Another disadvantage of (actively managed) ETF's vs mutual funds?

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buckeye7983
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Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by buckeye7983 »

Interesting article by Jason Zweig about ARK ETFs and potential problem with actively managed ETFs as compared to mutual funds:
What’s happened at ARK is a counterblast to the belief that ETFs are superior in every way to mutual funds. Over the past decade, investors have been stampeding into ETFs—which are, on average, much cheaper and more tax-efficient than mutual funds. ETFs have one critical flaw, however: They can get too big too fast, and nobody can stop it.

Nearly all professional investors admit—at least in private—that success carries the seeds of its own destruction. It’s a lot easier to rack up giant gains with a small fund than with a big one.

A mutual fund can mitigate this problem by closing to new investors, shutting off the inflow of cash. Over the years, when hot new money threatened to bloat mutual funds to unwieldy size, such firms as Fidelity, T. Rowe Price and Vanguard closed some of them until markets cooled off.
https://www.wsj.com/articles/cathie-woo ... investor_t (apologize if behind paywall for you)

What is actionable? If one chooses to use active management, consider this advantage of traditional mutual funds as compared to ETF's.
alex_686
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by alex_686 »

buckeye7983 wrote: Fri Jan 14, 2022 5:17 pm What is actionable? If one chooses to use active management, consider this advantage of traditional mutual funds as compared to ETF's.
This is a very mild edge for mutual funds. In general I tend to favor ETFs becuase of their lower cost structure.

Yes, mutual funds can close their doors. However they are loathed to do so. They have a strong economic incentive to do so even if it hurts current shareholders.

In practice this means that ETFs are limited to the more liquid part of the very liquid stock market.

A example would be the DFA small cap value funds. The mutual fund is able to dig deeper than the ETF into the small cap value sector because of liquidity issues.
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drk
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by drk »

Isn't it possible for an ETF sponsor to suspend creation of new shares? Searching turned up this WSJ article about Nomura doing that.
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by alex_686 »

drk wrote: Fri Jan 14, 2022 5:35 pm Isn't it possible for an ETF sponsor to suspend creation of new shares? Searching turned up this WSJ article about Nomura doing that.
Yes, ETFs have that particular nuclear option. The fallout from that would be even greater than closing a mutual fund to new investors. Things need to be really melting down before you pull that particular maneuver.

The way that the fund's price tracks the NAV is that authorized participants are constantly purchasing/redeeming shares. Without the APs trust and participation a ETF faces some real problems. Shutting down the process really hits the APs trading desk hard.
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by drk »

alex_686 wrote: Fri Jan 14, 2022 5:47 pm Yes, ETFs have that particular nuclear option. The fallout from that would be even greater than closing a mutual fund to new investors. Things need to be really melting down before you pull that particular maneuver.

The way that the fund's price tracks the NAV is that authorized participants are constantly purchasing/redeeming shares. Without the APs trust and participation a ETF faces some real problems. Shutting down the process really hits the APs trading desk hard.
Obviously there would be problems if you shut down redemptions, but it seems like creations would be a different story. In the article linked above, Nomura only suspended creations, and I don't know if it's possible to do the same in US markets.
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by Dry-Drink »

drk wrote: Fri Jan 14, 2022 6:02 pm
alex_686 wrote: Fri Jan 14, 2022 5:47 pm Yes, ETFs have that particular nuclear option. The fallout from that would be even greater than closing a mutual fund to new investors. Things need to be really melting down before you pull that particular maneuver.

The way that the fund's price tracks the NAV is that authorized participants are constantly purchasing/redeeming shares. Without the APs trust and participation a ETF faces some real problems. Shutting down the process really hits the APs trading desk hard.
Obviously there would be problems if you shut down redemptions, but it seems like creations would be a different story. In the article linked above, Nomura only suspended creations, and I don't know if it's possible to do the same in US markets.
Suspend creations => ETF can trade at way above the price that it should (based on underlyings).
Suspend redemptions => ETF can trade at way below the price that it should (based on underlyings).

