Presented by Syntax Advisors.
Margareta Hricova: Welcome to ETF TV – your insight into the world of exchange traded funds, issuers and investments. I am Margareta Hricova and joining me today is Taeyong Lee, co-founder of Neos Investments and Deborah Fuhr.
Taeyong Lee: Thank you for having me.
Deborah Fuhr: Thank you. So Taeyong, yesterday Neos Investments listed your first family of three actively managed ETFs on the New York Stock Exchange. Why did you decide to create Neos investments?
Taeyong Lee: I created NEOS Investments together with my former colleagues from various global investments. When I joined the WeighBridge about a year ago, which is a fintech start up in South Korea, I found out that we have many capable point professionals focusing on crypto trading. My former colleagues from various global investments created very well known option ETFs such as QYLD and NUSI, which are two of the largest option ETFs. So we got together and decided to create Neos investment to all four investment products covering both traditional assets and digital assets.
Margareta Hricova: You describe your new ETFs as more resilient for equity and income portfolios. How are your ETFs different than existing ETFs?
Taeyong Lee: I think this option based income strategy is becoming a bigger part of the entire ETF product universe. Our strategy is a little bit different from other covered call based strategies because ours is actively managed and also employing some of the more advanced option strategies, such as call spreads and push spread.
Margareta Hricova: And what type of investors do you expect to use these ETFs and how will they use them?
Taeyong Lee: Many different types of investors, both institutions and retail. Based on our initial conversations, many financial advisors are always looking for income generating strategies with proper risk management tools. I believe these ETFs will be particularly appealing to those financial advisors managing client assets.
Deborah Fuhr: You’re based in South Korea. Do you plan to list ETFs there?
Taeyong Lee: We are having active discussion with existing players in Korea, particularly large asset managers and banking institutions about potential collaboration. So there are ways that we can bring our expertize from the U.S. to Korea markets, because clearly ETF markets are growing nicely and they are always looking for ways to offer some advanced strategies, such as option based income ETFs.
Margareta Hricova: And do you have plans to launch more ETFs in the U.S.?
Taeyong Lee: Definitely. We are planning to offer more option based ETFs based on other core asset classes. Those may include the emerging markets and also some sectors such as real estate. And eventually, when U.S. regulators are more comfortable with crypto based exchange listed products, we may also use digital assets creating similar strategies for ETFs.
Deborah Fuhr: You have experience waiting for the S.E.C. To get permission to launch products. Can you tell us about your prior experience?
Taeyong Lee: I had a chance to work on America’s first leveraged and inverse ETF called ProShares back in early 2000, and I designed the product structure. Our application was sitting and debating with S.E.C. lawyers for six years, but finally we made it work and the product was launched in 2006.
Deborah Fuhr: That’s great. Thank you for joining us.
Taeyong Lee: Thank you for having me.
Margareta Hricova: Debbie, can you share with us some of the other news in the industry?
Deborah Fuhr: Last week there were 32 new listings and 24 new cross listings. Year to date, we’ve had 949 new listings and 1187 new cross listings. In terms of closures, there’s been 198. So we’re still seeing nearly 1000 new products come to market, and we’re about two thirds of the way through the year. When we look at Korea last week, we had nine new ETFs coming to market, eight of which were actively managed. So Korea is another market where we’ve seen a number of actively managed products coming to market. And what we tend to see is if one issuer launches a type of product, there tends to be three others that are doing the same thing. So you do have a lot of choice of similar types of products from different asset managers there. Some new statistics from South Korea would be that retail investors, if you look at the top 50 ETPs that they’ve been using, 80% of them are three times leverage or three times leveraged and inverse products listed overseas. So the Korean market really enjoys trading leveraged and inverse products and this is an interesting trend that is a bit concerning to the regulator in Korea. So they’re looking at should they make some changes in what retail investors are allowed to invest in in Korea. So those are some of the updates from this past week.
Margareta Hricova: Thank you for that update, Debbie. Thanks again to Taeyong for joining us today and to our sponsor, Syntax Advisors and of course to all of you for watching. To watch prior episodes and to see news from the ETF industry, visit us at ETFTv.net. Thank you.
ETF TV news does not provide investment advice nor recommend products.