My appearance in February on The ETF Store Show—a radio program produced by the ETF Store in Kansas City, Mo., on ESPN 1510, fulfilling my dream of following Mike & Mike on air.
For those (few) of you who follow my blog, it’s been quite a while since I’ve caught up on articles published elsewhere. So, this first post will just include links to some recent stories from Pensions & Investments and The Wall Street Journal.
Hot market, ETF popularity hurting securities lending (sub) - This article took a look at the somewhat controversial area of securities lending, including pension funds that moved into ETFs for the additional income from lending. As ETFs increased in both assets and liquidity, demand to borrow dropped and had some funds reconsidering. ETFs also lend their underlying securities, a topic I covered in 2011.
Institutions’ resistance to active ETFs may ease (sub) - During the 20th anniversary celebration for SPY, many people began to ask the next question…when will active ETFs take hold? To truly catch on, it will take institutional-level faith in the product and, perhaps, a less transparent vehicle. Money-market mutual fund reform, however, could turn institutions and corporations to ultra-short active ETFs (which I during the 2012 hearings).
Firms Try Varied Designs to Add ETFs - As asset managers look for more cost-efficient ways to offer their strategies across platforms, they have honed in on a few alternatives to launching entirely separate investment companies.
Qwafafew: Quants and Quaffs - On the lighter side, I worked with Rachel Louise Ensign on this amusing story about a group of quantitative analysts and their regular gatherings in New York and around the U.S.
My year-end wrap on the ETF landscape in Pensions & Investments. (sub)
And, a look at how ETFs are bringing in institutional clients, but not necessarily for ETFs. (sub)
My recent stories in the Wall Street Journal - “What ETF Managers Do" and "ETF Managers Don’t Buy and Sell Securities. Usually.” - helped me put the role of the ETF manager (or index manager) in perspective. They are very driven by process and mandate as security selection, for the most part, has been removed from the position.
Instead, they must consider the margin of every move that they do have to make and how that will positively or negatively affect tracking difference.
In a recent piece for Pensions & Investments, I highlighted a $1.4 billion underlying-for-ETF trade made in 4 iShares ETFs. The trade was discussed by BlackRock CEO Larry Fink at a September conference and again by the head of iShares in October. This not so subtle signal was a call-out to large institutions that bond ETFs are the new dealers.
With dealer inventory down significantly since 2008, corporate debt investors will increasingly find that their path to liquidity is through an ETF (and, of course, its management fee.) In the article, I also point to a recent study by The TABB Group which concludes that price discovery and liquidity of corporate bonds through ETFs could hasten the shift to more transparent and electronic bond exchanges.