No?
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by Marseille07 »

Dry-Drink wrote: Fri Jan 14, 2022 6:23 pm Suspend creations => ETF can trade at way above the price that it should (based on underlyings).
Suspend redemptions => ETF can trade at way below the price that it should (based on underlyings).

No?
No. The Authorized Participants make counter-trades to keep the price in check. This has little to do with creations or redemptions.
rich126
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by rich126 »

Dry-Drink wrote: Fri Jan 14, 2022 6:23 pm
drk wrote: Fri Jan 14, 2022 6:02 pm
alex_686 wrote: Fri Jan 14, 2022 5:47 pm Yes, ETFs have that particular nuclear option. The fallout from that would be even greater than closing a mutual fund to new investors. Things need to be really melting down before you pull that particular maneuver.

The way that the fund's price tracks the NAV is that authorized participants are constantly purchasing/redeeming shares. Without the APs trust and participation a ETF faces some real problems. Shutting down the process really hits the APs trading desk hard.
Obviously there would be problems if you shut down redemptions, but it seems like creations would be a different story. In the article linked above, Nomura only suspended creations, and I don't know if it's possible to do the same in US markets.
Suspend creations => ETF can trade at way above the price that it should (based on underlyings).
Suspend redemptions => ETF can trade at way below the price that it should (based on underlyings).

No?
Basically would be a closed ended fund.
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by Dry-Drink »

rich126 wrote: Fri Jan 14, 2022 6:29 pm
Dry-Drink wrote: Fri Jan 14, 2022 6:23 pm
drk wrote: Fri Jan 14, 2022 6:02 pm
alex_686 wrote: Fri Jan 14, 2022 5:47 pm Yes, ETFs have that particular nuclear option. The fallout from that would be even greater than closing a mutual fund to new investors. Things need to be really melting down before you pull that particular maneuver.

The way that the fund's price tracks the NAV is that authorized participants are constantly purchasing/redeeming shares. Without the APs trust and participation a ETF faces some real problems. Shutting down the process really hits the APs trading desk hard.
Obviously there would be problems if you shut down redemptions, but it seems like creations would be a different story. In the article linked above, Nomura only suspended creations, and I don't know if it's possible to do the same in US markets.
Suspend creations => ETF can trade at way above the price that it should (based on underlyings).
Suspend redemptions => ETF can trade at way below the price that it should (based on underlyings).

No?
Basically would be a closed ended fund.
Right, if you suspend both.
Marseille07 wrote: Fri Jan 14, 2022 6:25 pm
Dry-Drink wrote: Fri Jan 14, 2022 6:23 pm Suspend creations => ETF can trade at way above the price that it should (based on underlyings).
Suspend redemptions => ETF can trade at way below the price that it should (based on underlyings).

No?
No. The Authorized Participants make counter-trades to keep the price in check. This has little to do with creations or redemptions.
Huh ever heard of those. What are those and how do those work?

I thought ETF pricing was kept close to its correct underlying price precisely by redemption/creation, at least that's what I've always read. When I googled, that's what I found. Am I misreading the following or it's just plain wrong? Ex:
https://www.bis.org/publ/qtrpdf/r_qt2103d.pdf
"In general, ETFs rely on an arbitrage mechanism to keep their share prices aligned
with NAV. This mechanism relies on a special type of investors – usually, large marketmakers and broker-dealers – collectively known as authorised participants (APs),
which can create or redeem ETF shares. Whenever ETF prices rise above NAV, APs
have an incentive to step in and exchange a subset of the asset holdings (a “creation”
basket) for ETF shares. This helps close the arbitrage gap. Likewise, when ETF prices
fall below NAV, APs exchange a “redemption” basket for ETF shares. "
Marseille07
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by Marseille07 »

Dry-Drink wrote: Fri Jan 14, 2022 6:36 pm
rich126 wrote: Fri Jan 14, 2022 6:29 pm
Dry-Drink wrote: Fri Jan 14, 2022 6:23 pm
drk wrote: Fri Jan 14, 2022 6:02 pm
alex_686 wrote: Fri Jan 14, 2022 5:47 pm Yes, ETFs have that particular nuclear option. The fallout from that would be even greater than closing a mutual fund to new investors. Things need to be really melting down before you pull that particular maneuver.

