Do ETFs affect a stock’s performance?
“It’s almost as important, or more important, to figure out if a company or a stock that you own is in an ETF and if that ETF is getting flows; because the likelihood of that stock’s performance over the next three to five years is going to be much more about whether or not it’s in the right ETF, almost as much so, of if in fact they’re delivering the earnings. – CNBC‘s Gary Kaminsky looks at trends in capital markets and why investors should know how much of their stock is owned by exchange-traded funds.”
“… there was something that’s been on my mind for some time as well, this idea of how important ETFs are for individual stocks, much more important than anything else. In fact, we’re going through earnings season, obviously the impact of a company’s reported earnings impact that company on a specific day in the day’s trading; but longer term investing, whether or not that company’s security is in an ETF is probably the single most important thing. … 450 billion dollars has come out of actively-managed, net-long mutual funds over the last five years. The typical company has about an ETF exposure between 3% and 10%, that is between 3% and 10% of the shares outstanding are in those actively-managed or passive ETFs. Those are the areas of asset management that are growing. What’s the bottom line here, the point? It’s almost as important, or more important, to figure out if a company or a stock that you own is in an ETF, and if that ETF is getting flows; because the likelihood of that stock’s performance over the next three to five years is going to be much more about whether or not it’s in the right ETF, almost as much so, of if in fact they’re delivering the earnings. And this was a great point; if you’re a CFO, you better pay attention.” – CNBC‘s Gary Kaminsky
