Never miss an update

Man's 29608/Woman's Adidas economic Taekwondo/Karatedo shoes processing/Indoor shoes/martial arts shoes/Ultra-III/White economic Attractive fashion Perfect processing 8ec5482




Never miss an update

Man's 29608/Woman's Adidas economic Taekwondo/Karatedo shoes processing/Indoor shoes/martial arts shoes/Ultra-III/White economic Attractive fashion Perfect processing 8ec5482 - blurrypron.com

    Man's 29608/Woman's Adidas economic Taekwondo/Karatedo shoes processing/Indoor shoes/martial arts shoes/Ultra-III/White economic Attractive fashion Perfect processing 8ec5482
    Man's 29608/Woman's Adidas economic Taekwondo/Karatedo shoes processing/Indoor shoes/martial arts shoes/Ultra-III/White economic Attractive fashion Perfect processing 8ec5482
    NEW NIKE ERIC KOSTON 2 Men's Training Skate Skateboarding Shoes Size US 10 , ADIDAS ORIGINALS EQT CUSHION ADV SZ 8-13 CORE BLACK TURBO PINK WHITE KNIT AH2231Vans Gilbert Crockett Pro Mid Navy/Gum Men's 7.5Nike Shox Zoom Mens 11.5 Blue White Vintage Hightop Basketball Shoes Sneakers , Nike Roshe LD-1000 Mens Trainer Shoe US 11 , Adidas Barricade 2017 Men’s 9.0 (Custom Made Black And Yellow) , Vans Unisex Sk8-Hi Reissue (Denim C&L) Skate Shoe , Converse One Star Low Top Oxford SHOES SIZE MENS 10.5 $90 153706C OBSIDIAN , Nike Zoom Live Low Basketball Shoes Grey White Breathable New 852421-002 Mens 14 , Asics Gel-Kayano 23 Running Shoes, Men's Size 13, Poseidon/flameConverse CONS BREAKPOINT LOW LEATHER OX Shoes Size 11.5 157776CNike Air Footscape NM Mens Running Shoes Obsidian Team Orange 852629-401 Sz 8.5 , Men's/Women's DC Skateboard Shoes Pure Black/Black/Grey Elegant and sturdy set meal Modern design Direct business , Mens ADIDAS VERITAS MID Neutral Black Nylon Hi Top Trainers B24355Adidas Men's Pro Model Vulc Adv Skate ShoeMen Reebok Z Dual Rush 2.0 V66129 Blue Indigo Cherry White 100% Authentic B. New , Vans Slip-On SF Geo Check NIB Size US 8 Men's VN0A38IKOV3 , NEW IN BOX! MENS NEW BALANCE NB 580 RED RUNNING CASUAL SHOES MRT580MB SIZE 7-11 , NIKE STEFAN JANOSKI MAX SB UNIVERSITY RED WHITE RUNNER SIZES 7 TO 12 631303-662Nike KD VII Elite [724349-478] Basketball Blue Graphite/Volt-Citrus-Grey NEWNew Balance Men's Msrmc High-Top Mesh Running ShoeNike Men's Air Max Sequent 2 Ankle-High Running ShoePuma Trinomic Blaze of Glory x Swash Wta London Mens Trainers 358851 01 U39Men's Nike Free 5.0 Camo Print Running Shoe Blue White Red 10.5 RARENIKE Mens Reax TR III SL Black Athletic Shoes Size 11 155Fred Perry Men's Fletcher Chukka Mid Sneaker B4202 Leather Black size 11 USAVans Era (Military Mono) Black Size US 10.5 Men's VN0A38FRQUUNIKE CORTEZ '72 863173-400 LOYAL BLUE METALLIC PEWTER WHITE SIZE: 10Nike Zoom Tennis Classic Ultra Flyknit Shoes Blue White 830704-401$150 Mens 11.5 ,
    Man's 29608/Woman's Adidas economic Taekwondo/Karatedo shoes processing/Indoor shoes/martial arts shoes/Ultra-III/White economic Attractive fashion Perfect processing 8ec5482 - blurrypron.com>Man's 29608/Woman's Adidas economic Taekwondo/Karatedo shoes processing/Indoor shoes/martial arts shoes/Ultra-III/White economic Attractive fashion Perfect processing 8ec5482 - blurrypron.com
