My favorite ETF reads over the past week, along with my ETF tweet and chart of the week!
“U.S. ETF flows are on pace to exceed all annual records with the exception of 2021.”
“The first bond ETFs began trading 20 years ago last Friday, and the industry is poised for continued growth in the decades to come.”
“We have this bizarre situation where products have launched and then the SEC staff is saying not to use them.”
“The launches come at a time when regulators are taking a hard line against leverage in exchange-traded products and are considering plans to add restrictions for retail investors.”
“There are some legitimate use cases for these products, but these things are definitely going to be most used by the traders and gamblers, the Reddit community.”
“For all of the good that ETFs bring to the forefront, the fund structure’s benefits don’t necessarily translate to every single asset class or investment strategy.”
“For the third year in a row, new ETFs outnumbered new mutual fund launches.”
ETF Tweet of the Week: Alpha Architect’s Ryan Kirlin succinctly explains the current state of play in asset management: the biggest brainpower and experience is now in ETFs. That also means more competition, where investors will ultimately decide which ETFs survive and thrive. As Bloomberg’s Eric Balchunas notes, the “ETF industry is arguably the closest thing in the financial world to a true meritocracy. No bribes. May the best fund win”.
For the longest time, all the biggest brainpower and experience was on the mutual fund side of things. Bc that’s where the money was.
Sometime around 2010 that started to change. Now everyone big in public fund investing is here (just about).
— Ryan Patrick Kirlin 👽 (@RyanPKirlin) July 27, 2022
ETF Chart of the Week: A combination of investors gravitating towards the lowest cost products and continued fee cuts by issuers has led to a declining asset-weighted average ETF expense ratio, which now equals 0.18%. The simple average ETF expense ratio by asset class shows fee compression across the board (an exception is commodity ETFs, where the average fee has been bolstered by flows into products such as the 0.40% fee SPDR Gold Shares and 0.62% Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF)…
Source: FactSet’s Elisabeth Kashner