l am seriously considering shifting a greater proportion of my assets away from property into ETF's like JEPI, JEPQ, SPLG. the dividends and growth should more than match the ~6% yield in rent~2-8% capital growth. thoughts?
what happens if people managing ETF's 'collapse'?
- Thread starter IBRex&me user
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I see more advantages of owning and managing a portfolio of stocks, ETFs, REITS, MLPs, etc. for individuals.
I don't see how individuals can compete against Black Stone and other institutional investors in the real estate market.
They can outbid you and offer 100% cash on any property that you might look to purchase.
I don't see how individuals can compete against Black Stone and other institutional investors in the real estate market.
They can outbid you and offer 100% cash on any property that you might look to purchase.
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They unwind all the position...very regulated. They don't just cancel shares like a company.
https://www.investopedia.com/articl...ETFs may close due to,had invested in the ETF.
I thought he was asking about liquidation... Meme etf just went through
Right, how did that work out for XIV and SVXY?
Realistically, if a provider of any of these large option "yield" ETFs makes a decision to unwind their books, it's going to be in response to some extreme market movement (unless they make an executive decision of not being in the ETF/ETN business any more - which is also a possibility). Given the market participation of these ETFs, an unwind going to create some massive ripples across everything in the market. My guess is that nobody in their right mind would touch that shit with a six foot poll, at least until the dust clears.
Speaking of XIV, it was an ETN, which is basically an unsecured promise of a financial institution to deliver certain return characteristics.
My understanding is ETFs hold assets in a segregated account at a custodian, which is a bit of a guardrail from the provider failing. Of course a provider can still set up a toxic futures/options position and blow the account. But you should be able to filter out those kinds of strategies.
As for these currently popular "options yield ETFs" I would stay clear of them, since they cap upside and have 100% downside. They're the ETF version of r/thetagang. I'm also seeing increasing concerns that they might unwind spectacularly at the same time due to how popular the strategies have gotten and which has resulted in a reflexive volatility supressing feedback loop in the overall market... and that holds some parallels to why XIV does no longer exist.
My understanding is ETFs hold assets in a segregated account at a custodian, which is a bit of a guardrail from the provider failing. Of course a provider can still set up a toxic futures/options position and blow the account. But you should be able to filter out those kinds of strategies.
As for these currently popular "options yield ETFs" I would stay clear of them, since they cap upside and have 100% downside. They're the ETF version of r/thetagang. I'm also seeing increasing concerns that they might unwind spectacularly at the same time due to how popular the strategies have gotten and which has resulted in a reflexive volatility supressing feedback loop in the overall market... and that holds some parallels to why XIV does no longer exist.
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I was thinking more with vanilla etfslike spy. Not these leveraged or derivative composed ones
Its still a good topic...even the leveraged and derivatives. Its always good to hear about the wider topic. Some ETFs (ETNs) have seen problems for sure. And things are constantly changing (being unregulated for more financial opportunities). We usually don't understand how vulnerable we are until a failure happens. Then everyone is shocked at how unprotected they were.
During the collapse of late March 2020 some of the 3X ETFs I had were changed to 2X like the Gold & Oil sector ones (NUGT & ERX). I think it was because the GDX almost went down 30% one day and if it went down some more NUGT would have gone to zero. I think the same was true for the ERX where the XLE was down 25% one day.
And then there was USO that theoretically went to zero since it was 98% in front month of the CL contract and the April CL contract went negative. They changed their charter to be invested in front 3 months and not just all in the front month.
And then there was USO that theoretically went to zero since it was 98% in front month of the CL contract and the April CL contract went negative. They changed their charter to be invested in front 3 months and not just all in the front month.