5 ms·

The One-Man, $1.2B ETF Shop

49 points by qCOVET 11y ago

acconrad 11y ago
There was just recently a Business Insider post on a one-man billion dollar startup.[1] Here it is! [1] http://www.businessinsider.com/is-a-one-man-billion-dollar-startup-on-the-horizon-2015-5 http://www.businessinsider.com/is-a-one-man-billion-dollar-s...
- shalmanese 11y ago
  Except it's really a $9M startup since it's only seeing 0.75% of that $1.2B. Still very good for a single person business but not media worthy.
hkmurakami 11y ago
Here were the takeaways from a discussion I had with a friend about this. Initial setup is likely cumbersome but straightforward. Marketing is where all the effort is. The sector you choose has to outperform, which you have little control over.
- AndrewKemendo 11y ago
  Sounds like every startup.
- m-i-l 11y ago
  Not to mention: That’s the dirty secret of the ETF industry. All of the innovation has led to a lot of failure... The bottom line: Most ETFs live in oblivion. Like many other areas, you tend to only hear about the success stories, and are unaware of the scale of the non-successes.
  - roymurdock 11y ago
    From the article > 81% of funds account for 2.4% of dollar volume. So the top 20% see 97.6% of all trading, probably with the top 10% seeing 90% or so. The ETF industry is a bit more brutal than the 80/20 rule of thumb.
jakozaur 11y ago
This guy is awesome. We should have more that kind of funds. 0.75% yearly expense ratio: http://www.etf.com/HACK http://www.etf.com/HACK The whole finance could be disrupted if funds will charge less and less for commission. I believe anything over 1%/year is ridiculous high. Fundamentally there is little reason why we couldn't have active funds for the price of ETFs. Self index ETF seems to me like low cost active funds with open-source public investment thesis.
- joosters 11y ago
  0.75% TER is still far too high (like, charging at least three or four times too much) for something that is a passive index. Many indexes are 0.15% and under.
  - chkuendig 11y ago
    Is it a passive index though? Seems like ISE specifically maintain the index for this fund and fees of the fund also go to the guys in charge of the index (ISE).
  - kspaans 11y ago
    Not to mention that ETF is more expensive _and_ less diversified than broader market index funds. And the index it follows isn't even doing anything fancy like Dimensional Fund Advisors (they don't use a market-cap weighted index, they have their own formulas to calculate weights).
  - PhantomGremlin 11y ago
    Yes, too expensive. This article was posted a few hours earlier, and I pointed out that ETFs like SPY and VOO are much cheaper, 0.09% and 0.05% respectively. https://news.ycombinator.com/item?id=10123060 https://news.ycombinator.com/item?id=10123060
    - cowsandmilk 11y ago
      Buying HACK is to invest in a particular industry. SPY and VOO don't track an industry, they track large us companies.
kitd 11y ago
... because ETF shares are created and redeemed in kind and thus almost never produce capital gains for shareholders. Could someone explain this to me? What kind of 'kind' are we talking about?
- cs702 11y ago
  Here's a good explanation: http://www.etf.com/etf-education-center/7540-what-is-the-etf-creationredemption-mechanism.html http://www.etf.com/etf-education-center/7540-what-is-the-etf...
roymurdock 11y ago
I see a parallel here between tickers, which are extremely important given a fledgling ETF's reliance on marketing, and domain names. Could an ETF company hypothetically squat on valuable tickers such as HACK, DATA, BDAT, GEMS, etc.? Not sure it would be worth the costs to do so, but I'm curious nonetheless.
pbreit 11y ago
Looks like active managers are finally figuring out what to do: behave like passive managers. Pick a bucket of stocks, publish it, invest in it, calm down.
- qCOVET 11y ago
  That is exactly it. After reading the story, I have been thinking about this and how easy it is to create weighted-buckets of different companies, give it a cool name and launch. Cripto-currency ETF would be awesome .. when a few of these bitcoin companies start to trade publicaly.
NickHaflinger 11y ago
WTF !!!

