillion. Fellow ETF Nerd, Todd Rosenbluth @toddcfra does a great job of explaining where the growth came from this year.

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