ETF Naysayers Need to Look Elsewhere

Exchange-traded funds prove to be the ‘go to vehicle’ in times of uncertainty.

Reviewed by: John Davi
Edited by: John Davi

Over the past week, the regional banking sector nearly came to its knees. Silicon Valley and Signature Bank closed and were backstopped by the government. Others fell as much as 20%-80% at one point during the trading day on Monday, March 13.  

Bank failures have existed for decades. Whether it’s improper risk management, lack of regulatory oversight or just bad loan management, we’ve seen this movie many times before.  

Here’s another movie we’ve seen before: the one where the ETF comes in to save the day. On Monday, despite the carnage in the regional bank space, the SPDR S&P Regional Banking ETF (KRE) was the go-to vehicle for price discovery and to access liquidity. It’s fascinating that several stocks in KRE were halted for trading but the ETF kept on trading with increased volumes. I was telling investors that if ETF liquidity declined on days like Monday, then the naysayers have a point. But the fact that liquidity spikes up means that the product is working.  

KRE traded $4.9 billion notional on March 10 and $4.2 billion on March 13. Its normal average volume is around $887 million, so effectively it traded five times its normal volume when the regional banking sector was collapsing. The product was the price discovery tool and source of liquidity. That’s amazing. There’s a reason the ETF industry has 9.6 trillion in assets globally, and it’s not just because of low-cost indexation. 

We’ve seen the ETF success as a go-to vehicle and price discovery tool countless times in the past. The VanEck Egypt ETF continued trading when the Arab Spring caused the Egyptian stock market to close, and the same thing happened when Greece closed its stock market back in 2015 during its tumultuous financial breakdown. And many times when the fixed income market was either closed or there was an interest rate/credit shock (think of the “taper tantrum”), fixed income ETF liquidity was plentiful and the price discovery vehicle of choice. 

ETF naysayers, which range from world-famous economists to owners of very large fixed income asset managers, who deny ETFs’ viability in times of crisis, should consider finding something else to pontificate on. 


Astoria Portfolio Advisors Disclosure: This article was written by John Davi, founder of Astoria Portfolio Advisors. There is no affiliation between and Astoria Portfolio Advisors. 

Past performance is not indicative of future performance.  

Please note, as of March 13, 2023, Astoria Portfolio Advisors held KRE on behalf of its clients. Any third-party websites provided on are strictly for informational purposes and for convenience. These third-party websites are publicly available and do not belong to Astoria Portfolio Advisors LLC. We do not administer the content or control it. We cannot be held liable for the accuracy, time-sensitive nature, or viability of any information shown on these sites. The material in these links is not intended to be relied upon as a forecast or investment advice by Astoria Portfolio Advisors LLC and does not constitute a recommendation, offer, or solicitation for any security or investment strategy. The appearance of such third-party material on our website does not imply our endorsement of the third-party website. We are not responsible for your use of the linked site or its content. Once you leave Astoria Portfolio Advisors LLC’s website, you will be subject to the terms of use and privacy policies of the third-party website. Refer here for more details. 

John Davi is founder, CEO and CIO of Astoria Portfolio Advisors, a leading subadvisor and outsourced chief investment officer to independent RIAs providing dynamic asset allocation models, quantitative stock portfolios and ETFs. He is an award-winning research portfolio manager with a long history in the ETF ecosystem, having done research and structured ETF portfolio solutions dating back to 2001. Davi’s research has been recognized and featured in,, and Institutional Investor Magazine, and he is a regular contributor to CNBC TV, Bloomberg and other media outlets. Davi was recognized by Bloomberg as a “ETF Master Chef” and by CNBC as an “ETF Expert.”