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Dave Nadig
3:00
Good afternoon and welcome to ETF.com Live!  As always, you can enter your questions in the box below.  I’ll get to as many as I can in the next 30 minutes or so.
After we’re done, well post a transcript at this same address, in case you missed something.
So let's get started with Todd:
Todd Rosenbluth - CFRA research
3:00
While the top 2 ETF providers again gained most assets in Aug what are some exciting up and coming firms gaining share to you?
Dave Nadig
3:00
THis is actually a fun question.  Not that they aren't all fun.
3:01
For those who like keeping score, we actually publish a weekly league table:
as part of our flows reporting.  And as you can see, there are a LOT of small firms out there right now.
3:02
Just eyballing it, its what, something like 40 firms at least that are under 1B under ETF management.
A lot of these "little guys" are doing some pretty interesting stuff.  A few that come to mind right off the top of my head (not dissing anyone!) -- GraniteShares.
3:03
They're basically just going after the big guys on price in a few areas, like Gold, and they're doing it aggressively.
Moves like that are great for investors, even if you aren't buying one of their funds.
Because it keeps the pressure on.
3:04
I also think that the funds Innovator has launched recently -- the defined outcome funds that have "buffers" to protect you from some of the downside risk -- are really interesting
I worry they might be a bit complex for mom and pop, but they're super cool under the hood.
I also think some of the active management shops are making some big waves:  Ark, in particular, and Davis, come to mind.  Natixis is also putting some interesting strategies out.
3:05
Its actually almost dizzying, the pace of new ideas and new products.  But those come to mind.
Zack Truman
3:05
Hi Dave. Why does active seem to keep being the route investors think is wisest? Seems like that idea keeps getting debunked, yet on it reigns over passive.
Dave Nadig
3:05
Well, I'm not sure the data would support your assertion
3:06
If you look at flows across product types: combine mutual funds and ETFs - the flows are really going one way every since the financial crisis.  Out of active, into passive.
We're in a bit of a creative destruction moment on that front.
3:07
I think you'll see continued carnage inside the ranks of active management, and in a few years we'll look back and realize what we've done is weed out the low-conviction, low-active-share, overpriced, benchmark hugging version of active.
Which is a LOT of the funds out there, honestly.  And good riddance.
And what we'll be left with is folks that are at least TRYING to do something very different, and some of them will be quite successful.  (See also: Ark, above!)
3:08
but even granting you your point, its pretty obvious.  Nobody likes being average.
And buying index funds is guaranteeing being average.
I'll combine a few questions here:
Charlotte R.
3:08
So Fidelity's zero-fee funds saw about $1B in their first month. Does that amount surprise you, or is that about what was to be expected in this era of price wars? Is that amount per month sustainable?
lebowski
3:08
Is it possible to have zero-fee ETF? .... Fidelity's new zero funds are mutual funds
Dave Nadig
3:09
I'm not that surprised they pulled in a billion, remember firmwide this is an enormous company, with a lot of very dedicated customers who have a big relationship with Fidelity.
And Fidelity has spent an ENORMOUS amount of money marketing these things.
3:10
There are indoor billboards in Grand Central Station, they're doing 30 second spots on ESPN, the ZERO campaign is honestly the biggest one I can recall them ever doing.
I have an account, and I got lots of enticements too.
So, clearly they're pushing it hard.
3:11
As for an ETF - well theres certainly no structural reason you can't run a zero fee ETF.  In fact there are some that have no fee because they invest in other ETFs that do have fees -- I think thats how at least one of Cambrias funds works.
The issue is the economics -- Fido can do this because you have to be a fidelity customer to get access to these funds.  So it's a way of getting folks to open fidelity accoutns.
3:12
Once you have an account at Fido, they have LOTS of ways to make money -- financial advice, other funds, insurance products, you name it.
if they had, instead, launched these as ETFs, well, I can just buy them in my random brokerage account, and Fido won't ever even know who I am.
So the economics become punishing.
Alex Romeo
3:13
This is more a statement of frustration rather than a question, but I am looking for a good source for asset flows into ESG/SRI ETFs to demonstrate the rising demand for these products.    I am surprised that ESG/SRI isn't even a separate topic in the Category/Focus/Niche filters on this ETF.com website, as well as its own category in your monthly ETF asset flow analysis articles.  Not to be a tree hugger, but the demand for ESG/SRI products is real and growing!
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