Ether Futures, ETF Trading, & Investing in Texas
On this episode of ETF Prime, host Nate Geraci speaks with a trio of individuals discussing several different ETF-related topics. His guests include VettaFi’s Roxanna Islam who discusses the debut of Ethereum futures ETFs. Geraci also speaks with Baird’s Rich Lee who discusses ETF trading volumes and more. To close the podcast Geraci talks with Texas Capital’s Ed Rosenberg about the Texas Capital Texas Equity Index ETF (TXS).
Debut of Ethereum Futures ETFs
To open the podcast Geraci brings on VettaFi’s Roxanna Islam to discuss the debut of the Ethereum futures ETFs. Geraci first points out how last week seven Ethereum Futures ETFs launched, and he highlights how he feels that the SEC accelerated the launch of these funds. He mentions that the possible government shutdown could’ve been what brought these funds to market so quickly. However, Geraci mentioned that despite the government accelerating the release of these funds they were not met with a lot of interest from the market. He says there are about $17 million in net assets from all seven funds following their initial release. Geraci then asks Islam for her initial reaction to this disappointing debut.
“I don’t think it has been much of a surprise especially when you compare it to those Bitcoin Future ETF launches a couple of years ago,” said Islam.
Islam continues by comparing the releases of these Ethereum funds to the ProShares Bitcoin Strategy ETF (BITO) which brought in close to a billion on its first-day trading. While these Ethereum funds only brought in about seven million on its first day on the market.
Differences Between Bitcoin and Ethereum
Islam then highlights several other reasons as to why these Ethereum Futures ETFs have had such a disappointing debut. She first points out that you need to look at pure Bitcoin versus pure Ethereum, not underneath the ETF wrapper but as cryptocurrencies. Islam mentions that Bitcoin by far has more popularity among investors when you compare the two.
“It has about 50% market share in the crypto market versus Ethereum which has less than 20% of market share,” Islam said.
Ultimately, Islam believes that it is safe to assume that interest in Ethereum is not as high as it is in Bitcoin. Islam then points out the fact that the cryptocurrency market is much different than it was back when the Bitcoin futures ETFs were first launched. Today the attitude on cryptocurrency is also in a different place than it was when funds like BITO first came to market. She also points out the differences between spot and future ETFs as another reason why these funds may have not garnered that much attention.
To close the segment the pair continue going in-depth into the future of these funds, and more.
Bond ETF Trading Volumes
The conversation then switches gears when Geraci brings on Rich Lee, Head of Program Trading and Execution Strategy at Baird to discuss a multitude of different topics. Geraci highlights how Lee himself is involved in several different areas of Baird’s business, but he primarily helps institutional clients with their ETF trading strategies. He then asks for Lee’s thoughts on bond ETF trading in today’s market as last week there was a record amount of trade volume in the iShares iBoxx $ High Yield Corporate Bond ETF (HYG).
“Last week it quickly dawned on me that basically five of the top 10 most active ETFs that we traded were actually bond or treasury-related ETFs,” said Lee.
Lee then highlights several different funds in the bond space that Baird’s has specifically been trading. He mentioned that he and his firm have a significant amount of interest in the current fixed-income space. The pair discuss the concept of “bottom fishing” when pertaining to the significant number of flows that the bond space has seen this year.
Additionally, Geraci and Lee discuss concentration risk pertaining to the S&P 500, active management, and several other topics.
The TXS ETF
To close the podcast Geraci brings on Ed Rosenberg, the Head of ETF and Fund Management at Texas Capital to discuss his firm’s TXS ETF. Prior to the conversation, Geraci mentioned that the TXS is the only state-specific ETF. Rosenburg joins the conversation by sharing his thoughts on what makes Texas Capital a full-service firm. Rosenberg attributes the number of different service offerings his firm gives its clients as one of the main reasons he considers Texas Capital a full-service firm. He then dives into what made the firm want to get into the ETF space.
“It is another service offering for the clients of Texas Capital, and beyond,” said Rosenburg.
To close the discussion Geraci and Rosenburg spotlight some of the key features of the TXS ETF as well as the philosophy behind investing in the state of Texas. The pair also touch on what the firm’s future plans are within the ETF space.