ETF Prime: Dave Nadig On Taxes, Twitter, and More


On this week’s episode of ETF Prime, host Nate Geraci speaks with ETF Trends’ CIO and Director of Research, Dave Nadig, who discusses Senator Wyden’s most recent tax proposal and fields questions from Twitter.

Geraci is also joined by Katie Koch, Co-Head of Fundamental Equity for Goldman Sachs, who discusses the role of thematics in investing, and Simplify ETFs’ managing partner and “convexity maven” Harley Bassman, who shares insight on the Fed, inflation, and interest rates.

The podcast opens with Nadig discussing the recent tax proposal from Senate Finance Committee Chairman Ron Wyden, which would tax in-kind transactions on ETFs, thereby making them much less tax efficient. Though it sounds worrisome, Nadig explains that he has yet to see or hear of any actual text in any legislative papers regarding this taxation.

There hasn’t been any public pushback from major ETF firms on this potential proposal yet. Still, Nadig expects that they are working behind the scenes to gather research and put together cohesive rebuttals backed by the facts. “I would expect some of them to publish some white papers in the coming months where they point out how this tax treatment is advantaging certain classes of investors,” Nadig explained.

While he hopes that an acknowledgement that ETFs can benefit the middle class and similar investors could help to shelve the proposed taxation plan permanently, Nadig still believes that even if it were to come to a vote, it would have very little chance passing in the current Congress.

Nadig went on to answer questions from Twitter concerning his perspective on the future of ETFs being selected by “superstar” stock pickers in 10 years; if the number of ETF offerings will be greater in ten years; what he thinks about mutual fund conversions and Bitcoin futures ETFs; and more.

Thematics and the Fed’s Role in Inflation and Interest Rates

Katie Koch of Goldman Sachs was next up to discuss thematic investing, an arena that Goldman Sachs has just entered with three new thematic ETF offerings: the Goldman Sachs ETF Trust Goldman Sachs Innovate Equity ETF (GINN), the Goldman Sachs Future Planet Equity ETF (GSFP), and the Goldman Sachs Future Tech leaders Equity ETF (GTEK). Koch believes that the 60/40 traditional portfolio management style is “broken” due to current valuations. Thematic ETFs could provide a solution.

At issue is the overcrowding into market cap-weighted indexes, which are based on historical performance and are therefore underweighted to tomorrow’s innovations. “We estimate that about half of the S&P 500, an asset class that many people own directly through the index, is at risk for disruption,” Koch explained. By investing thematically, investors can capture that disruption.

The podcast closes out with Harley Bassman of Simplify ETFs discussing inflation, the Fed, and interest rates. Bassman believes that inflation will be a reality moving forward, because it is a way to climb back out of debt without defaulting. He also argues that the Fed ultimately wants and works towards inflation.

The influx of money has created what Bassman calls “massive inflation,” leading to a wide gulf in income disparity and leaving him concerned about any potential Fed pullout at this juncture. The way forward, he says, is to let  “long-term rates rise and keep the front-end rate low.”

Simplify offers the Simplify Interest Rate Hedge ETF (PFIX), which is a hedge against higher interest rates.

Listen to the Entire ETF Prime Episode Featuring Dave Nadig:

For more ETF Prime podcast episodes, visit our ETF Prime channel.