Never miss an update

Steven by Steve 10 Madden 29942 Womens Lanci Chelsea Sneaker Boot Shoes, Shoes, Black, US 10 9d1343f

Never miss an update

Steven by Steve 10 Madden 29942 Womens Lanci Chelsea Sneaker Boot Shoes, Shoes, Black, US 10 9d1343f -

    Steven by Steve 10 Madden 29942 Womens Lanci Chelsea Sneaker Boot Shoes, Shoes, Black, US 10 9d1343f
    Steven by Steve 10 Madden 29942 Womens Lanci Chelsea Sneaker Boot Shoes, Shoes, Black, US 10 9d1343f
    New Dr. Martens Womens Gray Ankle Boots Size 5*Miss Albright Light Taupe Suede Stacked Sandals Size 9Miss Albright Light TaupeElle Women's Cognac Leather Ankle Boots Booties (Sz 5.5 US, 36 EU)-$345 , Frye Red Beige Leather Lizard Inlay Foot Cowboy Boots Style 7040 Size 5 B USAVintage SAMELLO Exclusively for Circle Kane women's western Boots 7D 0-771-15-BO , Naughty Monkey Shavano Tan LTHR Slouch Boots Size 9.5M D2073/ , J. CREW BROWN LEATHER KNEE HIGH RIDING BOOTS HIGH HEEL MADE IN ITALYsz 9.5 GOODIVANKA TRUMP Sharon High Heel Booties Size 6 MSRP $150 D6 8 New , Steve Madden Jaydun Black Womens Shoes Size 7 M Boots MSRP $129 , Born Crown Black Leather Tall Boots Women's Size 10/42 , Womens Black 1"Low Heel Round Toe Side Elastic Sexy Over Knee Boots Size 6NEW NINE WEST LEATHER COWBOY BOOTS BROWN SZ 8 1/2 M NWOBSTEVEN MADDEN/HAYDON/BLACK LEATHER TALL BOOT/WOMENS SIZE 9Fashion Women Plus size Snow warm winter Ankle Women Boots flat Heel tassel , Naturalizer Hitch Black Womens Shoes Size 6 M Boots MSRP $119Donald Pliner Womens Luna Boots Sz 6M Leopard Print Black Stretch Velvet StretchWomen's Sam Edelman Petty Black Suede Ankle Boots Size 7 MBoc by Born Womens Sz 7.5 Tan Brown Suede Faux Fur Lined Mid Calf Buckle Boots , The North Face Janey 7 / 38 Primaloft 200 G Insulation Brown Suede Faux Fur A4c , $189 EMU Australia 'Cooma' Genuine Sheep Fur Boot sz 8 US , Womens Fur Trim Winter Casual Warm Snow Ankle Boots Block Heels Faux Suede ShoesNIB RAG AND BONE "GHITA" MOCCASIN IN TAUPE SUEDE SIZE US 8 , CRISTIANO Vintage Overlap Boots size 9 B Black made in italy , Men's/Women's BC Footwear Women's Collective Western Boot Online Shopping Used in durability a lot of varietiesWomen Hiker All Camo Waterproof Scent Block Slip​ ​Resistant Boots RT AP Green , Comptoir Des Cotonniers Cognac Leather Zip Ankle Boots Booties Sz 40 9 , ELIE TAHARI Ankle Boots Womens 38 Black Pleated Tiered Leather Zipper ShoesTHE NORTH FACE Tan & Gray Suede Hiking Trail Boots Shoes Women's Size: 8.5 , Chatz By Chatties Women's XL Size 11 Brown Suede Fleece Lined Winter Boots NWT ,
    Steven by Steve 10 Madden 29942 Womens Lanci Chelsea Sneaker Boot Shoes, Shoes, Black, US 10 9d1343f ->Steven by Steve 10 Madden 29942 Womens Lanci Chelsea Sneaker Boot Shoes, Shoes, Black, US 10 9d1343f -
    Rivet Womens Punk Rock Studs Leather Motorcycle Back Zipper Ankle Boots Shoes sz , RUNDHOLZ Germany - Women's Leather Ankle-Boot EU40 US9-9.5 UK7 RED - Black Label , ADIDAS EQT SUPPORT MID ADVANCE BLACK WHITE GREEN MENS SHOES US8.5 DEADSTOCK NEW , TORY BURCH Gray Silver Cap Toe Ballet Flats Shoes Size 6.5 Rubber Soles , MAISON MARTIN MARGIELA X H&M - ESCARPINS COMPENSES CUIR VERNI ROUGE 40 - EX ETAT , NEW CHRISTIAN LOUBOUTIN Pigalle Follies 100 Patent Saturne Multi Pump Shoe EU37nicole Dixy Sandal - Women's Brownstone, 9.0 , Birkenstock Women's Arizona Sfb Taupe Suede Soft Footbed , Man's/Woman's Puma Mens Arial Online Shopping Skilled manufacturing leading the fashion , Globe Australia Mens Finale Skateboard Shoes SIze 10M Charcoal Suede/White $119 , Jordan Trainer Pro Men's Black/University Blue A1344007 , Adidas Originals NMD_R1 "STLT" Primeknit in Grey/Grey/Core Black CQ2387 BNIB , Nike Air Max Zero BR Pale Grey/Pale Grey 903892-002 Men'sExotic Nocona Cape Buffalo Cowboy Boots Men Size 8 1/2 D MADE IN USANew Rock M.992-S2 Mens Tower Shoes - Black , Men's Outdoor Sneakers Breathable Casual Sports Athletic Running Shoes TrainersPikolinos Puerto Rico 03A-6222 Black Mens Leather Slip-On Loafers Casual ShoesGentlemen/Ladies River Merchant Men Dress Shoes Sz.11-M Reliable quality Online export store value , Sheepskin Slippers Viktor brown Fur shoes Slippers slippers Fur slippers , Rocket Dog Women's Jaybird Lucky Eyelet Cotton Sneaker - Choose SZ/ColorMNX15 Women's Elevator Shoes MIRO NAVY Height Increase 6cm by FedEx Fast ShipNike Free TR Focus Flyknit Black Training Lt Wt Performance Running Shoes 9.5 , NIKE WOMENS AIR MAX 97 SE PARACHUTE BEIGE/WHITE/BLACK AQ4137-200Marc Fisher Booties Suede Hydra Black Shoes 6MNine West Olwyn Boots-Women's size 7 M Brown , Blossom Women Mid Calf Faux Fur Boots Grey 5.5 M US , Women Stiletto High Heel Side Zipper Pointy Toe Plaid Ankle Boots Occident ShoesNine West Explorer Ankle Boots, Dark NaturalCorral Brown Leather Snip Toe Inlay Cowboy Boots Womens Size 8.5 M Style R2501NEW JEFFREY CAMPBELL ELMCROFT GROVE GARDEN FLORAL BOOTS SIZE 6
    Will ETFs cause the next market crash?
    ETF Watch - Jun 29, 2017
    Steven by Steve 10 Madden 29942 Womens Lanci Chelsea Sneaker Boot Shoes, Shoes, Black, US 10 9d1343f -

    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.

    Steven by Steve 10 Madden 29942 Womens Lanci Chelsea Sneaker Boot Shoes, Shoes, Black, US 10 9d1343f -

    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
    Steven by Steve 10 Madden 29942 Womens Lanci Chelsea Sneaker Boot Shoes, Shoes, Black, US 10 9d1343f