Never miss an update

DZ872 MBT shoes gray brown textile leather bagisrecor-11564 women 7 brown sneakers 7 - 7.5 () 54d6d7b

Never miss an update

DZ872 MBT shoes gray brown textile leather bagisrecor-11564 women 7 brown sneakers 7 - 7.5 () 54d6d7b -

    DZ872 MBT shoes gray brown textile leather bagisrecor-11564 women 7 brown sneakers 7 - 7.5 () 54d6d7b
    DZ872 MBT shoes gray brown textile leather bagisrecor-11564 women 7 brown sneakers 7 - 7.5 () 54d6d7b
    Women's Nike Air Max 90 MRBL AO1521-001 Black Multi Color Size 7.5 NEW WITH BOXMen's/Women's Joshua SANDERS Shoes 604767 Pink 36 Elegant appearance High quality and economy Modern mode , DZ798 MBT shoes brown leather women sneakers 6 - 6.5 ()DZ672 MBT shoes brown leather women sneakers 6 - 6.5 () , 1711 adidas Originals Tubular Shadow Women's Sneakers Sports Shoes BY97381806 Nike Free RN Women's Training Running Shoes AQ4846-800Irregular Choice Upon-thames Womens Black Fabric ShoesShoes Lifestyle Retro 90s New Balance White Women WSX90-CLAAsics GT-1000 6 Ladies Running Shoes - Seashell PinkDZ801 MBT shoes purple textile women sneakers 6 - 6.5 () , DZ906 MOMA US 7 shoes white pink leather suede women sneakers , Puma Vikky Platform VR Trainers Womens Olive Sports Trainers SneakersShoes Lifestyle Retro 90s New Balance Black Women WSX90-CLB , Nike Blazer Mid Rebel Women's Shoe GUAVA ICE SUMMIT WHITE BQ4022-801 , DZ704 MBT shoes green nabuk women sneakers 6 - 6.5 ()1711 adidas Edge Lux 2.0 Women's Training Running Shoes BY4564Men/Women Mephisto Sano Women's Evasion blk Wear resistant Known for its good quality Acknowledgement feedback , 1709 Nike Blazer Low Lx Women's Sneakers Sports Shoes AA2017-606 , TOD's fashion sneakers, black leather, women's size US 6 $450 , Adidas D97784 Women Classic Adicross Golf shoes white green sneakers , DZ880 MBT shoes gray textile women sneakers 6 - 6.5 ()Nike Air Zoom Structure 21 Women Running Shoes 904701-101 , ATLANTIC STARS WOMAN CASUAL FREE TIME SNEAKER SHOES SUEDE CODE MAYA UVT TE58 , AB766 GUARDIANI shoes pink black suede patent leather women sneakers , 1711 adidas Originals Swift Run Women's Training Running Shoes CG4146 , DZ727 MBT shoes white leather women sneakers 6 - 6.5 ()Drew Shoe Womens cairo Low Top Velcro , Women's Adidas By Stella Mccartney Running Adizero Adios Shoes BY1719AB817 BLAUER shoes white pink leather women sneakers ,
    DZ872 MBT shoes gray brown textile leather bagisrecor-11564 women 7 brown sneakers 7 - 7.5 () 54d6d7b ->DZ872 MBT shoes gray brown textile leather bagisrecor-11564 women 7 brown sneakers 7 - 7.5 () 54d6d7b -
    Pleaser XTREME-1017RSF Chrome Plated Platform Ankle Boot Rhinestone FringeKelsi Dagger Brooklyn Mason Ankle Booties 016, Black, 8 US , Irish Setter Women's Vaprtrek 1821 Knee High BootHarley-Davidson Women's Delwood Fashion Boot - Choose SZ/Color , Tory Burch Kevin Over The Knee Boot Willow Suede ~ Black 009 ~ Size 9 ~ BNIB , Steve Madden Women's Crushing Pointed Toe Boot Rhinestone MicrosuedeNike Air Max Zero Essential Smokey Blue White 2017 Men's Running DS 876070-003 , Clarks Juliet Lora Ladies Black Leather Slip On Shoes E-Fit (GO)(Jen) , New KEEN Midori Mj Women Sz 6 Black Canvas Leather Slip On Flats Shoes 5476-BLCK , Splendid Women's Derby Loafer Flat - Choose SZ/ColorDansko Womens Ingrid Slingback Leather Clogs White SizeWomens Beverly Feldman Multicolor Casual Dress Closed Toe Shoes Size 9.5 Medium , Vince Camuto Womenn's "Anisha" Black Patent Leather Bow Heels Size 8M USNightclub Womens Shiny High Wedge Heels Bowknot Platform Pumps Ankle Strap Shoes , Butter Women's Denero Peep Toe Pump, Nude Patent Leather, Size 10 , New Fendi Logo Satin Slide Mule, Pink, 37/7, Retail $500 , Korean Womens Suede Punk Roman Shoes Sandals High Wedge Heels Ankle Strap Pumps , Skechers Cali Womens Hushhush Platform Sandal- Pick SZ/Color.NIKE SWEET CLASSIC HIGH LEMON FROST WHITE GREEN MENS SIZE 9.5-11.5 316664-711 , adidas USSH1603063957 Adidas Mat Wizard David Taylor Ed. Wrestling Shoes , 1274425-006 Under Armour Mens UA Curry 2.5 SneakerD- Choose SZ/Color.MARK NASON LOUNGE U ROCK ANKLE BOOTS W/DAGGER BUCKLE MEN’S SZ 9Adidas Yeezy Boost 350 V2 BLACK WHITE OREO 14Stacy Adams Men's Fiero Brown Slip-on Shoes 25019-200Harpelunde Green Golden Plate Slip On Shoes Wedding Animal Shoes MensAdidas Originals Womens Superstar Up Two-Strap Shoes (7)Merrell Women's Siren Hex Waterproof Hiking Shoe, Turbulence, 5 M USAMAZONAS Tall Black Leather 16 Inch Riding Boots Made in Brazil Size 7 SBritish Style Womens Gladiator Leather Strappy Round Toe Military Shoes Boot NewWomen's Jellypop "Lisette" Black Boots Size 6m Smooth JMDQSM Retail $100
    Will ETFs cause the next market crash?
    ETF Watch - Jun 29, 2017
    DZ872 MBT shoes gray brown textile leather bagisrecor-11564 women 7 brown sneakers 7 - 7.5 () 54d6d7b -

    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.

    DZ872 MBT shoes gray brown textile leather bagisrecor-11564 women 7 brown sneakers 7 - 7.5 () 54d6d7b -

    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
    DZ872 MBT shoes gray brown textile leather bagisrecor-11564 women 7 brown sneakers 7 - 7.5 () 54d6d7b
    Athletic Shoes