Stocks and Trading Thread - Channeling your inner Mono

Started by MadImmortalMan, December 21, 2009, 04:32:41 AM

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Tonitrus


Ed Anger

Stay Alive...Let the Man Drive

Tonitrus

#2268
(and just to trigger Anger's Musk-hate a bit...)

WOO TSLA  :w00t:

Though it is likely grossly overvalued, which is why I now have a pretty tight trailing stop-loss sell order on it.

Though over time, my real big winner stock has been AMAT

And...MAH REITS :(

Malthus

My portfolio has done well over the past year. I'm up 13%.
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane—Marcus Aurelius

Admiral Yi

Online brokers are in a price war.  Etrade recently dropped its price to 6.49, and I just saw an add for 4.49.  I figure the market will have to consolidate at some point.

Ed Anger

Seedy will be pleased to know I took a minor shot to the gut when the NASDAQ shit the bed. I had my triggers set because I knew it wouldn't last but still.....

I need food stamps.
Stay Alive...Let the Man Drive

Admiral Yi

For the first time a company I own shares in is being bought out.  How does this play out?  Do I just sit back, then one day a new ticker will show up in my account?  Or cash?

Admiral Yi


Admiral Yi

QuoteMore than half of fund families saw outflows so far this year

In the world of asset management, it increasingly seems like there's Vanguard, and then there's everyone else.

The investment management giant has taken in more than $177.3 billion in inflows across its products thus far in 2017, according to Morningstar data. That's about as much as its 10 closest competitors--combined.

The losers amid Vanguard's victory include such Wall Street titans as J.P. Morgan Chase & Co. (JPM), Wells Fargo & Co. (WFC), and Goldman Sachs Group Inc. (GS), all of which have seen notable outflows this year.

Vanguard's dominance is a byproduct of investors moving en masse to passive products (http://www.marketwatch.com/story/passive-investing-a-winner-in-2016-shows-no-sign-of-stopping-2016-12-27), which simply track an index like the S&P 500 , as opposed to actively managed products, which aim to outperform such indexes through portfolio managers selecting the securities held. Data have repeatedly shown that passive funds perform better than active ones, particularly over the long term. Just as importantly, passive funds typically have much lower fees than their active counterparts. Vanguard funds, which are among the cheapest in the industry, can be had for as little as 4 basis points, or $4 for every $10,000 invested.

While Vanguard does offer actively managed funds--as well as "smart beta" funds, which use rules to deliver such strategies as "growth," "value," or "low volatility"--the overwhelming trend has been to passive. Last year, active funds as an overall category saw outflows of $285.2 billion while passive funds attracted inflows of $428.7 billion. This rotation has been occurring for at least 10 years.

According to Morningstar data, the flows into Vanguard products--which lifted its total assets to $3.826 trillion--were nearly double that of the second-place finisher, iShares, another giant in passive strategies, where inflows were about $94 billion.

Morningstar's flow data, which is through the end of May, looks at both mutual funds and exchange-traded funds, an investment structure that has become increasingly popular (http://www.marketwatch.com/story/how-the-etf-industry-became-a-4-trillion-juggernaut-2017-05-10). Not only are ETFs dominated by passive strategies, but they are both cheaper and more tax efficient than equivalent mutual funds.

Read: An industry icon explains how Enron's fall sparked the ETF explosion (http://www.marketwatch.com/story/an-industry-icon-explains-how-enrons-fall-sparked-the-etf-explosion-2017-06-02)

According to FactSet, the 10 equity ETFs with the largest year-to-date inflows are all iShares or Vanguard products, with five funds from each sponsor seeing the greatest adoption. Of the top 20 stock funds, 17 come from either one or the other. (Of the remaining three, one comes from Charles Schwab, while another is sponsored by SPDR State Street Global Advisors and the third is from PowerShares.) A similar trend is seen in fixed-income ETFs, where all the top 12 funds are either iShares or Vanguard products.

The iShares suite is owned by BlackRock (BLK), which--separate from iShares--had inflows of $4.54 billion thus far this year.

Morningstar looked at products from 852 fund families, and of those, only five had inflows of more than $10 billion over the time period considered. (In addition to Vanguard and iShares, they were Dimensional Fund Advisors, Pimco, and Schwab ETFs.) More than half the fund families--439, amounting to 51.5%--had outflows.

Among the families with the biggest redemptions, Franklin Templeton Investments led the way with $11.24 billion in outflows. The firm couldn't immediately be reached for comment.

