With the increased investor interest in fixed-income, Yones is seeing a variety of strategies implemented to capitalize on the bond market. As opposed to broad exposure in the bond market, ETFs are now available for specific areas of debt, hedging strategies and other products as the push for innovation in the ETF space continues.
“What we’re seeing in not just sort of those broad-based products that have come out in the past,” said Yones. “Now we’re seeing rules-based–some people call them smart beta or factor. We’re seeing a lot of actively-managed ETFs in the fixed-income space.”
Industry Changes on the Horizon
With ETFs growing at a rampant pace, innovation has been a byproduct and companies are finding new ways to accommodate the growth in this space, especially from a regulatory standpoint.
“In my 20 years in the ETF industry, I can’t really think of a more dynamic regulatory environment than right now,” said Yones.
At the New York Stock Exchange, the focus is on more transparency and expediency, such as the publishing of closing prices. The NYSE is using mathematical algorithms so that investor and issuers know the exact price of an ETF at a specific time.
“We began a whole new process where now at the New York Stock Exchange, if your ETF is listed here, we run this great calculation where we take the mid-point of the bid and the offer,” said Yones. “It’s somewhat scientific, but it’s a smarter way to value these ETFs.”
Yones cites specific areas of the market that ETFs are trending towards, such as artificial intelligence, robotics and other disruptive innovations that are in the forefront of what could be a vastly different ETF scenario than in days past.
“Those are all new categories of investing that maybe don’t fit into a pure technology ETF where now you can capture the growth of those companies in a brand new ETF,” said Yones.