The way that the fund's price tracks the NAV is that authorized participants are constantly purchasing/redeeming shares. Without the APs trust and participation a ETF faces some real problems. Shutting down the process really hits the APs trading desk hard.
Obviously there would be problems if you shut down redemptions, but it seems like creations would be a different story. In the article linked above, Nomura only suspended creations, and I don't know if it's possible to do the same in US markets.
Suspend creations => ETF can trade at way above the price that it should (based on underlyings).
Suspend redemptions => ETF can trade at way below the price that it should (based on underlyings).

No?
Basically would be a closed ended fund.
Right, if you suspend both.
Marseille07 wrote: Fri Jan 14, 2022 6:25 pm
Dry-Drink wrote: Fri Jan 14, 2022 6:23 pm Suspend creations => ETF can trade at way above the price that it should (based on underlyings).
Suspend redemptions => ETF can trade at way below the price that it should (based on underlyings).

No?
No. The Authorized Participants make counter-trades to keep the price in check. This has little to do with creations or redemptions.
Huh ever heard of those. What are those and how do those work?

I thought ETF pricing was kept close to its correct underlying price precisely by redemption/creation, at least that's what I've always read. When I googled, that's what I found. Am I misreading the following or it's just plain wrong? Ex:
https://www.bis.org/publ/qtrpdf/r_qt2103d.pdf
"In general, ETFs rely on an arbitrage mechanism to keep their share prices aligned
with NAV. This mechanism relies on a special type of investors – usually, large marketmakers and broker-dealers – collectively known as authorised participants (APs),
which can create or redeem ETF shares. Whenever ETF prices rise above NAV, APs
have an incentive to step in and exchange a subset of the asset holdings (a “creation”
basket) for ETF shares. This helps close the arbitrage gap. Likewise, when ETF prices
fall below NAV, APs exchange a “redemption” basket for ETF shares. "
I'm not aware that the APs can create or redeem shares. My understanding is that the issuers (like Vanguard) do that.

I can't imagine some APs are creating VOO shares for example. The explanation above doesn't make much sense to me.
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by TropikThunder »

Marseille07 wrote: Fri Jan 14, 2022 6:25 pm
Dry-Drink wrote: Fri Jan 14, 2022 6:23 pm Suspend creations => ETF can trade at way above the price that it should (based on underlyings).
Suspend redemptions => ETF can trade at way below the price that it should (based on underlyings).

No?
No. The Authorized Participants make counter-trades to keep the price in check. This has little to do with creations or redemptions.
I have no idea what you mean by this. Neither apparently does Google.
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by Dry-Drink »

Marseille07 wrote: Fri Jan 14, 2022 6:49 pm
Dry-Drink wrote: Fri Jan 14, 2022 6:36 pm
rich126 wrote: Fri Jan 14, 2022 6:29 pm
Dry-Drink wrote: Fri Jan 14, 2022 6:23 pm
drk wrote: Fri Jan 14, 2022 6:02 pm

Obviously there would be problems if you shut down redemptions, but it seems like creations would be a different story. In the article linked above, Nomura only suspended creations, and I don't know if it's possible to do the same in US markets.
Suspend creations => ETF can trade at way above the price that it should (based on underlyings).
Suspend redemptions => ETF can trade at way below the price that it should (based on underlyings).

No?
Basically would be a closed ended fund.
Right, if you suspend both.
Marseille07 wrote: Fri Jan 14, 2022 6:25 pm
Dry-Drink wrote: Fri Jan 14, 2022 6:23 pm Suspend creations => ETF can trade at way above the price that it should (based on underlyings).
Suspend redemptions => ETF can trade at way below the price that it should (based on underlyings).

No?
No. The Authorized Participants make counter-trades to keep the price in check. This has little to do with creations or redemptions.
Huh ever heard of those. What are those and how do those work?

