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Capital Allocators – Inside the Institutional Investment Industry

Jun 11, 2018

Tom Lydon is one of the leading experts in the ETF and mutual fund industries. He is the founder and CEO of ETF Trends, a business he created in 2004 whose website,, is filled with news, analysis, and webcasts about the world of ETFs. Before creating ETF Trends, Tom ran a financial advisory and publication business that followed the mutual fund industry.

Our conversation covers the evolution of mutual funds in the 80s and 90s and the rise of ETFs in the 2000s. We discuss the composition of the ETF marketplace, structure and tax advantages of ETFs, passive, factor and actively managed funds, characteristics of a superior manager, leveraged ETFs, VIX blowup, potential future problems in high yield and emerging market ETFs, and coming trends in the space.


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Show Notes

2:01  – A look at Tom’s early career

4:52 – What drove people to buy or sell a mutual fund in those early days

5:33 – How did Tom's sell signal just before Black Monday impact the business

6:21 – What were the right funds to invest with

6:56 – What were the key trends during the 80’s and 90’s

8:25 – Layers of cost for mutual funds in the early days

9:04 – Average active management fee back then

10:56 – Evolution of ETF’s

13:49 – Some numbers on the ETF landscape today

15:40 - Why did the last downturn foster more growth in ETFs

18:08 – The institutional presence in the ETF market

18:55 – Fees in the ETF space

19:50 – Distribution of ETFs

21:29 – Actively managed ETF’s

23:35 – Tax efficiency of ETF’s

26:42 – Judging ETF managers

31:26 – Do levered ETFs add any value

            34:00 – Ted paper against levered ETFs

35:18 – Potential landmines in ETFs

38:49 – Risks in the ETF space today

42:11– How do ETFs impact pricing distortions

46:16 – What’s happening in active fixed income ETFs

47:43 – Will fund flows chase hot managers?

48:35 – The big trends on the horizon

49:52 – What happens with liquid alternatives

51:08– What are businesses have thrived in the ETF space

53:56 – A deep dive into Tom’s business ETF Trends

55:41 – Closing questions