Showing posts with label InvestSmart. Show all posts
Showing posts with label InvestSmart. Show all posts

Thursday, October 29, 2026

Crypto ETF Rules In The US: How a Fund Gets Listed Now

ETF exchange traded fund on wood blocks

Getty Images

The September 2025 approval changed the arithmetic for every crypto fund sponsor in the country. Before that date, each new crypto exchange-traded product required its own Rule 19b-4 filing with the SEC, a process that could take 240 days and frequently took longer when the agency used its full extension authority. The result was a bottleneck where individual products waited years while the underlying question of whether commodity-based trust shares could list at all had already been answered by Bitcoin and Ethereum precedent. The generic standards replaced that per-product queue with a category-level framework……..Continue reading…

By Andrew Folkler

Source: Crypto News

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Critics:

ETFs are similar in many ways to mutual funds, except that ETFs are bought and sold from other owners throughout the day on stock exchanges, whereas mutual funds are bought and sold from the issuer based on their price at day’s end. ETFs are also more transparent since their holdings are generally published online daily and, in the United States, are more tax efficient than mutual funds.

Unlike mutual funds, ETFs trade on a stock exchange, can be sold short, can be purchased using funds borrowed from a stockbroker (margin), and can be purchased and sold using limit orders, with the buyer or seller aware of the price per share in advance. Both ETFs and mutual funds charge annual expense ratios that range from 0.02% of the investment value to upwards of 1% of the investment value.

Mutual funds generally have higher annual fees since they have higher marketing, distribution and accounting expenses (12b-1 fees). ETFs are also generally cheaper to operate since, unlike mutual funds, they do not have to buy and sell securities and maintain cash reserves to accommodate shareholder purchases and redemptions.

Stockbrokers may charge different commissions, if any, for the purchase and sale of ETFs and mutual funds. In addition, sales of ETFs in the United States are subject to transaction fees that the national securities exchanges must pay to the SEC under section 31 of the Securities Exchange Act of 1934, which, as of February 2023, is $8 per $1 million in transaction proceeds. 

Many mutual funds can be bought commission-free from the issuer, although some charge front-end or back-end loads, while ETFs do not have loads at all. In the United States, ETFs can be more attractive tax-wise than mutual funds for transactions made in taxable accounts. However, there are no tax benefits to ETFs compared to mutual funds in the United Kingdom and Germany.

In the US, whenever a mutual fund realizes a capital gain that is not balanced by a realized loss (i.e. when the fund sells appreciated shares to meet investor redemptions), its shareholders who hold the fund in taxable accounts must pay capital gains taxes on their share of the gain. However, ETF investors generally only realize capital gains when they sell their own shares for a gain. ETFs offered by Vanguard are actually a different share class of its mutual funds and do not stand on their own; however, they generally do not have any adverse tax issues.

In the United States, ETFs can be more attractive tax-wise than mutual funds for transactions made in taxable accounts. However, there are no tax benefits to ETFs compared to mutual funds in the United Kingdom and Germany. In the US, whenever a mutual fund realizes a capital gain that is not balanced by a realized loss (i.e. when the fund sells appreciated shares to meet investor redemptions), its shareholders who hold the fund in taxable accounts must pay capital gains taxes on their share of the gain.

However, ETF investors generally only realize capital gains when they sell their own shares for a gain. ETFs offered by Vanguard are actually a different share class of its mutual funds and do not stand on their own; however, they generally do not have any adverse tax issues. The most popular ETFs such as those tracking the S&P 500 trade tens of millions of shares per day and have strong market liquidity, while there are many ETFs that do not trade very often, and thus might be difficult to sell compared to more liquid ETFs.

The most active ETFs are very liquid, with high regular trading volume and tight bid-ask spreads (the gap between buyer and seller’s prices), and the price thus fluctuates throughout the day. This is in contrast with mutual funds, where all purchases or sales on a given day are executed at the same price at the end of the trading day.

Actively managed ETFs include active management, whereby the manager executes a specific trading strategy instead of replicating the performance of a stock market index. The securities held by such funds are posted on their websites daily, or quarterly in the cases of active non-transparent ETFs. The ETFs may then be at risk from people who might engage in front running since the portfolio reports can reveal the manager’s trading strategy.