Wells Fargo funds had outflows of $5.25 billion thus far this year, the fifth-highest of any firm. The redemptions lowered the assets held by Wells funds to $88.3 billion.

Other major names have also seen outflows in 2017. J.P. Morgan funds have seen a combined $3.79 billion in outflows this year, lowering its assets to $285.75 billion, while $332.9 million has been pulled from Goldman Sachs funds.

According to a report by the Financial Times (https://www.ft.com/content/147bd89c-6304-11e7-8814-0ac7eb84e5f1), Goldman Sachs Asset Management was the worst-selling fund manager globally thus far in 2017. The asset manager had outflows of $26.7 billion, per the FT, almost twice the rate of Federated Investors, the second-worst selling house.

"By their nature, money market fund flows in any short period are a misleading measure of our business or longer term performance for clients," a Goldman spokesperson told the FT.

While Goldman funds overall saw outflows, the firm did see increased adoption of its ETF lineup. One fund, the Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (GSLC), had inflows of $733.4 million thus far this year, according to FactSet. Two other ETFs also had year-to-date inflows above $150 million.

SPDR State Street Global Advisors, the third major player in the passive arena, bucked the trend of Vanguard and iShares, showing outflows of about $504 million in 2017. This is almost entirely due to SPDR S&P 500 ETF Trust (SPY), which has had outflows of nearly $7.5 billion thus far this year. The SPY, the largest and most actively traded ETF on the market, is frequently used as a short-term holding or a vehicle for hedging by investors. Its flows fluctuate wildly on a day-to-day basis.

People are beginning to see the light.

Admiral Yi

QuoteMW UPDATE: ETF fee war expands, bringing more pain to active managers

Sep 15, 2017 11:13:00 (ET)

By Ryan Vlastelica

Pressure on 'smart beta' fees is credit negative: Moody's

The ETF fee war is great for investors, saving them millions of dollars, but it's created a headwind for traditional active managers that's expected to intensify.

This month alone has seen two entrants into the exchange-traded funds marketplace that could radically change the fee equation across the industry, putting ever more revenue pressure on traditional managers, who have been struggling to retain assets amid a broader shift to low-fee index funds (http://www.marketwatch.com/story/passive-investing-a-winner-in-2016-shows-no-sign-of-stopping-2016-12-27).

At the start of the month, the GraniteShares Gold Trust (BAR) was launched with an expense ratio of 0.2%, or $20 for every $10,000 invested. That's half the fee charged by the SPDR Gold Shares ETF (GLD), by far the biggest gold fund on the market, and it also undercut the 0.25% charged by the iShares Gold Trust (IAU).

Read more:Quoting Bond villain, new gold ETF takes aim at rivals on fees (http://www.marketwatch.com/story/quoting-bond-villain-new-gold-etf-takes-aim-at-rivals-on-fees-2017-08-31)

The market for U.S.-listed commodity-based ETFs isn't huge--it has about $70 billion in assets, according to FactSet data, compared with nearly $2.5 trillion in equity funds--so that particular case may only have a limited impact. On Monday, however, Goldman Sachs filed for a fund that track an equally weighted index of large cap stocks. The ETF will only cost 0.09%, dramatically lower than the similar Guggenheim S&P 500 Equal Weight ETF (RSP), which goes for 0.2%.

Goldman's "move expands the ETF price war beyond plain vanilla ETFs into smart-beta ETFs, implying that the industry's higher pricing assumptions for smart-beta products will not hold," wrote Stephen Tu, a senior analyst at Moody's, in a Monday note. He added that the smart beta price war was a credit negative for traditional active equity managers.

"Smart beta" is a category of ETF that sits midway between passive funds--which track an index like the S&P, holding what it does, and in the same proportion--and active funds, where the holdings are individually selected by a portfolio manager. While these funds, also known as "strategic beta," do track an index, the components of many are not weighted by their market capitalization, and they are designed to do better than the traditional index over time. The indexes tracked by smart-beta funds are developed through rules that tilt toward such strategies as "value" or "growth."

Tu noted that traditional active managers, such as Legg Mason (LM), Franklin Resources (BEN) and Janus (JHG), have seen "steadily declining market share" as a result of the move to passive funds. According to Morningstar, active funds saw outflows of $285.2 billion in 2016; passive funds attracted inflows of $428.7 billion.