    Reebok Floatride 6000 White Black Men Running Training Shoes Sneakers CN5262 , Red White Wonder Woman Super Girl Hero Santa Boots Dancer Platform Costume Shoes , Mr/Ms CLARKS Women's Rosalyn Adele Slip-On Loafer use special promotion Personalization trendAmalfi by Rangoni Womens Matta Closed Toe Loafers , Women's Shoes French Connection Devlin Pump Heels Slip On Leather Gold Size 37.5Womens Cute Creepers T-Strappy Round Toe Lolita Gothic Punk Pumps Shoes SIZE , Salvatore Ferragamo Bronze Open Toe Wedge High Heels Shoes Sandals sz 9 BPrada Womens Tweed Pumps Brown Multicolor Peep Toe Size 39Dansko Ryder Women's Green Leather Clogs Shoes - (US 5.5-6)Vintage JOSETTI Black Genuine ALLIGATOR Pumps 7.5B , Sexy Backless Shoes Ankle Strappy Simple Sandals High Heel Stiletto Shoes PartyNew Balance MX20v6 Minimus 20 V6 Mens Sz. 11.5 Blue Cross Training Shoes MX20BG6Mens Roshe Run Rare Marble Sole Grey And Pink Size 11 , NIKE AIR MAX PLUS NS GPX 10,5us 44.5 Requin Supreme tn pattaNEW DS 2018 Nike Air Jordan 1 Retro High OG Game Royal 555088-403 size 13 , Corcoran 1800 Men's 7" Tactical Boots - Black, 14 Wide , Geox- Clemet Sneaker, Men's Size 9, BlackStacy Adams Mens NORTHPOINT MOC TOE SLIP ON Natural Dress/Casual 25183-280Florsheim Royal Imperial Slip On Wing Tip Shoes Mens Size 13D Burgundy Leather , NEW Vans Shoes Authentic Shoe Canvas Black Women Shoes Ladies FootwearGentlemen/Ladies 2750 LAMEN NOIR Best-selling worldwide real Rich on-time delivery , Hoka One One Clifton 3 Womens Blue Mesh Athletic Running Shoes SZ 11 , Adidas CQ2823 Stan smith Running shoes white pink SneakersNIKE Womens Nike Roshe One Prm 833928-601 RUST PINK/RUST PINK-WHITE Size 8.5 , NIKE Women's Air Max 90 Ultra BR sz 7 Gamma Blue Lagoon Breathe Hyperfuse , Felt Boots Russian Winter Footwear Warm Wool Valenki Snow Rain Rubber OvershoesEUC Montrail Blue Ridge Gore-Tex Hiking Boots Women US 11 Leather MountaineeringNew Womens Block Chunky Heels Over Knee Thigh High Boots Platform Leather ShoesNEW GEOX Kennity Suede Ankle Boot, Wine, Studded, Women Size 37 (6.5-7 US), $189 , Via Spiga Farrah Harness Ankle Boots Black Leather Women's Heel Booties
    Will ETFs cause the next market crash?
    ETF Watch - Jun 29, 2017
    Man's 29608/Woman's Adidas economic Taekwondo/Karatedo shoes processing/Indoor shoes/martial arts shoes/Ultra-III/White economic Attractive fashion Perfect processing 8ec5482 - 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 29608/Woman's Adidas economic Taekwondo/Karatedo shoes processing/Indoor shoes/martial arts shoes/Ultra-III/White economic Attractive fashion Perfect processing 8ec5482 - 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 29608/Woman's Adidas economic Taekwondo/Karatedo shoes processing/Indoor shoes/martial arts shoes/Ultra-III/White economic Attractive fashion Perfect processing 8ec5482
    Athletic Shoes
    >
    ;