On a warm and sunny mid-winter weekend in Florida, a short drive from what some call “Wall Street South,” the Exchange ETF conference kicked off at the Fontainebleau Miami Beach.
From Feb. 11-14, the hotel's meeting halls and pool decks teemed with issuers, market makers and financial advisors in an atmosphere overshadowing the usual holiday-goers.
The event provided a view of changing landscapes in ETFs, with discussions around everything from the recent regulatory clearance for a spot Bitcoin product to innovations like buffered ETFs.
Benzinga engaged with attendees of all sorts. Here are the key takeaways.
Lesson 1: Disregard Noise And Look For Value
Passive investing, driven by the “There Is No Alternative” (TINA) mentality, gained traction in the past decade. However, economic uncertainty and stretched positioning present opportunities.
“I don't think it should be all doom and gloom,” said Ed Lopez, head of ETF Product at VanEck. “There are opportunities to find value in the market. Even with super low-interest rates, you can find equities trading at a good value relative to the fair value.”
See Also: Record $648M Inflows To Bitcoin ETFs Coincide With All-Time Highs
Lesson 2: Don’t Rationalize Your Wrongness
“People who have not concentrated in large-cap tech stocks have been wrong, and that’s okay,” Unlimited co-founder, CEO and CIO Bob Elliott shared on building trust. “Don’t rationalize your wrongness. The point is to see that you’re wrong, acknowledge it, and learn from it.”
Lesson 3: Active ETFs The Next Big Thing
Piggybacking on news Bill Ackman would launch Pershing Square USA as a hedge fund for the masses, Elliott added he foresees actively managed ETFs becoming popular.
“A big advantage is tax,” he said. “You get to washout those capital gains.”
Texas Capital's Edward Rosenberg said such disruptions threaten the status quo. There is complacency, with most advisors recommending the same few funds to their clients.
“One of our friends retired and asked three different [advisors] to see what portfolios they would recommend. Only one fund out of the bunch would be different. The rest “were all the same.”
Lesson 4: "It’s No Longer One Size Fits All"
More customization investors are now after, shared Anu R. Ganti, who left the buy-side to work as the senior director and U.S. head of Index Investment Strategy at S&P Dow Jones Indices.
“It’s no longer one size fits all,” Ganti explained. Previously, individuals at the helm, typically company owners, would devise methods to fragment investments for broader accessibility. Andy Baehr, managing director at CoinDesk Indices, remarked that this dynamic has reversed.
“Most asset classes in people’s investment portfolios start as being institutionally important, and then they found their way down to retail.”
Ben Jones, head of Americas Index Licensing at Nasdaq, said recent regulatory changes have lessened the difficulty of developing the innovative products investors desire, highlighting the growing use of options for hedging or income generation.
“I think the good news is a lot of these strategies are grounded in classic, traditional option-based strategies,” Jones elaborated. “For example, some options ETFs use strategies that provide downside protection, and we know that type of protection is extremely important to investors. Imagine if investors had that in 2008 or during the volatile period of 2011.”
Lesson 5: Learn To Sell The Outcome
Jones’ colleague, Jillian DelSignore, global head of Investor Distribution Strategy, ended with a note on how to get investors to embrace new products. Content-driven marketing and thoughtful education work best.
“It's helping investors understand the products and where they potentially make sense in a portfolio. Investors are focused on outcome. As an index provider, we’re focused on helping our asset management and issuer clients effectively reach their end investor.”
Photo: Brendon Spring from Pexels
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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