Surprising ETF Successes & Failures
On this episode of ETF Prime, host Nate Geraci speaks with a pair of individuals discussing several different ETF-related topics. His guests include VettaFi’s Dave Nadig who gives his thoughts on surprising ETF successes and nonsuccesses in 2023. Geraci also speaks with Gabelli’s Tony Bancroft to discuss the Gabelli Commercial Aerospace & Defense ETF (GCAD).
Surprising ETF Successes
To open the podcast Geraci brings on VettaFi’s Dave Nadig to discuss some of the surprising successes and failures he has seen in the ETF industry thus far in 2023. The duo decided to start the conversation talking about the good that they have seen in the market this year. Nadig mentions that the biggest surprises for him are launches of funds that he thinks are interesting and not necessarily products that have pulled in the most money. He says that this is because most of the funds and classes that have brought in the most money in 2023 are in areas he feels he could’ve predicted.
“To me, one of the biggest surprises has been just the absolute tidal wave of actively managed equity products,” said Nadig.
He then names the JPMorgan Equity Premium Income ETF (JEPI) as one of the great success stories in active management. He also shares how JEPI has influenced several other firms to bring copycat funds of the product to market this year. Nadig highlights that not all of these products are getting assets, but some of them are. The duo then goes on to discuss what to expect from active management in the future.
More Surprising ETF Stories
Nadig then names two other surprising stories he has seen this year. He mentions that there is a class of luxury products that he still is in disbelief that they launched this year. He specifically names the Roundhill S&P Global Luxury ETF (LUXX) and the KraneShares Global Luxury Index ETF (KLXY) as a pair of funds he was surprised to see come to market in 2023. Nadig then mentions that he doesn’t fully understand how or why these products did come to market. Geraci then asks for clarification from Nadig if he considers these funds a success or a failure from this year.
“They are successes in the sense that they came to market,” Nadig said.
He shares with Geraci that when developing his list of surprising successes for the show he looked at it from the lens of what surprised him the most, and the release of these styles of funds definitely fit that description. Nadig then shares that another storyline that surprised him was the strength of funds like the Invesco S&P 500® Equal Weight ETF (RSP) and Invesco Senior Loan ETF (BKLN).
In addition, the duo goes in-depth discussing Geraci’s takes on surprisingly successful ETF stories.
Surprising ETF Failures
The conversation then shifts gears when the pair begins discussing surprising failures, that they each have seen this year. Nadig highlighted that there has been a significant number of closures this year, and it would be easy to point fingers at all of those different firms. He also wants to highlight that he doesn’t want to discourage closures because he feels that they are necessary for the market’s overall health.
“I feel like this has been a pretty healthy year, in the sense that we have flushed a lot of products that weren’t going to be able to get any traction,” Nadig said.
Nadig said he doesn’t think of these closures as a failure, but he thinks of it as rationalization. The segment closes as Geraci and Nadig discuss several other topics that Geraci sees as failures in the markets.
The GCAD ETF
To close the podcast Geraci brings on Tony Bancroft a portfolio manager, and research analyst at Gabelli Funds. During this segment, the pair go in-depth discussing the Gabelli Commercial Aerospace & Defense ETF (GCAD). Prior to discussing the ETF, Geraci shares that Bancroft is a former F/A-18 Hornet fighter pilot. This acknowledgment led the duo to dive into some of Bancroft’s military experiences and background. The pair then jump into discussing the GCAD ETF, and Bancroft’s overall approach to the space.
“We have compounded knowledge in certain companies, that we have followed for almost 40 plus years, and we’ve built our portfolio based on that, and where we see opportunities in the aerospace and defense industry,” said Bancroft.
To close the conversation, Bancroft continues to go in-depth on what to expect from the industry moving forward and he shares more information regarding the ETF.