One of the “most helpful plain-English resources for investors who want to demystify exchange-traded funds” – Bloomberg Businessweek
Will Rhind, Founder & CEO of GraniteShares, dives into their YieldBOOST lineup of ETFs and offers perspective on the growing demand for options-based ETF strategies overall. Zeno Mercer, Senior Research Analyst at VettaFi, breaks down one of the hottest segments in the market: artificial intelligence ETFs. He covers fund flows, performance trends, and the key drivers behind investor interest.
ETF Prime is hosted by Nate Geraci. Learn how to make ETFs a part of your investment portfolio as Nate spotlights individual ETFs and interviews experts from across the country. ETF Prime is available on Apple Podcasts, Android, Spotify, and most other major podcasting platforms. Specific guest interviews can be accessed by visiting the ETF Expert Corner.
The investment world recently lost a legend in Vanguard Founder Jack Bogle. Nate, Conor, and ETF.com’s Dave Nadig look back at Jack’s impact on investing and the legacy he leaves behind. Connor O’Brien, CEO of O’Shares ETF Investments, spotlights their lineup of ETFs including the O’Shares FTSE U.S. Dividend Quality ETF (OUSA).
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ETF.com’s Lara Crigger discusses challenges and opportunities facing ESG ETFs and highlights the “World’s Cheapest ESG ETF Portfolio“. Bob Smith, President & CIO at Sage Advisory, offers his perspective on ESG investing including spotlighting the Sage ESG Intermediate Credit ETF (GUDB). Bruce Bond, CEO of Innovator ETFs, goes in-depth on their lineup of Defined Outcome ETFs.
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Nathan Geraci is President of The ETF Store, Inc. and host of ETF Prime.
After hitting record highs on September 20th, the S&P 500 dropped 20%+ through December 24th. A less than spirited holiday week bounce only somewhat salvaged the carnage. Up 11% late into the 3rd quarter, the S&P 500 ended 2018 down 4.5%. The swoon ended a streak of 9 consecutive years of gains following the global financial crisis, tied for the longest such streak in history. The contrast between the first three quarters of 2018 and the fourth was stark:
Source: Tim Edwards, S&P Dow Jones Indices
U.S. stocks weren’t alone in their misery. International stocks fared even worse, with both developed market stocks and emerging market stocks declining approximately 14%. Most sectors of the bond market – typically an investor refuge – also fell as rising rates pressured prices (interest rates and bond prices move in opposite directions). Stocks, bonds, real estate, commodities – there was nowhere to hide in 2018.
Source: JPMorgan
The challenging market environment was blamed on a host of factors including an overly aggressive Federal Reserve, trade tensions, political turmoil, and evidence of a global economic slowdown. In the U.S., debate now centers around whether a recession is on the horizon. Stocks are generally forward-looking indicators, and a 20% down move (arbitrarily defined as a bear market) has some wondering whether stocks might be trying to tell us something. Unfortunately, historical data proves inconclusive with only 7 out of the last 14 bear markets resulting in a recession.
Source: LPL Research
Another more reliable predictor of economic recessions is the yield curve. Every recession since the 1950s was preceded by an inverted yield curve, where longer-term U.S. Treasuries yield less than shorter-term U.S. Treasuries. Investors loaning money for a longer period of time expect compensation in the form of higher interest rates. When shorter-term rates are higher, it signals concerns about future economic growth. The yield curve came close to inverting during the 4th quarter, though has yet to do so. The problem with reading yield curve tea leaves is that even if there is an inversion, stocks can still continue posting strong gains.
Time will tell if the economy is heading for a recession. In the meantime, some context is important for longer-term investors. The S&P 500’s 9-year win streak featured average annual returns of nearly 16%, far higher than the historical average of around 10%. It’s entirely natural for U.S. stocks to pause and catch their breath. There is a reason the 9-year bull run tied for the longest: it simply doesn’t happen. Down years are inevitable. The longer-term rewards of stocks aren’t provided free of charge.
International stocks are no different. While the relative underperformance versus U.S. stocks has been frustrating, international stocks have proven their mettle over longer time periods. So too have bonds, a time-tested portfolio ballast. While rising rates may cause short-term pain for investors, they can be beneficial over the long-run. Rising rates equate to greater income for investors, and that growing income ultimately exceeds shorter-term capital losses for investors with longer time horizons.
