Never miss an update

Man's/Woman's Valuable Fitflop 29989 F-SPORTY Womens Suede Leather F-SPORTY Shoes Moderate price High quality and economy Valuable boutique 113215e




Never miss an update

Man's/Woman's Valuable Fitflop 29989 F-SPORTY Womens Suede Leather F-SPORTY Shoes Moderate price High quality and economy Valuable boutique 113215e - blurrypron.com

    Man's/Woman's Valuable Fitflop 29989 F-SPORTY Womens Suede Leather F-SPORTY Shoes Moderate price High quality and economy Valuable boutique 113215e
    Man's/Woman's Valuable Fitflop 29989 F-SPORTY Womens Suede Leather F-SPORTY Shoes Moderate price High quality and economy Valuable boutique 113215e
    Athe Vanessa Brand New Bnib Sandals Flats Shoes Size 39 Silver NudeMinnetonka Moccasins Handmade 600 Women'S Thunderbird Ii Hardsole Black SuedeSize 9 (/ ) Womens Black Leather Point Toe Ballet Flats MADE IN SPAINHOGAN women shoes Black suede stretch ballerina flat with patent leather accents , Demonia Grip-02 Studded Heart Platform Creepers - Gothic,Goth,Punk,Black,Buckle , BOTTEGA VENETA Multicoloured Cloth Ballet Flats, US 9 , Fabio Rusconi S-2388 Natural Flat Shoe in Leather - New in Box , Irregular Choice Women’s Eternally Grateful Closed Toe HeelsAUTHENTIC TORY BURCH ESPADRILLE SLIP-ONS 40034 BEIGE GRADE A USED - ATnew D&C DOLCE & GABBANA BALLERINA FLATS SHOES 40 AU 9 layby , LADIES SHOES/FOOTWEAR - Naot Figaro sandal berry/shiraz/garnet , Geox Yuki pearl-cream leather loafers, /RRP .00, BNWBTOD'S women shoes Silver metallic leather penny bar loafer with metal clampMen/Women Ladies Gabor Shoes - 82625 Cash Online Shopping Won highly appreciated and widely trusted at home and abroad wonderfulVersace 19.69 7502 SOFTY RED Loafers Women's Red AULadies Easy B Slip On Shoes 'Elsie'Vintage 1980s Tan Leather Ladies Shoes - Flat Heel - Women's Size 8B - "as new" , EASY B Elizabeth Casual Wide Fitting Shoe , PRADA women shoes Black velvet bow ballerina tobacco captoe 1F718H 866 F034SAC751 MBT shoes black suede women ballet flatsWomens Vagabond Frances Tassel Loafers BLACK Flats , TOD'S WOMEN'S SUEDE LOAFERS MOCCASINS NEW RUBBER BLACK CE6N°21 women shoes Black polished leather oxford shoes with jeweled embellishment , LADIES SHOES/FOOTWEAR - Laura Azano Hanko brown/wine shoe , WDIS118 Women Designer Inspired Beaded Ballet Pump Shoes , HOGAN WOMEN'S LEATHER LOAFERS MOCCASINS NEW H323 ROUTE WHITE 64DWomens Office Destiny Trim Loafers NAVY CROC LEATHER Flats , Size 8 Womens Taupe Leather Point Toe Ballet Flats MADE IN SPAINSkechers Womens/Ladies Flex Appeal 2.0 Bright Eyed Trainers (FS4435)
    Man's/Woman's Valuable Fitflop 29989 F-SPORTY Womens Suede Leather F-SPORTY Shoes Moderate price High quality and economy Valuable boutique 113215e - blurrypron.com>Man's/Woman's Valuable Fitflop 29989 F-SPORTY Womens Suede Leather F-SPORTY Shoes Moderate price High quality and economy Valuable boutique 113215e - blurrypron.com
    Ladies Clarks Cheyn Web Black Or Dark Brown Leather Casual ShoesBNIB Clarks Ladies Funny Dream Navy Nubuck Leather Flat Shoes , FitFlop Skinny Toe Thong Sandal Black LeatherEarth Ocelot - Women's Comfort Mary Jane - All Colors - All Sizes , BZ372 FDF SHOES shoes blue shiny leather men elegant EUWomen's Gentle Souls by Kenneth Cole Darby XL Black & White Oxfords Size 6.5 M , Womens Summer Peep Toe Med Block Heels Shiny Pu Leather Sandals Mules SlipperMIU MIU Brown Glitter Black Patent Leather Cut Out Platform Sandal Heel 37.5/7.5NWT St John Sz 7.5 B Rhinestone Crystal Sandals 3.5" Silver Metal Heel , DOLCE & GABBANA Carretto Sicily Crystals Silk Pumps Heels Shoes VALLY Red 06855 , New CHRISTIAN DIOR Baby D Evolution Black Patent Heels Pumps Shoes 39.5Jambu Womens Simone Platform Dress Sandal- Select SZ/Color. , Mizuno GV87 Left Foot With Discoloration Men Running Shoes Sneakers D1GA1709-14adidas AlphaBounce Zip - Men's Light Brown/White DA9949Nike Air Shake Ndestrukt Dennis Rodman Bulls White / Red / Black 880869 100Nike PRESTO FLY (908019 004) Men’s Sneakers Size 11 Black Volt Pure Platinum , Nike Vandal Premium QS, Sz 12, All Star Area 72, Galaxy, Quickstrike. , Puma Men's Sf Driver Evoknit Replica Ankle-High Fashion SneakerClarks 1825 Collection Men's Clarkdale Bara Chukka Ankle Boot Olive SuedeRIDGE ULTIMATE ZIPPER WATERPROOF TACTICAL 8" BOOTS 9000 * ALL SIZES - M/W 4-14Johnston & Murphy Moc Toe Dark Brown Oxfords 8 1/2 M NEW $185Retro Men Dress Pointed Toe Shoes Buckle Cuban Heels Floral Real Leather GoldenMens Stacy Adams Dress Shoes PARISI 24903 Gray Moc Toe Slip On Loafer Leather 8 , New Skechers You walk 14951/WBK Knit Slip on shoes, black/white, size 6Vans Womens Era Sneakers Aged Leather Black Size 5.5 New , Merrell Women's Siren Hex Q2 E-mesh Sneaker, - Choose SZ/Color , Mr/Ms Prada Nylon-Strap Leather Sneakers Excellent value Let our products go to the world Complete specifications , Chic Women's Rhinestone Leather Knee High Boots Block Heel Shoes us sz , Vince Camuto Britsy Ankle Boot Rouge Red Leather Pointed Toe Block Heel BootieWomen Leather Stretchy Over Knee High Boot Casual High heel Stilettos Snakeskin ,
    Will ETFs cause the next market crash?
    ETF Watch - Jun 29, 2017
    Man's/Woman's Valuable Fitflop 29989 F-SPORTY Womens Suede Leather F-SPORTY Shoes Moderate price High quality and economy Valuable boutique 113215e - 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.

    Man's/Woman's Valuable Fitflop 29989 F-SPORTY Womens Suede Leather F-SPORTY Shoes Moderate price High quality and economy Valuable boutique 113215e - 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
    Man's/Woman's Valuable Fitflop 29989 F-SPORTY Womens Suede Leather F-SPORTY Shoes Moderate price High quality and economy Valuable boutique 113215e
    Flats
    >
    ;