@HariPKrishnan2 If questions like, “how does the flow-performance curve of bond mutual funds differ from equity funds and what are the implications for ETF pricing in a crisis,” interest you,
then this book is for you.
@HariPKrishnan2 P.S. I still think there’s “alpha” in holding bond mutual funds, and then selling them in a crisis to buy bond ETFs trading at a significant discount.
2/ The expectation of low real returns going forward puts a significant burden on long-term investors striving to meet future needs.
e.g. Endowments who are making annual withdrawals, pensions that have future liabilities, and individuals who are saving for retirement.
3/ A phenomenon that we've witnessed over the last decade is investors moving up the risk curve by either (1) increasing equity exposure, (2) increasing credit risk (lower quality bonds), or (3) increasing liquidity risk (e.g. real estate, private equity or private credit).
1️⃣ Some funds achieve capital efficiency in a tax efficient manner, and some do not.
e.g. $PSLDX buys bonds and overlays with S&P 500 futures. That's very tax inefficient, since those S&P 500 futures are taxed at a 60% long-term / 40% short-term rate.
NTSX, on the other hand, buys the S&P 500 and then overlays with U.S. Treasury futures. Those futures are also taxed at the 60/40 rate, which *can* be more tax advantageous than buy-and-hold bond exposure, where the majority of the return (yield) gets taxed at ordinary income.
I put $1 in $USDC.
You start a new project $COIN.
I buy 1 $COIN for 1 $USDC.
Someone else starts $TOKEN.
I buy 1 $TOKEN for 1 $COIN.
How much money is in crypto?
@John_Stepek So you’ve got a massive ball of “money” that bubbles up, but can’t ever really be removed. So it just rips around the space.
It’s L1 tokens one month, DeFi the next, NFTs the next...
@John_Stepek So unless (1) people can start to borrow fiat against their crypto / NFTs, (2) people try to move crypto into fiat en masse, or (3) businesses accept crypto as payment, I think you just get this risk of inflated bubble money.