This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day.
Almost three decades since the very first launch, Exchange Traded Funds (ETFs) have grown to a multi-trillion-dollar segment of the market, with more than seven thousand spread across the world. The US market is home to approximately 30 percent of them, spanning the passive/index-tracking, actively managed and thematic categories, not to mention a handful of more exoteric niches. We drew on the expertise of our friend Eric Balchunas (Senior ETF Analyst at Bloomberg) for an update on the current state of the ETF. We discussed:
- The hottest tickets in town – the ARK family and Cathie Wood
- Soap opera drama – why haven’t crypto ETFs been allowed yet
- Why thematic ETFs are actually a closet-momentum play
- Value as the most intuitive factor – emulating Graham’s ‘Intelligent investor’
- The Beta Vortex, how passive distorts price discovery
- Biases and the narrowing gap between institutional and retail investors
- The answer to 99 out of 100 questions in markets – blame it on the Fed
Eric also gave us the breakdown in AUM for each segment of the market, as well as his estimate for the current size of the entire passive investment complex. This was a wide-ranging and very entertaining conversation, with great input from the audience (especially from our friends Brian Portnoy and Dave Nadig – thanks guys), and we also learned there is such a thing as “conversational alpha”.
Thank you for watching and listening. See you next week.