Never miss an update

Dr Martens Martens 4-Hole Lorrie Lorrie sanfrancisco-27775 Dress Blues 21664408 Original Doc 3f548bb




Never miss an update

Dr Martens Martens 4-Hole Lorrie Lorrie sanfrancisco-27775 Dress Blues 21664408 Original Doc 3f548bb - blurrypron.com

    Dr Martens Martens 4-Hole Lorrie Lorrie sanfrancisco-27775 Dress Blues 21664408 Original Doc 3f548bb
    Dr Martens Martens 4-Hole Lorrie Lorrie sanfrancisco-27775 Dress Blues 21664408 Original Doc 3f548bb
    Dr Martens 3-HOLE 1461 Green Slick 21086300 Original Doc , VANELi Womens Frankie Cap Toe Classic Pumps, White, Size 8.5 US / 6.5 UKDr Martens 3-HOLE 1461 Grey 11837022 Original Classic DocT.U.K V8353 Grey Suede Low Sole Round Toe Creeper , NEW ANTICHI ROMANI 116 Strappy Sandal Platino MetallicAUTHENTIC CHRISTIAN LOUBOUTIN TASSEL LOAFERS CHAIN CHILL FLAT GRADE NS USED-AT , Nevermind Round Low Creeper Black Suede Leo 26-UL49 !Far East Import , Dr Martens 3-HOLE 1461 Aqua Hug Me 21476457 Original Doc , NEW ANTICHI ROMANI 727 Woven Sandal BrownVince Womens maxwell 2 Closed Toe Ballet Flats, salmon fb, Size 7.0 US / 5 UKHaflinger Sabrina Womens Slides braun 5.5 US / 3.5 UK , Dr Martens 4-Hole Lorrie Black 20363001 Original Doc , AUTHENTIC JIMMY CHOO HARAKO SLIPONS VELOUR BLACK GRADE AB USED-AT , Nevermind 2 Hole Round Low Creeper Black Suede 25-UL49 !Far East ImportDr Martens 4-Hole Lorrie 2 Tan 21664220 Original DocAUTHENTIC MARC BY MARC JACOBS ESPADRILLE SHOES 625031 GRADE B USED - ATDr Martens Slip On Kara Off White 15045110 Original DocEl Naturalista Womens Stella Closed Toe Ballet Flats, Wood, Size 7.5 US / 5.5 UKLa Redoute Womens Low Top Leather Trainers , Dr Martens 6-Hole lahava Graphite Grey 21178070 Original DocAUTHENTIC BERLUTI ALESSANDRO OXFORD LEATHER BUSINESS SHOES 349 GRADE AB USED -AT , AUTHENTIC CHRISTIAN LOUBOUTIN HARAKO FLAT PUMPS LEOPARD GRADE B USED-ATT.U.K A8140 TUK Black / White Smooth Pointed Tie Creeper , AUTHENTIC CHRISTIAN LOUBOUTIN LOUIS SPIKE STUDS SNEAKERS 1101084 GRADE A USED-AT , Dr Martens 3-Hole Lester Green Canvas 21138300 Original Doc , AUTHENTIC CHRISTIAN LOUBOUTIN LEATHER FLAT SHOES PUMPS BLACK GRADE S USED -ATAUTHENTIC CELINE TASSEL SLIP-ONS OPERA SHOES BLACK GRADE AB USED -AT , VANELi Womens solana Closed Toe Ballet Flats, Black nappa, Size 6.5 US / 4.5 UK , AUTHENTIC DIANA LEATHER BIJOU POINTED TOE PUMPS WHITE GRADE AB USED - AT ,
    Dr Martens Martens 4-Hole Lorrie Lorrie sanfrancisco-27775 Dress Blues 21664408 Original Doc 3f548bb - blurrypron.com>Dr Martens Martens 4-Hole Lorrie Lorrie sanfrancisco-27775 Dress Blues 21664408 Original Doc 3f548bb - blurrypron.com
    CLARKS Women's Desert Boot Chukka Boot, Oakwood Suede, 6 M US , Under Armour Women's HOVR Phantom X EP NM3 Sneaker - Choose SZ/colorSUPPER SEXY!!! ROBERTO CAVALLI FAUX FEATHER BROWN SUEDE WOMEN BOOTS US 8REEBOK CHAUSSURE CLASSIC LEATHER - BLKGUM - 8.5 (886406214209)Designer Charles Jourdan Paris Size 40 Black & Clear Perspex Resin Women's Heels , NEW Iron Fist Midnight Mermaid Platform US 9 ~ AU 8 Rockabilly Goth Punk Emoigi&co Patty Vit Vegetale ballets sale 11448 castoroMan's/Woman's Propet Women's Eden White Sneakers use Let our goods go to the world Shopping promotion , Woman Coloured Crystal High Heel Stiletto Dress Shoes Wedding Party Bridal PumpsAdrianna Papell Jamie Peep Toe Mesh Caged Pumps 501, Silver, 6 US , Skechers Cali Women's Bohemian Arrow Music Fest Platform Dress Sandal , K-Swiss Men's Foam Insole Flexible Leather Athletic Footwear. MCMFIICOURTPROAsics Men's Fuzex Tr Fabric Running Shoe , Adidas Originals Swift Run Primeknite Men's Shoes Black/White CQ2891 , Nike Kobe A.D Ruthless Precision basketball Shoes Men's Size 8 -852425 010New NIKE Air Max 95 Mens Sneakers gray blue all sizes , New Nike Air Jordan X 10 Retro 2005 Version Steel Grey Black White Shoes Size 11 , Men's/Women's Adidas Ultraboost - CM7880 Good world reputation Modern design Elegant and robust menuMen's Air Jordan XXXII Low Basketball Shoes Black/Varsity Red AA1256 003 , Mr/Ms Ariat Work Men's Groundbreaker Pull Boot High quality and cheap Attractive fashion Great choice , Man's/Woman's Zara Mens Shoes 11.5 Fine workmanship New in stock Rich on-time deliveryRockport Men’s Northfield Black Leather Oxfords Size 8M D1966/ , Hush Puppies Men's GT Black Leather Slip-on Shoes , Gentlemen/Ladies Nike Trainers Orange Size 9 Fine workmanship Quality and quantity guaranteed Extreme speed logistics , WMNS NIKE ROSHE TWO FLYKNIT 844929 001 SIZE 5.5~9.5Saucony Women's Ride 9 Running Shoe, Purple/Blue/Mint, 7 M US , Reebok Speedlux 2.0 Women's Size 9.5 Black Memory Tech LT Sneaker CN1488stella mccartney women neon pink wedges shoes size 7 (37). perfect conditionNew Womens Skechers Synergy: Winter Walking Boot, size 6.5, 8 , US Plus size women block heel over the knee thigh high boots shoes Winter Warm
    Will ETFs cause the next market crash?
    ETF Watch - Jun 29, 2017
    Dr Martens Martens 4-Hole Lorrie Lorrie sanfrancisco-27775 Dress Blues 21664408 Original Doc 3f548bb - blurrypron.com

