As the ETF market, valued at a staggering $5.4 trillion, confronts its most significant crisis since its inception, it's crucial to understand the underlying factors. Let's delve into the complexities and challenges that are reshaping this financial landscape.
An ETF death knell?
Senate Finance Committee Chairman Ron Wyden’s proposal aims to tax the ETF industry
- Currently, in-kind tax treatment is governed by section 852(b) (6) of the Internal Revenue Code, and provides that the creation of new ETF shares and the redemption of old ones isn’t a taxable event.
- If ETFs can no longer utilize In-kind redemptions and loyal shareholders are taxed at year end for fund activity it would be a burden to many middle class investors
Future Fund Active ETF
Launched a fund focused on “transformational opportunities that could develop over the next several years.”
- David Kalis, CFA, partner at The Future Fund
- Looks for transformational opportunities in tech, biotech, healthcare, and healthcare
The race to fee bottoms
Rosenbluth notes that there are approximately 80 U.S. listed ETFs charging a minuscule fee of 0.05% or less.
- However, fees shouldn’t be the sole criteria that investors base their fund selections. The composition of the fund and the record are something to consider as well.
Bottom Line
Proponents of ETFs make the case that those funds democratized access to the market, giving investors of all stripes the ability to gain access to areas and strategies that they would not easily get access to without paying hefty fees.
- Industry participants argue that ETFs are being billed as an investment tool that solely benefit the wealthy.
- Longer-term holders would likely see the greatest harm under the Wyden proposal.
Goldman Sachs launched an ETF targeting the next generation of technology companies
The Goldman Sachs Future Tech Leaders Equity ETF GTEK will invest in listed companies with a market value of less than $100 billion and the fund will trade under the ticker symbol “GTEK.”
- According to the ICI, nearly 12 million U.S. households own ETFs. The median income of these households is $125,000 and 92% of all ETF-investing households have a household income under $400,000.