Some actively managed equity ETFs address this problem by trading only weekly or monthly. The largest actively managed ETFs are the JPMorgan Equity Premium Income ETF (NYSE: JEPI), which charges 0.35% in annual fees, JPMorgan Ultra-Short Income ETF (NYSE: JPST), which charges 0.18% in annual fees, and the Pimco Enhanced Short Duration ETF (NYSE: MINT), which charges 0.36% in annual fees.

Cryptocurrency ETFs invest in cryptocurrencies such as Bitcoin, Ethereum, or a basket of different cryptocurrencies. There are two types of crypto ETFs. Spot crypto ETFs invest directly in cryptocurrencies, tracking their real-time prices, and their share prices will fluctuate with the prices of the cryptocurrencies they hold.

On the other hand, future-based crypto ETFs refer to equities that do not invest directly in cryptocurrencies but rather in crypto futures contracts. These contracts are agreements to buy or sell cryptocurrencies at a predetermined price in the future. As a result, the share prices and price fluctuating trends of funds in these two types could be different, even though they hold identical cryptocurrencies and amounts.

ETF shares are created and redeemed when large broker-dealers called authorized participants (AP) act as market makers and purchase and redeem ETF shares directly from the ETF issuer in large blocks, generally 50,000 shares, called creation units. Purchases and redemptions of the creation units are generally in kind, with the AP contributing or receiving securities of the same type and proportion held by the ETF; the lists of ETF holdings are published online.

The ability to purchase and redeem creation units gives ETFs an arbitrage mechanism intended to minimize the potential deviation between the market price and the net asset value of ETF shares. APs provide market liquidity for the ETF shares and help ensure that their intraday market price approximates the net asset value of the underlying assets. Other investors, such as individuals using a retail broker, trade ETF shares on the secondary market.

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Sunday, October 25, 2026

Meta Is About To Show Whether Bigger AI Capex Still Wins

Tonight, after the closing bell, Meta (META) steps to the podium and tells the world how much it plans to spend building AI infrastructure next year. One week later, on Oct. 28, Microsoft (MSFT) and Alphabet (GOOGL) do the same thing, on the same evening. Amazon (AMZN) follows roughly 24 hours after that. Apple (AAPL) closes out the parade on Nov. 2. Then the very next morning, Americans vote in the midterm elections. And the morning after that – Nov. 4 – is the date my colleague Eric Fry has circled in red. He believes it marks the start of the biggest shift in the AI trade since this bull market began……….Continue reading…

By Luke Lango

Source:  InvestorPlace

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Critics:

The stock market is one of the most important ways for companies to raise money, along with debt markets which are generally more imposing but do not trade publicly. This allows businesses to be publicly traded, and raise additional financial capital for expansion by selling shares of ownership of the company in a public market.

The liquidity that an exchange affords the investors enables their holders to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as property and other immoveable assets. History has shown that the price of stocks and other assets is an important part of the dynamics of economic activity, and can influence or be an indicator of social mood.

Therefore, central banks tend to keep an eye on the control and behavior of the stock market and, in general, on the smooth operation of financial system functions. Financial stability is the raison d’être of central banks. Exchanges also act as the clearinghouse for each transaction, meaning that they collect and deliver the shares, and guarantee payment to the seller of a security.

This eliminates the risk to an individual buyer or seller that the counterparty could default on the transaction. The smooth functioning of all these activities facilitates economic growth in that lower costs and enterprise risks promote the production of goods and services as well as possibly employment. In this way the financial system is assumed to contribute to increased prosperity, although some controversy exists as to whether the optimal financial system is bank-based or market-based.

Recent events such as the Global Financial Crisis have prompted a heightened degree of scrutiny of the impact of the structure of stock markets (called market microstructure), in particular to the stability of the financial system and the transmission of systemic risk. A transformation is the move to electronic trading to replace human trading of listed securities.

