Hot ETF Topics From Wealth/Stack

September 10, 2019

I’m writing this from Phoenix Sky Harbor airport after a whirlwind three days at the inaugural Wealth/Stack conference here in Phoenix. The event is the brainchild of Ritholtz Wealth Management and the Informa team that puts together Inside ETFs every year in Florida, with the stated intent of discussing the intersection of technology and wealth management.

Much of the event featured demos of various tech platforms and how they can help advisors differentiate and streamline their practices. But ETFs were part of almost every conversation.

This wasn’t a typical audience of advisors. If I had to paint with a broad brush, I’d say the average attendee was younger, more diverse, more tech savvy, and probably smaller and hungrier than the usual crew I see at these kinds of events.

Here are the topics that seemed to be resonating with this audience, both from the stage and from the networking lounge.

Lots Of Darned ETFs

I heard this observation a lot, and it’s not wrong. With more than 2,200 ETFs on the U.S. market, and more coming every day, there’s a definite sense of being overwhelmed. Many advisors simply limit themselves to a pretty small list of funds to consider based on rules of thumb (assets under management, volume) or brand loyalty or even just name recognition.

They are very, very skeptical of any new product being promoted by the local wholesaler.

In some ways, this is really a shame. While skepticism is completely appropriate, the reality is there are new products every day that are in fact better mousetraps. The challenge is wading into those newfangled products and separating the useful tools from the me-too late entrants.

Fixed Income Is Hot

While Wealth/Stack has far fewer asset-class panels, fixed income was an exception, and it’s clear the attendees are wrestling with how to approach the fixed income problem. While flows have been very strong into fixed income ETFs in the past year, it’s not clear those flows have been great for investors.

Much of the flow has looked like “duration shortening”—which made sense in an era of rising rates, and maybe even in a world of declining rates when the curve is flat or inverted. But with so many ways to slice and dice fixed income, there was broad concern that many folks are looking to fixed income as an alpha generator, as opposed to its historical use as a counter-correlated asset to the real risk assets: equities.

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