Trends Watch: Innovation in ETFs

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.  

This week, Elana talks with Matthew Tuttle, CEO & CIO, Tuttle Capital Management.

What is your outlook for investing in ETFs?  

Regardless of technical definitions, we are in a bear market. Throughout the bubble, issuers have brought more and more aggressive growth stock ETFs out—ARK Innovation ETF (ARKK), VanEck’s Social Sentiment ETF (BUZZ), Direxion Moonshot ETF (MOON), Roundhill MEME ETF (MEME), etc. that investors have gravitated to for turbocharged returns. Now that multiples are repricing for a higher-rate environment and the bubble is popping, we believe investors will increasingly want tactical tools that allow them to hedge risks and make tactical bets on the upside. We also believe that you will continue to see innovation from ETF issuers. For example, in 2021, the space saw the first Bitcoin futures ETFs. We expect this pace of innovation to continue, and we expect more demand for products that are conducive to the current environment. 

What are the greatest opportunities you see and why?  

Coming from an ETF issuer side, we see more of a need for hedging and tactical tools. Stocks have gone up in almost a straight line since 2009 with the Fed at their back. As long as the Fed doesn’t blink, we are entering a whole new environment and investors need new tools, new thinking and the ability to deal with it all.

What are the greatest challenges you face and why?

As an ETF issuer, it is regulations. There are some new proposed derivatives rules that could make it very difficult for investors to access products that are backed by derivatives. We see so many areas where individual investors are losing money at which a regulator could choose to examine. Derivative-based ETFs is not one of those areas.

What keeps you up at night?

If anything, again, it is the regulatory environment. We don’t want to see our investment strategies impacted by this.

The views and opinions expressed above are of the interviewee only and do not/are not intended to reflect the views of EisnerAmper.