This week we bring you a little light reading in case you are missing ETFs over your Christmas break, with an In My Opinion from Philipp Höfler, Goethe University Frankfurt, who has studied the effects of passive ETFs on stockmarket quality. Höfler writes: “We think regulators, concerned about market quality and extreme stock price movements, will find the insights interesting. With the rise of passive ETFs, policymakers might need to trade-off the benefits—lower transaction costs, ease of investing—against potential costs—increased tail risk, lower liquidity, reduced efficiency of asset prices and market-making capacity. While we do not argue that passive products should be eliminated, we think policymakers can use this information to find the right balance.”
At the other end of the spectrum from passive ETFs lies the world of short & leveraged and REX Shares, with USD3 billion in its leveraged and inverse products but has returned to its roots, launching an ETF designed to produce income. Scott Acheychek, CEO of REX Shares says: “Fixed income is a disaster right now and a ton of assets are going into alternative income. We started analysing and felt we could improve on the current structures and build something a bit different and this is based on the FANG & friends stocks which people know and love so it’s very approachable and a viable alternative to some of the products that are out there.”
We also have our last podcast for the year in the ETF Express Off the Record series, this time in partnership with Franklin Templeton and featuring Jason Xavier of Franklin Templeton in conversation with me about all the different types of ETFs available to investors.
To listen you can click listen here, or you can listen on Spotify or Apple Music.
This is the last newsletter for the year from us at ETF Express and we would like to take this opportunity of wishing all our readers and supporters, happy holidays. We will return with a new newsletter on 5th January but will be updating the site over the holiday period.