Related:Feeling bullish on the ETF industry? There's an ETF for that (http://www.marketwatch.com/story/feeling-bullish-on-the-etf-industry-theres-an-etf-for-that-2017-04-20)

See also: These 10 ETFs sucked up half of all inflows in August (http://www.marketwatch.com/story/these-10-etfs-sucked-up-half-of-all-inflows-in-august-2017-09-11)

To combat this, such managers have been investing in smart-beta products, which they viewed as "a product category with which they could grow assets without too much sacrifice on revenue," Tu wrote.

Goldman's aggressively low fee could change that equation. Currently, most smart-beta products have been priced between 0.24% and 0.39%, a pricing range that at the high end is more than four times more expensive than Goldman's proposed fund.

Currently, the 100 largest smart-beta funds have an average expense ratio of 0.27%, although this is heavily impacted by Vanguard, which has been the big winner of the shift to passive funds and other low-fee products. Excluding Vanguard, the average ratio for the largest 100 funds is 0.33%.

Read:Investors flock to Vanguard funds, dump Goldman, Wells Fargo, and others (http://www.marketwatch.com/story/investors-flock-to-vanguard-funds-dump-goldman-wells-fargo-and-others-2017-07-11)

"The plain vanilla ETF category has experienced a severe price war in which products pricing has migrated toward zero basis points, and this aggressive price competition is migrating up toward the smart-beta category," Tu wrote. "As a result, much of the hope and investment traditional managers placed into smart beta as a product salvation may be at risk. This is negative for traditional active managers that move into this space and expect to charge active light management fees, but will rather face a more index-like pricing environment."

Don't miss:How the bond industry changed, 15 years after the first fixed-income ETF (http://www.marketwatch.com/story/how-the-bond-industry-changed-15-years-after-the-first-fixed-income-etf-2017-08-03)

While investors don't care about fees to the exclusion of all other factors--for example, tracking error, tradability, and liquidity--the dominant trend in recent years has been to the cheapest funds on the market. According to data from Bloomberg (https://www.bloomberg.com/news/articles/2017-09-11/how-low-can-they-go-goldman-cuts-smart-beta-fees-to-a-new-level), ETFs that charge between 0% and 0.1% have had inflows of nearly $250 billion thus far this year (through the end of August). Funds charging between 0.21% and 0.3% have seen inflows of less than $25 billion.

According to the Investment Company Institute, expense ratios for U.S. equity ETFs overall dropped by nearly a third between 2009 and 2016 (http://www.marketwatch.com/story/heres-how-much-etf-fees-have-dropped-since-the-financial-crisis-2017-05-18), falling 32% to 23 basis points (or 0.23% of assets) on average, from 34 basis points. In June, Morgan Stanley estimated that fees could fall an additional 10% to 15% (http://www.marketwatch.com/story/morgan-stanley-predicts-fees-for-mutual-funds-etfs-falling-a-further-10-15-2017-06-01) over the coming three to five years.

Moody's currently rates Legg Mason as Baa1 negative, Franklin as A1 negative and Janus as Baa3 positive. Tu also said that falling smart-beta fees would be a negative for existing managers in the space, "which are likely to respond with price cuts on existing products."

Among those, Invesco Ltd. is rated A2 stable while both BlackRock Inc. (BLK) and State Street Corp. (STT) are rated A1 positive. BlackRock operates the iShares suite of products and has the largest market share of the ETF space. State Street sponsors the SPDR family of funds, which includes the SPDR S&P 500 ETF Trust (SPY), the oldest and largest ETF on the market.

-Ryan Vlastelica; 415-439-6400; [email protected]



(END) Dow Jones Newswires

tldnr: fees for index funds have been declining, now "smart-beta" funds are cheaper too, active funds getting clobbered.

Admiral Yi

I'm pulling the plug on my Lending Club experiment.  Not pulling the plug per se, but I've stopped rolling over my incoming payments.  I caught a bad spell and my yield is down to about 4%.  That's way less than the 6-8 I signed up for.  And that's at a time of full employment.  I can only guess what will happen to these loans if a recession hits.

How're you doing Valmy?

Camerus

I read an article the other day saying that Lending Club was overrun by bots and third world research slaves snapping up the best loans before the average Joe can even review 'em.

Valmy

Huh. I am still finding good notes. How recent is this?
Quote"This is a Russian warship. I propose you lay down arms and surrender to avoid bloodshed & unnecessary victims. Otherwise, you'll be bombed."

Zmiinyi defenders: "Russian warship, go fuck yourself."

Admiral Yi