Two key takeaways after a year like 2018 are 1) Recognize your time horizon, and 2) Embrace diversification. Time is your best friend on the path towards achieving your financial goals. Diversification helps keep you on that path. Owning a globally-diversified portfolio including international stocks and bonds can improve your overall risk-adjusted returns. You will never own 100% of the best performing asset classes and, consequently, you will never be over weighted in the worst. Expect the steady stream of headlines to continue in 2019 – trade wars, Brexit, North Korea, political showdowns, the Fed – but sleep soundly knowing that time and diversification are under your pillow.
AEI’s Mike Strain surveys the current economic and political landscape, offering perspective on the Fed, China, and the government shutdown. ETF.com’s Dave Nadig discusses stock ownership concentration in ETFs, focusing on Apple and other FAANG stocks. Amplify ETFs’ Christian Magoon spotlights the BlackSwan Growth & Treasury Core ETF (SWAN).
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One of the “most helpful plain-English resources for investors who want to demystify exchange-traded funds.” – Bloomberg BusinessWeek
In addition to the following guests, be sure to catch our weekly segment with the experts at ETF.com! Subscribe to receive the latest ETF Prime podcast directly to your inbox here.
January 8th – Mike Strain, Director of Economic Policy Studies at the American Enterprise Institute, discusses 2019’s economic and political landscape. Christian Magoon, Founder & CEO of Amplify ETFs highlights the Amplify BlackSwan Growth and Treasury Core ETF (SWAN).
January 15th – Bob Smith, President & Chief Investment Officer at Sage Advisors, goes in-depth on ESG investing and the ESG Intermediate Credit ETF (GUDB). Bruce Bond, President of Innovator Capital Management, explains the inner workings of their lineup of Defined Outcome ETFs.
January 22nd – Connor O’Brien, President & CEO of O’Shares ETF Investments, discusses their disciplined, factor-based approach to investing including the O’Shares FTSE U.S. Quality Dividend ETF (OUSA).
January 29th – John Swolfs, CEO at Inside ETFs, previews the world’s largest ETF conference. Bill DeRoche, Chief Investment Officer at FFCM, spotlights one of the best performing ETFs of 2018, the AGFiQ US Market Neutral Anti-Beta Fund (BTAL).
February 5th – Matt Bartolini, Head of SPDR Americas Research, explains the differences between the SPDR Gold Shares (GLD) and SPDR Gold MiniShares (GLDM). Juan Carlos Artigas, Director of Investment Research at the World Gold Council, discusses recent gold demand trends and gold’s prospects in 2019.
February 12th – D.J. Tierney, Managing Director at Charles Schwab Investment Management, talks Schwab ETFs including their rapid growth and focus on low total cost of ownership. Jacob Hutchinson, Managing Director at Premise Capital, describes their Frontier Advantage Diversified Tactical ETF (TCTL).
February 19th – Ambar Bajaj, V.P. ETF Product Manager at Legg Mason, recaps the Inside ETFs conference and highlights Legg Mason’s ETF approach. Jeremy Schwartz, Global Head of Research at WisdomTree, discusses the global macro environment and several WisdomTree ETFs to consider.
February 26th – Ethan Powell, Founder of Impact Shares, explains their unique approach to socially-conscious investing which includes the Impact Shares Sustainable Development Goals Global Equity ETF (SDGA).
March 5th – Simeon Hyman, Global Investment Strategist at ProShares, provides a comprehensive look at leveraged and inverse ETFs. Todd Rosenbluth, Director of ETF & Mutual Fund Research at CFRA, explores recent ETF trends.
March 12th – Jillian DelSignore, Head of ETF Distribution at JPMorgan Asset Management, offers perspective on the current markets and the investment case for several JPM ETFs. Jay Jacobs, Head of Research & Strategy at Global X, explains the potential benefits of a covered call strategy such as the Global X Nasdaq 100 Covered Call ETF (QYLD).
March 19th – Sal Bruno, Chief Investment Officer at IndexIQ, goes in-depth on using alternative ETF strategies in a portfolio. Jeremy Held, Senior Vice President & Director of Research at ALPS Advisors, spotlights the Alerian MLP ETF (AMLP).
All guest interviews are available through our featured section “ETF Expert Corner” at etfstore.com and can be played directly from any mobile device. Full podcasts of ETF Prime can be downloaded for free at etfprime.com, etf.com, Apple iTunes, and Spotify. ETF Prime airs every Tuesday at 3pm CST on ESPN 1510AM | 94.5FM in Kansas City and you can listen online at www.1510.com or via TuneIn Radio.
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