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Heard At Inside ETFs: Paper Checks

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On Tuesday at the Inside ETFs conference, ETF.com staff were tasked with selecting some of the more insightful statements and observations they heard.

ETF.com Editor-In-Chief Drew Voros noted two quotes in particular:

  • “You must still be writing paper checks if you don’t think Visa & Mastercard are tech companies,: ETF.com Managing Editor Cinthia Murphy told Inside ETFs Chairman Matt Hougan during the ETF Pundits Panel, right before she won with her choice, the ProShares S&P Technology Dividend Aristocrats ETF (TDV).
  • “The coronavirus in China is having a big impact on fixed income, pushing rates lower as there is a flight to safety, driving down rates further including here in the U.S.,” said Kevin Flanagan, WisdomTree head of fixed income strategy, during an ETF.com video interview.

Staff Writer Sumit Roy found one of the panels particularly interesting:

The panelists at the Inside ETFs panel ‘Alpha for 2020’ admitted that generating market-beating returns wasn’t easy, but they offered investors some tips for getting it done.

Jay Pelosky, Co-founder and Chief Investment Officer for TPW Investment Management said that, ironically, a lower growth environment that lasts for a long time would be better for equities than a high-growth environment. That’s because it keeps central banks on the sidelines, keeping monetary policy loose.

Pelosky was particularly bullish on select emerging markets, like Brazil, which he called downright cheap. He also likes China, despite the trade and coronavirus headwinds that the country has recently faced.

The Emerging Markets Internet & Ecommerce ETF (EMQQ), which holds e-commerce stocks across emerging markets, was one of his top picks.

Meanwhile, another panelist, Sandra Testani, director of Product Management, Alternatives and ETFs for American Century, pointed to municipal bonds as an area where investors could capture alpha.

Munis may be seen by some investors as bland, but they should be an important component of any fixed income portfolio, she said.

Her firm’s product, the American Century Diversified Municipal Bond ETF (TAXF), attempts to generate alpha in the muni market with bottom-up security selection.

Finally, Adam Grossman, Global Equity CIO, suggested that factors—such as quality and value— may be a promising way for investors to beat the broader markets.But regardless of what alpha-generating strategy investors use, Grossman advised humility. It’s impossible for investors to know every little thing in the vast financial markets. That’s completely okay, he said. Don’t get overwhelmed and that will put you one step closer to beating the markets.

And Staff Writer Lara Crigger notes the following:

  • There was still lots of chatter around semi-transparent active ETFs on Tuesday. The biggest question I hear from skeptical advisors is: How will these things trade? Even the licensees/prospective issuers I’ve spoken to don’t seem to fully have the answers. They have plans, of course. They’re in the midst of building out the trading machinery, but really, the first one who makes it to market is going to have to be a guinea pig in more ways than one.
  • An ETF strategist shared that he thinks the market is overlooking the increasing disconnect between the industrial side of the economy and the consumer side of the economy. “Will there be a reckoning soon?” I asked him. He shrugged. “Beats me. But the gap is real.”
  • There seems to be a surprise contingent of attendees at the conference consisting of ETF market makers/liquidity providers. I don’t think I’ve ever encountered so many market makers at this conference in years past. A coincidence, or a sign?

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