I thought ETF pricing was kept close to its correct underlying price precisely by redemption/creation, at least that's what I've always read. When I googled, that's what I found. Am I misreading the following or it's just plain wrong? Ex:
https://www.bis.org/publ/qtrpdf/r_qt2103d.pdf
"In general, ETFs rely on an arbitrage mechanism to keep their share prices aligned
with NAV. This mechanism relies on a special type of investors – usually, large marketmakers and broker-dealers – collectively known as authorised participants (APs),
which can create or redeem ETF shares. Whenever ETF prices rise above NAV, APs
have an incentive to step in and exchange a subset of the asset holdings (a “creation”
basket) for ETF shares. This helps close the arbitrage gap. Likewise, when ETF prices
fall below NAV, APs exchange a “redemption” basket for ETF shares. "
I'm not aware that the APs can create or redeem shares. My understanding is that the issuers (like Vanguard) do that.

I can't imagine some APs are creating VOO shares for example. The explanation above doesn't make much sense to me.
APs do it along with the ETF sponsor. This link explains how the ETF redemption/creation process works and has a section on why it's so critical to keep prices where they should be:
https://www.ssga.com/us/en/institutiona ... d-redeemed

I don't think I'm wrong in my original comment, but I'm by no means an expert on this :oops:
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by nisiprius »

I appreciate the point that ETFs are not automatically Just Plain Better in Every Way.

But it seems to me keeping an eye on fund size is something that just goes with the active management territory, regardless of vehicle. Barry Ritholtz, writing about mutual funds (not ETFs) says it's your responsibility to pay attention to the manager and "fire" them under a number of circumstances. One is:
When they become too big

Some managers find a niche that they can profitably exploit. But beyond a certain size — which can range from less than $1 billion to about $5 billion — they no longer can create alpha with that strategy... I have found it is especially true for small cap and technologies, and emerging markets.
Zweig may be right that there is more danger of an ETF getting too big too quickly due to inability to throttle the inflow of money. But assets under management is an easy number to find.

It seems to me that investors in products that have a large "active share," and depend on concentrated holdings in "high conviction" stock picks by star managers, need to take responsibility for paying attention to the fund's size, whether it's a mutual fund or an ETF.

It doesn't seem like due diligence simply to ignore this with active mutual funds, in the belief that fund managers will close the fund when necessary. Zweig writes
ARK, which declined to comment, has said that its funds will be able to “scale exponentially” as its favorite industries continue to grow.
Assuming the fund's manager really believes this, then even if ARKK were a mutual fund Cathie Wood would not necessarily have chosen to close it to new investors.
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by afan »

There is no reason to buy active mutual funds.
There is no reason to buy active etfs.
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by TropikThunder »

Dry-Drink wrote: Fri Jan 14, 2022 7:06 pm APs do it along with the ETF sponsor. This link explains how the ETF redemption/creation process works and has a section on why it's so critical to keep prices where they should be:
https://www.ssga.com/us/en/institutiona ... d-redeemed

I don't think I'm wrong in my original comment, but I'm by no means an expert on this :oops:
You are correct about how the AP carries out the creation/redemption process in cooperation with the ETF sponsor. If the ETF sponsor has suspended both creation and redemption, I don't see how the AP has any other role to play. I have no idea what a "counter-trade" is.
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by rich126 »

There seems to be several threads about funds like ARKK lately. Performance wise those funds tend to have several problems. One, they tend to be trendy and not really a long term way to trade. Also once they get a strong track record and become known, they get tons of investors chasing the latest success/fad and they can't invest all of that money because there isn't enough firms to invest in that matched their metrics. And then when they hit a rough spell, whether it is a short or long term trough, people withdraw money and they have to sell firms often at the worst possible time, and sometimes even generating capital gains.

But they make their money (salary, bonuses, etc.) often based on assets managed so they continue to accept it and invest it. If they end up holding a lot of cash on the sidelines waiting for better opportunities, investors often get upset.