Changes in stock prices are mostly caused by external factors such as socioeconomic conditions, inflation, exchange rates. Intellectual capital does not affect a company stock’s current earnings. Intellectual capital contributes to a stock’s return growth. The efficient-market hypothesis (EMH) is a hypothesis in financial economics that states that asset prices reflect all available information at the current time.

The ‘hard’ efficient-market hypothesis does not explain the cause of events such as the crash in 1987, when the Dow Jones Industrial Average plummeted 22.6 percent—the largest-ever one-day fall in the United States. This event demonstrated that share prices can fall dramatically even though no generally agreed upon definite cause has been found: a thorough search failed to detect any ‘reasonable’ development that might have accounted for the crash.

It seems also to be true more generally that many price movements (beyond those which are predicted to occur ‘randomly’) are not occasioned by new information; a study of the fifty largest one-day share price movements in the United States in the post-war period seems to confirm this. A ‘soft’ EMH has emerged which does not require that prices remain at or near equilibrium, but only that market participants cannot systematically profit from any momentary ‘market anomaly‘.

For instance, some research has shown that changes in estimated risk, and the use of certain strategies, such as stop-loss limits and value at risk limits, theoretically could cause financial markets to overreact. But the best explanation seems to be that the distribution of stock market prices is non-Gaussian (in which case EMH, in any of its current forms, would not be strictly applicable). Other research has shown that psychological factors may result in exaggerated (statistically anomalous) stock price movements (contrary to EMH which assumes such behaviors ‘cancel out’).

Psychological research has demonstrated that people are predisposed to ‘seeing’ patterns, and often will perceive a pattern in what is, in fact, just noise, e.g. seeing familiar shapes in clouds or ink blots. In the present context, this means that a succession of good news items about a company may lead investors to overreact positively, driving the price up. A period of good returns also boosts the investors’ self-confidence, reducing their (psychological) risk threshold.

Another phenomenon—also from psychology—that works against an objective assessment is group thinking. As social animals, it is not easy to stick to an opinion that differs markedly from that of a majority of the group. An example with which one may be familiar is the reluctance to enter a restaurant that is empty; people generally prefer to have their opinion validated by those of others in the group.

In one paper the authors draw an analogy with gambling. In normal times the market behaves like a game of roulette; the probabilities are known and largely independent of the investment decisions of the different players. In times of market stress, however, the game becomes more like poker (herding behavior takes over). The players now must give heavy weight to the psychology of other investors and how they are likely to react psychologically.

Stock markets play an essential role in growing industries that ultimately affect the economy through transferring available funds from units that have excess funds (savings) to those who are suffering from funds deficit (borrowings) (Padhi and Naik, 2012). In other words, capital markets facilitate funds movement between the above-mentioned units. This process leads to the enhancement of available financial resources which in turn affects the economic growth positively

Economic and financial theories argue that stock prices are affected by macroeconomic trends. Macroeconomic trends include such as changes in GDP, unemployment rates, national income, price indices, output, consumption, unemployment, inflation, saving, investment, energy, international trade, immigration, productivity, aging populations, innovations, international finance.

Increasing corporate profit, increasing profit margins, higher concentration of business, lower company income, less vigorous activity, less progress, lower investment rates, lower productivity growth, less employee share of corporate revenues, decreasing Worker to Beneficiary ratio (year 1960 5:1, year 2009 3:1, year 2030 2.2:1), increasing female to male ratio college graduates.

Therefore, the stock market may be swayed in either direction by press releases, rumors, euphoria and mass panic. Over the short-term, stocks and other securities can be battered or bought by any number of fast market-changing events, making the stock market behavior difficult to predict. Emotions can drive prices up and down, people are generally not as rational as they think, and the reasons for buying and selling are generally accepted.

Behaviorists argue that investors often behave irrationally when making investment decisions thereby incorrectly pricing securities, which causes market inefficiencies, which, in turn, are opportunities to make money.However, the whole notion of EMH is that these non-rational reactions to information cancel out, leaving the prices of stocks rationally determined.

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Crypto ETF Rules In The US: How a Fund Gets Listed Now

Getty Images The September 2025 approval changed the arithmetic for every crypto fund sponsor in the country. Before that date, each new cry...