On this week’s episode of ETF Prime, host Nate Geraci is joined by ETF Trends’ CEO Tom Lydon to discuss a recent advisor survey concerning the financial markets and advisor sentiment regarding investing and managing client portfolios in the current environment. Later Geraci is joined by Giang Bui, head of U.S. exchange traded products at Nasdaq, who discusses a survey regarding the use of ETPs by the next generation of retail investors, and then Kevin Kelly, CEO of Kelly ETFs is on to discuss their suite of recently launched ETFs, which includes the Kelly Residential & Apartment Real Estate ETF (RESI).
The conversation opens with Lydon discussing the recent addition of Todd Rosenbluth as head of research for ETF Trends and ETF Database and the pivot of Dave Nadig to a more detailed research and analytics role that looks to identify emerging trends as a financial futurist.
A recent survey conducted by ETF Trends of advisors found that 25% of respondents anticipate the S&P 500 reaching new highs by the end of the year, 18% believed it would decline by 20% this year, and 57% anticipate the S&P 500 will stay within a 10% trading range for the year. It’s a change from the last decade that saw outperformance and bullish attitudes from advisors and investors.
“We don’t see the optimism among advisors that we saw in the last ten years, and they’re voting with their feet,” Lydon explains.
Advisors are concerned about finding income in a rising rate environment and the impacts that inflation is having on their purchasing power. That being said, the price action and opportunities to buy the dip have resulted in funds like Vanguard S&P 500 ETF (VOO) bringing in $26 billion in inflows YTD and the iShares Core S&P 500 ETF (IVV) bringing in $14 billion of inflows YTD, Geraci and Lydon discuss.
“I think the big surprise this past year has been advisors have been very cautious about inflation. They’ve been concerned about inflation in a big, big way, but we didn’t see a lot of money going into commodities last year,” Lydon says. “We’ve seen almost three times as much money going into commodities already this year that we saw all of last year.”
The discussion also covers gold, ESG investing, emerging market investing, and what sectors advisors reported allocating to the most.
Retail Investors and Rental Investing
Giang Bui, head of U.S. exchange traded products at Nasdaq, is on next and opens by discussing the strong continuing launches of new ETFs from issuers despite current market volatility and its negative impact on IPO launches from corporations.
The survey by Nasdaq recently over retail investors’ habits found that most younger retail investors were getting their ETF information from podcasts and online forums and that the younger generations were most familiar with Robinhood from a brokerage standpoint. Bui sees strong merit in ETF issuers and exchanges in partnering with companies such as Robinhood to provide educational materials about ETFs and their products.
“Commission-free trading, all the digital tools, and mobile apps have made it very accessible and easy for investors, especially younger investors to trade and become more interest in investing, which is a great thing, and Robinhood has captured a large market share amongst these younger investors,” Bui says.
The survey also found that many of the younger retail investors reported being unfamiliar with some of the more technical aspects of ETPs, such as the Sharpe ratio and different types of orders they could place when investing, highlighting the education opportunities when it comes to best practices and due diligence when investing and trading.
Last on was Kevin Kelly, CEO of Kelly ETFs, who discusses RESI, a fund that contains all publicly traded multi-family real estate companies within the U.S. and Canada, including apartments, single-family residential, student housing, and manufactured housing.
“What really differentiates this on a risk/reward basis is that we believe that the companies within the renting sector have strong pricing power in inflationary environments,” Kelly explains. “You’re not getting broad-based exposure to multiple different property types and leases; you’re getting targeted exposure to a traditional real estate asset class with specialized management teams that focus on their sector.”
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