    There’s no doubt that the last 2 years has seen the coming of age of ETFs. With what was once an unknown type of investment quickly becoming a $30b industry in Australia ($3 trillion globally). However, as ETFs have moved from the unknown to the flavour of the month, an increasing number of commentators have called on the risks ETF investors face, with some even stating that ETFs will be the source of the next market crash. Today we take a look at some of the claims as to why some believe there are so many risks associated with ETFs.

    Claim 1: ETFS are blindly pushing up stock prices

    Many have written about share markets being at record highs. In an interview with the AFR, Wilson Asset Management chief Geoff Wilson discussed his portfolios’ current high weightings to cash due to concerns of market over-valuations. 

    US based fund manager FPA capital called ETFs “Weapons of Mass Destruction”and stated “The flood of money into passive products is making stock prices move in lockstep and creating markets increasingly divorced from underlying fundamentals”. The argument they make is as ETFs blindly invest in stocks in their chosen index and ignore the underlying fundamentals of these companies. This causes these companies prices to be bid up to prices that do not support their fundamentals (ie a bubble), and eventually history repeats, the bubble bursts and markets crash.

    What do we think?

    ETFs account for around 10% of US stocks’ market value and less than 1% in Australia. In the US at least this is not an immaterial amount. However, the active managers whom ETFs have taken business from generally have mandates which force them to invest a certain percentage in the market. As a result, active managers have always been investing in expensive markets and pushing up prices. Additionally, what is currently called by many analysis as expensive equity markets could also be attributed to global record low interest rates rather than an uptick in passive investing. In saying that, since the last major market crash (the 2008 GFC), the proportion of total assets in ETFs are considerably higher and continual growth of passive investing must be considered as a possible cause of markets becoming expensive.

    Recently we’ve seen Vaneck reweight their huge Junior Gold Miner’s ETF as they approached 20% limits in some of their smaller holdings. This meant selling out of these small gold miners which saw large falls in some of these shares (some of which was blamed on hedge funds looking to capitalise on the opportunity). This is a great example of the influence that ETFs can have, albeit this is at the small end of the market.

