Ron DeLegge has been in the ETF industry for more than two decades. He’s written multiple books and is the Founder of ETF Guide, which produces the popular “ETF Battles” web series. He joins the ETF Think Tank to discuss ETF entrepreneurship, how to market an ETF, and the landscape of the industry.
DeLegge was fortunate to be able to interact with several industry names early on. In particular, an interview with Peter Bernstein stuck with him. He noted that he was a big supporter of ETF investing at the time. This was back in 2008 when many thought the entire financial system was on the brink of collapse and provided some level of reassurance that things would eventually recover. Muriel Siebert was another who provided inspiration.
One lesson he has learned is that someone can be right most of the time, but not all of the time. John Bogle was an example of this. He had an inaccurate view of ETFs and said they would be like handing an arsonist matches. This was at a time when Vanguard was on the cusp of launching its own ETF lineup. Thankfully, Vanguard didn’t listen and they are in the position they are today precisely because they didn’t listen to Bogle.
ETFs, however, are just an extension of his original principle. DeLegge says that Bogle hated trading and turnover, but it is creating tighter bid/ask spreads and that’s a good thing for investors. Sometimes, innovators latch on to certain things. The mutual fund is a flawed structure, but Bogle would probably never admit to that.
DeLegge developed the idea of ETF Battles in 2020. He wanted to create a program that would be innovative, interactive, and fun for the viewers. He felt a format that featured different perspectives and views would be much more valuable than just one person offering an opinion. He believes one of the biggest advantages of the show is that it involves deeper dives into ETFs that many people probably feel they already know. Once you break down these ETFs, you get a little surprised at the result even if you go in with a predetermined view.
What about marketing tricks? DeLegge believes you should build a following first, including a social media presence and an email list. If you’re an ETF issuer, that is where your shareholder base will come from. You don’t necessarily need a following, but it’ll be a lot harder to succeed without one. One underrated key to success is marketing and investing materials. They should look visually appealing and attractive. ALPS, for example, does this well, but DeLegge has been unimpressed with BlackRock.
Other key takeaways:
- What about non-transparent ETFs? DeLegge thinks that it really comes down to whether or not you trust the manager. If the answer is yes, he doesn’t have a problem with the lack of transparency.
- DeLegge says that the markets are always going to be different, but the people and the craziness are constants. We’re always battling our demons. All of the news and numbers don’t matter. It’s all about investor psychology.
- DeLegge thinks we are going to see more active managers do a better job of explaining their thesis. There is got to be a shareholder base that believes in the approach. Things sometimes get lost in messaging even if the objective is great. It needs to be sold.
- Leveraged products are overregulated and under-policed. Something as simple as requiring the degree of leverage in the product name can help with clarity.
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