Never miss an update

Wholesale Lot 18 Pairs Pairs Men's Comfortable Sport Sandals Wholesale Assorted 18 1601 ead9e6d

Never miss an update

Wholesale Lot 18 Pairs Pairs Men's Comfortable Sport Sandals Wholesale Assorted 18 1601 ead9e6d -

    Wholesale Lot 18 Pairs Pairs Men's Comfortable Sport Sandals Wholesale Assorted 18 1601 ead9e6d
    Wholesale Lot 18 Pairs Pairs Men's Comfortable Sport Sandals Wholesale Assorted 18 1601 ead9e6d
    Men/Women Y'S Mouton bore sandals WHT 4 Special price excellent As of the latest modelMENS OLUKAI MANOA DK SHADOW / TOFFEE 10331-6C33 MENS 12Wholesale Lot 36 Pairs Men's Sandals Comfortable Beach Sport Assorted 1854 , Jordan Hydro 3 III Retro Mens 854556-116 White Fire Red Cement Sandals Size 15 , Sandal Boyz Rose Pink Suede Sandals sz 6 Supreme 5.5 SandalBoyz wmns 7.5 , JUTTA NEUMANN Men's Shoes 351448 Brown 10Birkenstock Boston Smooth Leather Unisex Clogs slippers footbed mules - NEWBirkenstock Arizona Velours Leather Unisex Shoes Slides SandalsBirkenstock Zürich Nubuck leather Soft-Footbed Steer unisex Slides slipper - NEWISLAND SLIPPER Men's Shoes 701175 Black 10 , NIKE AIR MAX 2017(not 2018) Men's Running Trainers Shoes Sneakers MovementMan/Woman TRIPPEN Wood & Leather sabot sandals High quality and cheap Trendy Outstanding style , F.lii.Giacometti Men's Shoes 282896 Brown 39 1/2 , AE231 MOMA shoes brown leather men sandalsSHAKA Men's Shoes 994035 Black 26cm , Emporio Armani Slippers Shoes Sz. 43 ITALY Man Blue X4P079XL293-A046 MAKE OFFEREmporio Armani Slippers Shoes Sz. 42 ITALY Man Blue X4P079XL293-A044 MAKE OFFERBrioni Grained Leather Boat Shoe, 7 Uk , Summer Rome Sandals Genuine Leather Casual Shoes For Man Outdoor Cowhide WearMen's Spenco Siesta Chukka Boots Sandals Expresso SKUNEW~Adidas JEREMY SCOTT HIKING BOOT JS obyo ALLIGATOR superstar Shoes~Mens sz 12 , 2018 Men Real Leather Gladiator Roman Hollow out High top Motorcycle Sandals Wi , S-1047968 New Salvatore Ferragamo Gym Dark Ivy Rubber Sandal Shoes Size US-7 , Teva Terra Fi 4 Madang Olive Webbing Mens Sport Sandals Size 12M , Wholesale lot Men's sandals 36 pairs sizes 7-10 / 7-13 SB5704TRIPPEN Wood & Leather Sabo sandals dark brown 24.5Men sandals leather model ZAID Us 2 to 12Aldo Men's Welawien Flip-Flop - Choose SZ/colorJ-2417270 New Valentino Garavani Blue Stripe Sandals Shoes Size 42 US 9 ,
    Wholesale Lot 18 Pairs Pairs Men's Comfortable Sport Sandals Wholesale Assorted 18 1601 ead9e6d ->Wholesale Lot 18 Pairs Pairs Men's Comfortable Sport Sandals Wholesale Assorted 18 1601 ead9e6d -
    Corral Girls' Cowhide Fringe Cowgirl Boot - Snip Toe - A3152 , Tommy Hilfiger Ian Summer Shoes Shoes Trainers Size 42 , Embroidered Black Ankle Boots knitted sides. 4.5cm heel. Size 38/39ACORN mules slides SHOES - 6 W fleece linedSteve Madden colorful Plaid Peep Toe pumps high heel platform heels shoes SZ 8 MNEW G.I.L.I. Leather Ankle Strap Wedges - Avery 10 Black , Pleaser SKY-309UVT Women's Neon Hot Pink Heel Tinted Platform Ankle Strap Sandal , Womens Pumps Shoes Slip On Pointed Toe Velvet Sequins Chunky High Heel ClubwearParty Party Dress Pumps: 2825 Comfort Evening Dance S Heels with Sole Stopper , MIU MIU 36.5 6 Buff Off White Cream Sling Back Leather Peep Toe Bow Heels ShoesLucky Brand Sortia Caged Sandals 572, Rye, 7.5 US / 37.5 EU , Nike Training Free 5.0 TR Fit 5 Women's Size 12 Training Run Shoes 704674 108adidas Originals ZX Flux W Black Red Snakeskin Womens Running Shoes B35310NIKE Hyperdunk 2017 Low LIMITED Mens Sz 9.5 Shoes Black White Gum 897636 900 , Nike Dunk Low Premium SB Bleached Denim Fat Tongue Blue 313170 402 Size 8 , Nike Oregon Ducks Free Trainer 5.0 NRG Rivalry , ASICS GEL LYTE V 5 TAOS TAUPE TAN BROWN BEIGE HL7A1 0707 SZ 10.5Nike Men Size 13 Zoom Hawk Flight Bball Shoes 805272-100 White Black Silver , Man's/Woman's Harley-Davidson Men's Chase Black Sneakers Modern technology First quality Breathable shoes , Asics Gel Nimbus 18 Mens Runner (D) (9001) + Free Aus Delivery , air jordan 5 RETRO INTERNATIONAL FLIGHT US MENS SIZES 136027-148 , Chung Shi Black Rocker Sole Toning Mens Sandal US Size 12.5 W/Box SH5 , Mens Loafers Embroidery Pointy Toe Canvas Slip On Fashion Slip On Driving Shoes , Allen Edmonds Brown Leather Kirkwood Loafers Mens 10 M/D BOAT SHOES DOCKSIDERS$1800 NIB ARTIOLI Light Brown Suede Cap Toe Italian Hand Made Oxford Shoes 10 DNike WMNS Court Force High Sku:316117 811 NIB Mango Purple $88.00 , New Balance 580 Elite Edition WRT580LA Green Gold White Women's Sz 6 B NEW!!! , Nike Womans Juvenate Woven PRM 833825-002 Size 62002 Nike Air Max TRAINER SC HIGH 1 WHITE REAL PINK GREY 302583-111 NEW 5.5 7 , Womens Leather Fleece Lining Fur Ankle Riding Boots Pointed Toe Stilettos F311
    Will ETFs cause the next market crash?
    ETF Watch - Jun 29, 2017
    Wholesale Lot 18 Pairs Pairs Men's Comfortable Sport Sandals Wholesale Assorted 18 1601 ead9e6d -

    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.

    Wholesale Lot 18 Pairs Pairs Men's Comfortable Sport Sandals Wholesale Assorted 18 1601 ead9e6d -

    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.


    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
    Wholesale Lot 18 Pairs Pairs Men's Comfortable Sport Sandals Wholesale Assorted 18 1601 ead9e6d