In The Wall Street Journal, Spencer Jakab cautions investors against joining "star managers," who have already had their biggest gains. He uses ARK Invest's Cathie Wood as an example. He writes: Just as unusual as ARK Invest’s marketing has been its performance, growing its assets more quickly than any active exchange-traded fund firm in history. Cathie Wood’s firm went from about $3.5 billion under management across several funds shortly before the pandemic struck to hit the $50 billion mark a year later. But that rapid growth has come back to bite her investors. Even after a major tumble … [Read more...]

Recently a mutual fund, for the first time, successfully became an ETF. Is this the harbinger of a flood of new actively managed ETFs hitting the market as other mutual funds follow suit? Claire Ballentine reports for Bloomberg: A small mutual-fund provider has made history by becoming the first to formally change its products into exchange-traded funds. Guinness Atkinson Funds announced on Monday that it had converted two of its mutual funds into the SmartETFs Dividend Builder (ticker DIVS) and SmartETFs Asia Pacific Dividend Builder (ADIV). The conversion was a non-taxable event for … [Read more...]

Financial regulators are finally admitting money market reforms put in place during the last crisis are insufficient to prevent runs on America’s non-Treasury money market funds. Part of the problem here is that investors bail at the first whiff of trouble. There just isn’t enough return offered in money markets to take the risk. Ultra-low interest rates are partly to blame for that. Reforms are likely to continue to fail unless the government requires an FDIC insurance guarantee for money funds. That’s a bad idea if you favor free markets, but less bad than the alternative. What’s the … [Read more...]

At the Financial Times, Billy Nauman examines ESG funds and their potential as victims of short-sellers. He writes: Whenever big money starts flowing into a hot new sector, it seems inevitable that companies that list on the stock market fall short of hype and hope around them. One of the market’s current hottest areas is environmental, social and governance investing. And, like the cryptocurrency boom and cannabis stock surge, the flood of money has been followed closely by allegations of fraud. These claims are often made by activist investors and short-sellers, who bet on the fall in … [Read more...]

At the Financial Times, Paul Woolley explains a troubling phenomenon in investing that he calls “the curse of the benchmarks.” He writes: All investing boils down to a choice of two distinct strategies implemented in a variety of ways. One is buying securities that are priced cheaply in relation to their expected future cash flows, which is what everyone assumes is done with their savings. Bizarrely, the other is almost the exact opposite: buying securities whose prices have recently been on the rise or that have already gone up most, both without reference to fundamental value. Another … [Read more...]