I know it isn't boglehead but my only way of investing besides index funds is to look at stocks that ARE making money and aren't trading at unusually high valuations. Many firms that have had an excessively strong run are purely speculative growth stocks with little to no earnings. They rarely are long term winners. For example Berkshire had been trailing the market while many were chasing the latest fad, well look at them now. They are up 38% over the last 12 months. ARKK is down 43% in that time. So unless you are lucky enough to ID ARKK as an investment very early, you aren't likely to end up making money in the long run.

Note that I'm not suggesting to put a ton of money into BRK right now after its sharp rise but patiently wait and pounce. Ditto for stuff like Google and other stocks.
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by Gaston »

I know the overwhelming trend is away from mutual funds and toward ETF’s. And I believe I understand the many benefits of ETFs.

There is, however, one great benefit of mutual funds that oft goes unmentioned: setting a daily price and trading on that price . ETFs, in contrast, permit trading anytime the market is open. This opens the door to the behavioral risk of excessive trading. Multiple academics have reported that higher levels of trading result in lower levels of return. John Bogle also warned of this.

So while we all like the benefits of ETFs, let’s remind ourselves that succumbing to the temptation of frequent ETF trading is a bad idea.
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by vtsnowdin »

Yes John said that ETFs were fine as long as you bought them and then "Do not trade them"!
I wonder why a successful fund manager does not try to avoid regressing to the mean when he or she receives a huge inflow of cash by buying their own basket of stocks equal to the S&P 500 index with that cash.It would change the top holdings in the fund pretty quickly but would pretty much insure closely matching the whole market and protect investors money and their reputation.
They could of course buy more stock in keeping with the initial theme of the fund when and where available but would not be forced to make large bets hurriedly which would adversely effect the value of the small cap stocks they are buying just due to the funds activity.
Probably some rule against it my newbie brain has never heard of.
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by calwatch »

Gaston wrote: Sat Jan 15, 2022 7:25 pm I know the overwhelming trend is away from mutual funds and toward ETF’s. And I believe I understand the many benefits of ETFs.

There is, however, one great benefit of mutual funds that oft goes unmentioned: setting a daily price and trading on that price . ETFs, in contrast, permit trading anytime the market is open. This opens the door to the behavioral risk of excessive trading. Multiple academics have reported that higher levels of trading result in lower levels of return. John Bogle also warned of this.

So while we all like the benefits of ETFs, let’s remind ourselves that succumbing to the temptation of frequent ETF trading is a bad idea.
You can of course always place market on close/market on open orders or use brokers like Stockpile or M1 which trade at a set time per day. Stockpile uses the closing cross and so their prices match the daily close precisely.
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by Northern Flicker »

drk wrote: Fri Jan 14, 2022 5:35 pm Isn't it possible for an ETF sponsor to suspend creation of new shares? Searching turned up this WSJ article about Nomura doing that.
It would then become a closed-end fund with wide swings in the price premium/discount to NAV.
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by UpperNwGuy »

Gaston wrote: Sat Jan 15, 2022 7:25 pm I know the overwhelming trend is away from mutual funds and toward ETF’s. And I believe I understand the many benefits of ETFs.

There is, however, one great benefit of mutual funds that oft goes unmentioned: setting a daily price and trading on that price . ETFs, in contrast, permit trading anytime the market is open. This opens the door to the behavioral risk of excessive trading. Multiple academics have reported that higher levels of trading result in lower levels of return. John Bogle also warned of this.

So while we all like the benefits of ETFs, let’s remind ourselves that succumbing to the temptation of frequent ETF trading is a bad idea.
This "problem" with ETFs is frequently mentioned here, but I have seen no evidence of it among bogleheads as we tend to be buy and hold investors. I own both mutual funds and ETFs and I don't see any difference in my frequency of trading — which is very low. Let's not discourage folk from buying ETFs by implying that we will become excessive traders if we own them.
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by Tanelorn »

This is a dumb article. ETFs and ETNs have indeed shut off additional creation of units, for example when the sponsor thought the funds were getting too big for their markets (VIX ETFs and ETNs come to mind), just in the same way a mutual fund might decide they can’t deploy additional capital well at the time and close to new investors or new capital.

