My favorite ETF reads over the past week, along with my ETF tweet and chart of the week!
(Note: Given the potential ETF industry and investor impact of Senator Ron Wyden’s tax proposal, this week’s ETF buzz features several must read pieces on the topic. The first is a legal deep dive into exactly how the proposal would affect ETFs. Three additional pieces offer excellent perspective on possible implications. To lighten things up, I still include a few unrelated ETF reads as well!)
“Many ETFs rely heavily on in-kind distributions of securities as a key component to implementing their investment strategy, and Section 852(b)(6) is a fundamental aspect of how ETFs operate by accepting in-kind contributions and by making in-kind redemptions.”
“Respectfully, Chair Wyden is mistaken. In actuality, changing the tax treatment for in-kind redemptions will penalize the exact same American investors that the Biden administration has identified as the individuals who most need to build financial security.”
“The end consumer gets less in return, and the government gets less in taxes.”
“Congratulations to you and your staff, Senator Wyden! You’ve figured out the shortest possible path towards killing ETFs’ tax-fairness advantage.”
“An advisor’s motivation for including a semitransparent ETF over a transparent one would be related to an investment decision.”
“The advantages of the ETF wrapper will draw RIAs toward launching their own funds.”
“Sector ETFs may sound the same, but they do not perform the same.”
ETF Tweet of the Week: A unique look at ETF industry market share and fees…
Another one showing how the avg ETF fee is 53ps but the asset weighted avg is 19bps (24bps ex-Vgrd). If you flow-weight them its even lower. Which shows that ETFs aren’t really that cheap as a gp, but their investors LOVE the cheap ones. pic.twitter.com/XOmfS2P1ux
— Eric Balchunas (@EricBalchunas) September 24, 2021
ETF Chart of the Week: Morningstar’s Jeffrey Ptak offers the always stunning visual of ETF versus mutual fund flows. Over the past 10 years, approximately $1.2 trillion has flowed into US stock ETFs, while about $1.3 trillion has flowed out of US stock open-ended (OE) mutual funds!