ETF Zoo: International Stock Trauma and Why Investors Hesitate
The ETF Zoo crew dives into the biggest paradoxes in the market. Why are high-yield single-stock covered call ETFs (like YieldMax) booming despite poor total returns? Why are investors ignoring top-performing international markets like China and South Korea? Plus, the group debates the future of small-cap stocks, the diminishing need for crypto treasury companies like MicroStrategy, and the flood of new crypto ETF filings – including the strategy set to win the advisory channel.
Welcome to ETF Zoo, where we check in on the latest happenings in the wild world of ETFs. This week's conversation features a deep dive into international waters as the experts break down why investors still hesitate to dip a toe in, a private credit pulse check, crypto update, and a collective verdict on small-caps in the next year.
Hosts Dave Nadig, President and Director of Research at ETF.com as well as Sumit Roy, Senior ETF Analyst at ETF.com, are joined by industry experts to cover the latest and greatest happenings in ETFs. This week's episode features Bryan Armour, CFA, Director of ETF & Passive Strategies Research, North America for Morningstar; Aniket Ullal, SVP and Head of ETF Research and Analytics, CFRA Research; Cinthia Murphy, Investment Strategist, TMX VettaFi; and Nate Geraci, President of NovaDius Wealth Management and Host of ETF Prime.
Topics and Timestamps
[00:00:48] The Private Credit ETF Reality Check: Bryan Armour and Nate Geraci open up with a discussion on the lack of demand for private credit ETFs despite overall market excitement, the structural hurdles for non-liquid assets in the ETF wrapper, and what is actually worthwhile for ETF investors in the private market.
[00:04:45] International Equities, China Rejection, and Hidden Investing Gems: Cinthia Murphy offers insight on how international stocks are performing well but being rejected by investors (especially China) due to long-term underperformance. Aniket Ullal reveals the anti-AI play embedded in major international indices, and the group shares what overlooked opportunities are crushing it this year.
[00:15:35] The Incoming "Firehose" of Crypto ETFs: Nate Geraci delves into the real-world performance of crypto this year, the expected deluge of new crypto ETF launches (including index and altcoin products), and the decline in the value proposition for crypto-treasury companies like MicroStrategy. Geraci also shares what he believes will be the best crypto play for advisors.
[00:20:30] The YieldMax ETF Controversy (High Distribution vs. Total Return): Sumit Roy provides an in-depth discussion on the misleading nature of high-income YieldMax products and the trade-off of capping upside. The group talks about the importance of understanding distribution versus total returns, and why the funds will likely continue to attract retail investors.
[00:31:40] The Small Cap Dilemma and the Final Verdict: Today's episode wraps with a conversation on the net outflows and sustained underperformance of small-cap stocks, why large-cap's dominance makes a near-term recovery difficult, and which panelists still hold faith versus which ones believe small caps to be a lost cause in the next year.
