Never miss an update

Steve Madden 7.5 Mens Lyford Wingtip Steve Oxford Dress Dress Shoes, Tan, US 7.5 09a9f1b

Never miss an update

Steve Madden 7.5 Mens Lyford Wingtip Steve Oxford Dress Dress Shoes, Tan, US 7.5 09a9f1b -

    Steve Madden 7.5 Mens Lyford Wingtip Steve Oxford Dress Dress Shoes, Tan, US 7.5 09a9f1b
    Steve Madden 7.5 Mens Lyford Wingtip Steve Oxford Dress Dress Shoes, Tan, US 7.5 09a9f1b
    Allen Edmonds Ashton 1608 Black Leather Split Toe Oxfords Men Size11D No Inserts , Allen Edmonds Kearney Black Leather Penny Loafers, Size 9.5 D, Style , NUNN BUSH Men's Leather Dark Purple Tassel Wingtip Moccasins Dress Shoes Sz 13MNEW Men's Giorgio Brutini Private Collection Snake Shoes 933628 Size 81/2 MNIB NEW Asher Green GREG 054621 LEATHER LOAFER SLIP ON SHOESMens Height Increasing Genuine Leather Hidden Elevator Formal Dress Shoes Z9620 , Stacy Adams Men's Biscayne Closed Toe Sandal Cognac 25025-221 , Pronto Uomo Firenze Dress Shoes Formal Tux Black Patent Leather Sz US 14Mens casual walking flats heel round toe loafer shoes fashion new shoes black , Florsheim Men's Marino Wingtip Oxfords GG8 Brown Size 9.5D $100Kenneth Cole Unlisted Mens Spend The Night Loafer Dress Shoes, Brown, US 7BZ684 CRISS shoes gray leather men slip on , GH BASS & CO Black leather Kiltie Tassel Loafers "LANCE" Slip On Shoes MENS 11.5$230 Ecco Mens 50104 ECCO Helsinki Oxford- Black shoe size 9 , BX668 NYON by CORAF shoes gray leather men elegantMens Slip On British Suede Leather Business Dress Formal Loafers oxford Shoes , Men's Roberto Chillini Shiny Green Oxford Faux Gator Dress Shoes Size 8Mens ALLEN EDMONDS MODENA black leather dress loafers sz. 8.5 D , Pronto Uomo Made in Italy Split Toe Oxford in Oxblood Leather Men's 12 M ItalyBruno Magli Mens Horse Bit Loafer Black Leather Size 10MLa Milano Leather Loafers men's Shoes-Black-Front Monogram Steel Buckle A1204Stafford® Nolan Men's Wingtip Oxford Shoes Cognac Size 8.5MUsed Nunn Bush Mens Eagan Wing Tip Oxford (84155) sz 12 size 12 excellent , Stanley Blacker Loafers Shoes Sz 6 Men Brown Braided Leather Italy YGI I7Mens STEVE MADDEN BOXXEER 226310 black dress oxfords sz. 10 MAllen Edmonds Byron Brown Dress Oxford Shoes 14 AA Made USA , New Mens Fashion patent leather wedding shoes pointy toe dress formal Shoes , JOHNSTON & MURPHY Black Leather Apron Split Toe Oxford Dress Shoes Sz 9.5 B4353 , Allen Edmonds Montgomery Dark Brown Dress Oxford Shoes 11 D Made USA ,
    Steve Madden 7.5 Mens Lyford Wingtip Steve Oxford Dress Dress Shoes, Tan, US 7.5 09a9f1b ->Steve Madden 7.5 Mens Lyford Wingtip Steve Oxford Dress Dress Shoes, Tan, US 7.5 09a9f1b -
    Le Pepe Women's Italian Leather Knee high Flat Boots 670218 , Stonefly Womens Venus II 79 Bis Vel Trainers, Beige Taupe Brown 075, 7.5 , AS NEW IN BOX Carvela Kurt Geiger KG Black Studded Flats AU 7 RRP 175 , Marco Tozzi Chain Applique Biker Boot Womens Black Synthetic Boots - 40 EUMan's/Woman's BETTIE-04 Satin Red online sale a good reputation in the world Fashion dynamic , New Womens Cole Haan Tali Bow D43263 Maple Sugar Leather Ballet Flats ShoesGianni Versace Black Satin Strappy Crystals Stiletto Sandals Evening 38.5Jessica Simpson Women's Tanysha Dress Pump - Choose SZ/ColorClarks Leisa Grace Platform Slip on Sandals 921, Brown Multi, 5 US / 35 EU , new CHRISTIAN LOUBOUTIN Diva Cora 100 embellished toe black velvet stiletto heel , Naot Krista Rhinestone & Metallic Leather Wedge Sandals, Women's Size 7, Pewter , Nike Air Zoom Attack Golf Shoe, Synthetic Microfiber Upper, White or Black, New , JUSTIN COWBOY BOOTS MEN'S 10'B , Mens Combat Military Cowboy Western Chukka Motorcycle Ankle Boots Work LeatherNEW DIADORA N9000 "COPITO" X 24 Kilates - RARE - US11 , DAN POST USA BLACK LIZARD LEATHER COWBOY RANCH BOOTS 11.5D , Puma Classic Casual Emboss, Winetasting, Mens 6.5Klogs Akland Men's Clog Display Model Shoes Black 13 M , Jones Bootmaker Men's Tan Suede Brogues Shoes , Handmade Men Double Monk Dress Shoes, Men Monk Shoes, Men Black Formal ShoeMan/Woman Corkys Footwear Women's Monkey Fashion Sneaker Louis, elaborate Medium cost Human border , Women Wedges Sneakers Height increase 10 cm Platform Shoes Fashion High , Aquatalia Glenda Quilted Weatherproof Velvet Sneaker - Wine Red - Size 7.5 , Nike Wmns Blazer City Low Desert Sand White Women Casual Shoe Sneaker AJ9257-002 , NIKE WOMEN'S FREE 5.0 TR FIT 4 PRT PRINT RUNNING SHOES WMS 6.5 , Womens's Nike Air Zoom PEGASUS 34 Sz 9 White /Metallic silver; 880560-104Men/Women NOT AVAILABLE Moderate price delicate Shopping promotionChristian Louboutin Chunky Heel Design Pumps 39 1 2 140818 (39763Bottes TRIVER COLLECTION Tout Cuir Marron T 38,5 TBEChic Womens Leather Back Zip Knee High Boots Low Block Heel Combat Knight Shoes
    Will ETFs cause the next market crash?
    ETF Watch - Jun 29, 2017
    Steve Madden 7.5 Mens Lyford Wingtip Steve Oxford Dress Dress Shoes, Tan, US 7.5 09a9f1b -

    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.

    Steve Madden 7.5 Mens Lyford Wingtip Steve Oxford Dress Dress Shoes, Tan, US 7.5 09a9f1b -

    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
    Steve Madden 7.5 Mens Lyford Wingtip Steve Oxford Dress Dress Shoes, Tan, US 7.5 09a9f1b
    Dress Shoes