49 points by qCOVET 11y ago

There was just recently a Business Insider post on a one-man billion dollar startup.[1] Here it is! [1] http://www.businessinsider.com/is-a-one-man-billion-dollar-startup-on-the-horizon-2015-5 http://www.businessinsider.com/is-a-one-man-billion-dollar-s...

shalmanese 11y ago
Except it's really a $9M startup since it's only seeing 0.75% of that $1.2B. Still very good for a single person business but not media worthy.

hkmurakami 11y ago

Here were the takeaways from a discussion I had with a friend about this. Initial setup is likely cumbersome but straightforward. Marketing is where all the effort is. The sector you choose has to outperform, which you have little control over.

AndrewKemendo 11y ago
Sounds like every startup.
m-i-l 11y ago
Not to mention: That’s the dirty secret of the ETF industry. All of the innovation has led to a lot of failure... The bottom line: Most ETFs live in oblivion. Like many other areas, you tend to only hear about the success stories, and are unaware of the scale of the non-successes.
- roymurdock 11y ago
  From the article > 81% of funds account for 2.4% of dollar volume. So the top 20% see 97.6% of all trading, probably with the top 10% seeing 90% or so. The ETF industry is a bit more brutal than the 80/20 rule of thumb.

jakozaur 11y ago

This guy is awesome. We should have more that kind of funds. 0.75% yearly expense ratio: http://www.etf.com/HACK http://www.etf.com/HACK The whole finance could be disrupted if funds will charge less and less for commission. I believe anything over 1%/year is ridiculous high. Fundamentally there is little reason why we couldn't have active funds for the price of ETFs. Self index ETF seems to me like low cost active funds with open-source public investment thesis.

joosters 11y ago
0.75% TER is still far too high (like, charging at least three or four times too much) for something that is a passive index. Many indexes are 0.15% and under.
- chkuendig 11y ago
  Is it a passive index though? Seems like ISE specifically maintain the index for this fund and fees of the fund also go to the guys in charge of the index (ISE).
- kspaans 11y ago
  Not to mention that ETF is more expensive _and_ less diversified than broader market index funds. And the index it follows isn't even doing anything fancy like Dimensional Fund Advisors (they don't use a market-cap weighted index, they have their own formulas to calculate weights).
- PhantomGremlin 11y ago
  Yes, too expensive. This article was posted a few hours earlier, and I pointed out that ETFs like SPY and VOO are much cheaper, 0.09% and 0.05% respectively. https://news.ycombinator.com/item?id=10123060 https://news.ycombinator.com/item?id=10123060
  - cowsandmilk 11y ago
    Buying HACK is to invest in a particular industry. SPY and VOO don't track an industry, they track large us companies.

kitd 11y ago

... because ETF shares are created and redeemed in kind and thus almost never produce capital gains for shareholders. Could someone explain this to me? What kind of 'kind' are we talking about?

cs702 11y ago
Here's a good explanation: http://www.etf.com/etf-education-center/7540-what-is-the-etf-creationredemption-mechanism.html http://www.etf.com/etf-education-center/7540-what-is-the-etf...

roymurdock 11y ago

I see a parallel here between tickers, which are extremely important given a fledgling ETF's reliance on marketing, and domain names. Could an ETF company hypothetically squat on valuable tickers such as HACK, DATA, BDAT, GEMS, etc.? Not sure it would be worth the costs to do so, but I'm curious nonetheless.

pbreit 11y ago

Looks like active managers are finally figuring out what to do: behave like passive managers. Pick a bucket of stocks, publish it, invest in it, calm down.

qCOVET 11y ago
That is exactly it. After reading the story, I have been thinking about this and how easy it is to create weighted-buckets of different companies, give it a cool name and launch. Cripto-currency ETF would be awesome .. when a few of these bitcoin companies start to trade publicaly.

NickHaflinger 11y ago

WTF !!!