Tag Archives: Bob Pisani

CNBC Debuts Programming Dedicated to ETFs-Finally!

MarketsMuse coverage of the exchange-traded fund (ETF) industry began nearly ten years ago, and our senior curators have since been scratching their heads as to why CNBC, the retail investors’ most-watched business news network had never created dedicated programming to educate their viewers about ETFs, an asset class that has consistently grown (by as much as 20% YoY). How big is this market? Based on various metrics published by the assortment of ETF Issuers, more than $3 Trillion (with a “T”) of ETFs are held by US investors, the global market size is over $5 Trillion (with a “T”).

More telling, RIAs (Registered Investment Advisors) that manage money for retail investors now allocate well more than 50% of client money into these thematic funds. That said, CNBC–the business media channel that has become ubiquitous for its retail investor-targeted 12 hour+ daily coverage of stock market activity, interviews with fund managers, sell-side research analysts and public company CEOs have provided merely tangential insight to the ETF marketplace. Until now, that is.

Yesterday, CNBC premiered a new segment titled “ETF Edge” and hosted by commentator Bob Pisani. The premiere segment captured two particularly insightful ETF industry veterans; hedge fund manager Tim Seymour (who is also one of CNBC’s frequent market commentators) and Andy McCormond, Managing Director of ETF Execution for agency broker-dealer WallachBeth Capital, a boutique institutional brokerage whose thought-leadership on the topic of ETFs and better approaches to executing orders in ETF products has been embraced by a discrete universe of institutional investors and tens of dozens of RIAs for more than 10 years.

Hats Off to CNBC for shedding more light on an asset class that retail investors need to know more about.  Roll the opening show clip!

ETF Edge, January 23, 2019 from CNBC.

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VIX Index Gears Up For Accushares Overhaul-A Contango Cure?

MarketsMuse ETF “What’s Next?” update profiling 2 new market volatility trackers from AccuShares with a revised approach to VIX that seeks to mitigate the contango concerns and compares these pending products to the frequently discussed, but often misunderstood tracker CBOE Volatility Index. This post is courtesy of coverage from CNBC’s Bob Pisani, who tweets frequently via @BobPisani

Bob Pisani, CNBC
Bob Pisani, CNBC

There’s a potentially important new ETF launching next Tuesday, May 19th, which allows investors to invest in the well-known CBOE Volatility Index.

Will it do a better job of tracking the $VIX than other ETF and ETN products? The answer is likely yes, but there are some wrinkles.

The CBOE Volatility Index measures the intensity of put and call buying for the S&P 500 for a 30-day period and is often referred to as the “fear index.”

The new Volatility ETF is attracting more attention than usual because the brains behind it is Robert Whaley, the man who invented the VIX.

His company, AccuShares, will float two different VIX ETFs: 1) the Spot VIX Up Class (VXUP), which seeks to track the VIX over a one-month period, and 2) the AccuShares Spot VIX Down Class (VXDN), which seeks to track the inverse performance of the VIX over a one-month period.

cnbcWhy an inverse ETF? It has to do with how the ETF is structured.

Other ETFs exist to track spot indices—including commodities like oil—but they buy future contracts in their respective sectors. When the contracts expire, the next contract has to be bought, which greatly increases the cost of investing, since most future contracts are in contango, that is, the cost of the contracts further out are more expensive.

So you are usually buying high and selling low.

That creates tracking errors from the index. In other words, most investors find the investment they bought does not track the spot index they want to follow.

AccuShares is trying a different approach with this VIX product, and with other spot indices they will be launching in the near future. They hold cash and cash equivalents. Each ETF has an “up” asset class and a “down” asset class. Assets are swapped back and forth, depending on the increase or decrease in the spot price.

On the 15th of every month, everything is recalibrated. So you are essentially making a bet on where the VIX might be in the middle of the month.

With that said, there are a couple important details:

1)      This is not free. There is a management fee of about 90 basis points a year.

To continue reading Pisani’s in-depth analysis of this new product, please click here