    Claim 2: ETFs will sell on mass and compound market falls

    One of the known weaknesses of a managed fund structure is the ability for investors to fairly easily redeem their funds, meaning at times of market falls, when a fund manager may find the best investment opportunities, the investors in the fund are panicking and redeeming their investments, meaning the fund manager becomes a forced seller rather than a buyer. This was one of the reasons Forager decided to turn their Australian Share Fund (FOR) into a Listed Investment Trust, where the pool of capital for them to invest was guaranteed.

    The one thing stopping simple redemption of managed funds during market crashes is another one of its weaknesses, which is managed funds are not simple to trade, and require the investor to apply to the fund to redeem units. This can involve filling out paper forms, and an apathetic investor may simply not be bothered.

    What do we think?

    One of the greatest advantages of ETFs is also one of its weaknesses when it comes to the above, with ETFs able to be traded on the ASX, a panicked investor simply has to log into their online brokerage account and hit the sell button. If a buyer does not exist on the other side of the trade, the ETF issuer is forced to then sell the underlying holdings which could very well begin a contagion effect.

    However, we come back to the size of the ETF market, at around 1% of the Australian market and 10% of the US market. Investors selling underlying stocks that they own through their broker will have the exact same impact as the reasonably small proportion of ETFs. We believe the actual impact of this event would be not materially higher than what currently exists.

    Claim 3: ETFS with low liquidity will be hard to sell if markets fall

    Peter Switzer recently spoke about a client who had received advice that an ETF with low liquidity would be difficult to sell if markets fall. The argument being that without a liquid market the seller would be unable to find a buyer on the other side of the trade and would need to sell at a significant discount.

    What do we think?

    One of the somewhat unknown components of ETFs is the role of the market maker. Essentially the market maker’s role is to provide liquidity to an ETF, so that if there is not an existing ETF unit on the other side of an ETF trade, the market maker must create an ETF unit for a buyer, or absorb an ETF unit for a seller. It is then the ETF issuer's role to buy or sell the underlying assets that the ETF holds. This means that regardless of an ETF’s liquidity, a market maker will always exist to buy an ETF off an investor even if the markets in free fall.

    However, there is a caveat to the above. Market makers make a profit by charging a spread between the buy price and the sell price of an ETF. The spread becomes the market maker’s profit margin. In a free falling market it may be difficult for the market maker to price the underlying investments forcing them to create a huge spread between the buy and sell price to protect their margins. This was seen in the 2015 Dow Jones ‘Flash Crash’, where some ETFs dropped 30% when the market makers were unable to price the underlying securities.

    Dr Martens Martens 4-Hole Lorrie Lorrie sanfrancisco-27775 Dress Blues 21664408 Original Doc 3f548bb - blurrypron.com

    Finally, an ETF is only ever as liquid as its underlying holdings. ETFs which invest in illiquid investments may have great liquidity, but if the underlying investments do not, this will likely be reflected in falls in both the underlying holdings and the ETF during market falls. This may be more likely to play out at the small cap end of the sharemarket and within unlisted asset classes.

    Claim 4: ‘Exotic’ ETFs are higher risk

    In a recent RBA publication, economist Michelle Cunningham discussed the risks faced with some of the more exotic ETFs, those that are classed as ‘synthetic’ ETFs, meaning the ETF issuer does not hold the underlying investments, rather they rely on a counterparty to pay the return. These ETFs are generally referred to as ‘Synthetic’ or ‘Hedge fund’ in their title. Cunningham raised the risk that the counterparty may default on their obligation, so an additional level of risk exists for the investor.

    What do we think?

    We agree with Cunningham’s analysis, an additional level of risk certainly exists with these ETF structures, however in many cases this is the only way to access to investment strategy that the ETF provides. Nevertheless, investors should be aware of the additional risks that exist.

    Conclusion

    There’s plenty of arguments in both camps about ETFs role in future market crashes. There’s no doubt the world has moved into uncharted territory with the rise of passive investing & ETFs in particular. We do believe, however, that some of the risks are overblow. Nevertheless, investors should be aware of these risks in order to make informed investing decisions. What do you think?

     

    Previous Article

    2017 Financial Year ETF and LIC Performance Table

    Next Article

    New Fixed Interest ETFs expand options for investors

    Leave a Reply
    Find a Fund
    Dr Martens Martens 4-Hole Lorrie Lorrie sanfrancisco-27775 Dress Blues 21664408 Original Doc 3f548bb
    Flats
    >
    ;