Interesting graphs/ETF’s/Bitcoin

The below is a graph that shows the performance of a thing, in the lead in and subsequent launch of that thing via an ETF.

The launch of an S&P500 tracker would be an example of the broad-index ETF. A US Value ETF would be an example of the Smart-beta ETF. A US consumer discretionary ETF would be an example for the sector specific. And the thematic one might be a US ESG tracker. But it can also be something like a luxury good ETFs, rising middle class of China ETF, a climate change tracker (investing in things that benefit from the energy transition), and it can cross asset classes, like an art (paintings, watches) tracker, or NFT (non funigble tokens) and of course it can be things like Bitcoin futures or crypto baskets.

And what often happens is that by the time the product is launched, the prevailing narrative is in the price, i.e. it’s frothy, a bit like (well, exactly like) an IPO, where a private company wants to sell shares to the public because it knows things are fantastic, and that the time to sell out for a lot of money is nigh.

Often the ability to short (a product launch happens, futures exchanges are set) means price discovery, and that price discovery is often a lower number than hopefuls expected prior to launch.

And so these thematic ETF’s are a) negatively correlated to subsequent launch and b) as a result, quite good contra indicators.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

Receive our investment insights

Something went wrong. Please check your entries and try again.