Never miss an update

Diadora Studded Shoes [Product Customized] Diadora Shoes STUDDED ORIGINAL 100% Studded I 3de94eb

Never miss an update

Diadora Studded Shoes [Product Customized] Diadora Shoes STUDDED ORIGINAL 100% Studded I 3de94eb -

    Diadora Studded Shoes [Product Customized] Diadora Shoes STUDDED ORIGINAL 100% Studded I 3de94eb
    Diadora Studded Shoes [Product Customized] Diadora Shoes STUDDED ORIGINAL 100% Studded I 3de94eb
    Shoes Lotto Leggenda Signature T4570 Man white off blue mode sneakers , Converse All Star Courmayeur [Product Customized] Shoes Studded ORIGINAL , Converse All Star Pink Vintage Effect [Product Customized] Shoes Borchi , Men's/Women's New Balance Men's M840V3 Running Shoes Special price cheapest Amoy , Adidas Pure Boost Training 3.0 Shoes Running Brown CQ3527 SZ 4-11Adidas Men's Football Soccer Running X 17.1 FG Grey Blue S82285 Size 5-11New Balance Men's M3190V2 Neutral Run Shoe Running Shoe , Men's/Women's Chaussure Golden Goose Superstar Suede Reputation first High-quality materials Excellent function , Converse All Star Hawaii [Product Customized] Shoes Studded ORIGINAL 100%New Balance Men's NYC 1400v5 Running ShoeConverse All Star Miami [Product Customized] Shoes Studded ORIGINAL 100%Shoes AsicsTiger h742n 8181 men's fashion fashion agave green/agave greenNew Balance Men's MW847 Health Walking ShoeConverse All Star Olive [Product Customized] Shoes Studded ORIGINAL 100% , Adidas Original AF 1.4 PK Black White Sneakers Running BY9395 Limited S 4-11 , Men/Women New Balance Men's M880br7 Queensland New design buy onlineAdidas NMD_R1 STLT PRIMEK Shoes Athletic Sneaker Rubber outsole CQ2910 Sz4-12 , ADIDAS NMD CS2 PK Unisex Running Sneakers Size 4-11 Black Black Pink BY9312 , NIKE shoes AIR ZOOM ELITE 9 863769 802 man Running sport Total crimson Mode , ADIDAS NMD CS1 PK Unisex Running Shoes Sneakers Size 4-11 Black BA7209Shoes Merrell Concordia Mid J310704C Man Bootie Trekking Expresso RougeConverse All Star Detroit [Product Customized] Shoes Studded ORIGINAL 100Shoes New Balance MRL996DY man sneakers casual mode Grey Fashion SuedeAdidas Women Terrex Agravic GTX Outdoor Hiking Shoes Running Black BB0954 SZ4-12Adidas Original NMD R1 PK Shoes Running Grey BY1888 SZ 4-11 Limited Q AvailableAdidas Adizero Adios Boost Shoes Shoes Running Black DB2491 SZ 4-11 , Converse All Star Black Glitter Studs Silver [Product Customized] Shoes , Limited edition Houston Rockets Converse - Chuck Taylors - NEW Never been worn , Adidas WM Boston Super PK Black Black CG3668 Size 4-11 Sneakers
    Diadora Studded Shoes [Product Customized] Diadora Shoes STUDDED ORIGINAL 100% Studded I 3de94eb ->Diadora Studded Shoes [Product Customized] Diadora Shoes STUDDED ORIGINAL 100% Studded I 3de94eb -
    Aquatalia Franca Weatherproof Suede Ankle Boot Size 5.5 , DS Nike W AIR FOAMPOSITE ONE ‘Alien’ Sz 11/Men's 9.5/[AA3963 100] 1Versace 19.69 V5421N ALCE BOTTOLATO COBALTO sneaker Men's Blue AU , NIB Marsèll Cuneone Ankle Boots in Nocciola Size 37.5 $1120 , Nike Air Max 90 - Limited Ed. - Red - US9 - Hyperfuse - Independence Day - , Demonia Steam 12 Unisex Eyelet Steampunk Strap Black Leather Calf Combat Boots , Ladies Rieker Double Zip Ankle Boots L4652Women sandals suede model DEMITRIA Aus 2 to 10.5 , Pleaser Pink Label ANNA-03 Womens Anna03/Rsa Ballet Flat 1- Choose SZ/Color. , crocs 205030 Crocs Womens Kadee Graphic Work Flat W Food Service Shoe , Ladies Clarks Un Haven Strap Leather Casual Shoes D FittingWomens Tecnica Moon Boot Delux Winter Wateproof Snow Mid Calf BootPRADA Etiquette Logo Blue Suede Loafer Shoes Calzature Donna Size 36 BRAND NEW , new SESTO MEUCCI brown leather Mary Jane platforms shoes Italy 10 - really cuteGentlemen/Ladies Lyvine Arche Shoes Best-selling worldwide New products in 2018 Excellent function , FITFLOP WOMENS CHRISSIE SHEARLING SUEDE SLIPPERS TUMBLED TAN SIZE 9$120 msrp NIKE AIR JORDAN RISING HIGH MENS BASKETBALL SHOES SNEAKERSNIB ADIDAS NMD R2 PRIMEKNIT GREEN MEN'S 10.5 r1 human race yeezy 350 pharrell , New Nike Shox Gravity "Olympic" Vast Grey Metallic Gold AQ8553-009 Men's SizesNike Men Zoom Winflo 5 Shoes Running Gray Training Sneakers Shoe AA7406-011 , Nike Air Max 1 Anniversary Aqua Size 9 Mens**Authentic** Brooks Dyad 10 Mens Neutral Running Shoes (4E) (082)Nike Air Force 1 X Clot PRM Silk White US 10.5 Nikelab AF1 , Mens Round Toe Leather Rivet Loafers Slip On Black Casual Barber Shoes Wedding G , Amali Men's Sequin Embroidered Plush Velvet & Glitter Smoking Slippers : Starry , New Florsheim Comfortech Radar 8 EEEEE brown (2654) , LUXURY PRADA SAFFIANO LOGO LOAFER SHOES 2DD125 BLACK NEW US 7NIKE Womens Nike Zoom Strike AJ0188-100 WHITE/WOLF GREY Womens Size 11.5Dansko Women's Alice Sneaker Black Suede/Knit SneakersECCO Women's Arizona Tie-W - Choose SZ/color
    Will ETFs cause the next market crash?
    ETF Watch - Jun 29, 2017
    Diadora Studded Shoes [Product Customized] Diadora Shoes STUDDED ORIGINAL 100% Studded I 3de94eb -

    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.

    Diadora Studded Shoes [Product Customized] Diadora Shoes STUDDED ORIGINAL 100% Studded I 3de94eb -

    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
    Diadora Studded Shoes [Product Customized] Diadora Shoes STUDDED ORIGINAL 100% Studded I 3de94eb
    Athletic Shoes