Also, it’s a dumb argument against ETFs because the first thing that happens if your etf gets so popular you have to close it to new creations is that the arbitrage on the upside is gone and now the etf can trade at a premium to NAV as demand from buyers can’t be met by creation of new shares but has to occur by selling from existing shareholders.

If you own such an ETF, you should be glad it can trade at a premium. That’s more upside than you expected, even more than getting the NAV return of the assets the manager chose, you’re also getting the speculative premium based on their investment track record and success.
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by PersonalFinanceJam »

UpperNwGuy wrote: Sun Jan 16, 2022 7:29 am
Gaston wrote: Sat Jan 15, 2022 7:25 pm I know the overwhelming trend is away from mutual funds and toward ETF’s. And I believe I understand the many benefits of ETFs.

There is, however, one great benefit of mutual funds that oft goes unmentioned: setting a daily price and trading on that price . ETFs, in contrast, permit trading anytime the market is open. This opens the door to the behavioral risk of excessive trading. Multiple academics have reported that higher levels of trading result in lower levels of return. John Bogle also warned of this.

So while we all like the benefits of ETFs, let’s remind ourselves that succumbing to the temptation of frequent ETF trading is a bad idea.
This "problem" with ETFs is frequently mentioned here, but I have seen no evidence of it among bogleheads as we tend to be buy and hold investors. I own both mutual funds and ETFs and I don't see any difference in my frequency of trading — which is very low. Let's not discourage folk from buying ETFs by implying that we will become excessive traders if we own them.
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by drk »

Dry-Drink wrote: Fri Jan 14, 2022 6:23 pm Suspend creations => ETF can trade at way above the price that it should (based on underlyings).
Suspend redemptions => ETF can trade at way below the price that it should (based on underlyings).

No?
Yes, it's possible that suspending creations would lead to negative side effects, but remember that the question arose from popular ETFs creating price distortions in their underlying assets as they grew. In theory, it should still be possible for an enterprising market-maker to arbitrage an overvalued ETF without creations by buying the underlying assets and shorting the ETF.
Northern Flicker wrote: Sun Jan 16, 2022 3:06 am It would then become a closed-end fund with wide swings in the price premium/discount to NAV.
There are no redemptions from a closed-end fund, though.
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by Northern Flicker »

Tanelorn wrote: This is a dumb article. ETFs and ETNs have indeed shut off additional creation of units, for example when the sponsor thought the funds were getting too big for their markets (VIX ETFs and ETNs come to mind)...
ETFs tied to derivatives to use for hedging such as derivatives based on the VIX are a different kettle of fish. Liquidity problems are a risk of hedging with derivatives generally, and shutting down creation of shares is the only choice when there is not someone to take the other side of an option needed for a new creation unit of a VIX ETF. This doesn't make it a neutral scenario. It is undesirable, but it comes with the territory.

Market index ETFs function well because the securities held are weighted in proportion to their liquidity.
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Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by drk »

drk wrote: Fri Jan 14, 2022 5:35 pm Isn't it possible for an ETF sponsor to suspend creation of new shares? Searching turned up this WSJ article about Nomura doing that.
Cool. Today we got a US fund example (Direxion Suspends Creations in RUSL):
Direxion wrote: [...] As a result, the Direxion Daily Russia Bull 2X Shares (the “Fund”) has suspended creations of its shares until further notice. During this time, the Fund may not meet its investment objective, may experience increased tracking error and may experience significant premium/discounts and bid-ask spreads.
So, yeah, the article in the OP is pretty much bunk.
A useful razor: anyone asking about speculative strategies on Bogleheads.org has no business using them.
Tanelorn
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Joined: Thu May 01, 2014 9:35 pm

Re: Another disadvantage of (actively managed) ETF's vs mutual funds?

Post by Tanelorn »

Right and because they suspended creations, but not redemptions, the fund will have a chance to trade higher than NAV (but not lower). This should be good for anyone who’s already long it, but of course if you buy in the future you should be careful about the valuation that you’re paying.
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