On this week’s episode of ETF Prime, host Nate Geraci was joined by Cinthia Murphy, a VettaFi investment strategist and VettaFi Voice. Murphy and Geraci discussed alternative ETFs and the state of spot ether ETFs, among other topics. Later, Bloomberg Senior ETF Analyst Eric Balchunas and Van Buren Capital General Partner Scott Johnsson joined Geraci to evaluate the SEC’s pivot on spot ether ETFs.
SEC Confidence
To start, Geraci asked Murphy what her thoughts were on the SEC’s surprising approval of spot ether ETFs. Murphy noted that she felt “a little bit of a sense of relief” knowing that the approval process was not a “long haul” like it was for spot bitcoin ETFs. However, Murphy noted her disappointment that the approval may have been politically motivated.
“When we think about just the process of ETF approvals and the process of product innovation and improving market access — those are all great things. You know, noble causes, if you will. And when you hear that it can be such a 180 pivot on something that’s important for political motivation, [it] kind of dents our confidence in the whole thing, and maybe even some of the credibility of the SEC,” added Murphy.
Are Spot Crypto ETFs an Alternative Strategy?
Transitioning to a discussion on alternatives, Geraci asked Murphy if she believed spot bitcoin and spot ether can be considered alternative ETFs. Murphy asserted that she believed so. She noted that alternatives is a “broad umbrella” encompassing investment strategies that are not “plain equities, plain bonds, or cash.”
Following up, Murphy observed that the alternative nature of spot crypto ETFs can be why the asset is not more broadly added to portfolios. “I think that’s also something that keeps that adoption one step removed from just being in everybody’s portfolio too. It takes a little more due diligence, a little more figuring out how it fits within broader allocations,” Murphy observed. Murphy then cited recent VettaFi polling that found a wide percentage of advisors held cryptocurrency in either a negative or noncommittal light.
Alternative Momentum
Moving on to the broader field of alternatives, Geraci noted a recent article from Murphy highlighting the growing optimism behind alternative strategies. She noted this is partially due to the unique nature of alternative ETFs and how the different funds end up in the same category. Murphy added that some say alts are growing due to increased accessibility to liquid assets. However, she said the alt momentum illuminates the market environment. She then added that alts can help investors who are looking for “noncorrelated assets to diversify exposures.”
Following up on the state of the market, Geraci observed that stocks are doing quite well at the moment. However, Murphy noted that while investors are chasing growth, many are prioritizing value and quality as well. She noted that value and quality demand suggests “people are getting a little bit nervous about where stock valuations are, especially in the growth names.” As additional examples of market uncertainty, Murphy cited the shifting expectations for 2024 rate cuts and the upcoming U.S. presidential election.
Listen to the entire episode of ETF Prime:
For more ETF Prime podcast episodes, visit our ETF Prime Channel.
