The Biden administration’s influence could give exchange-traded funds a boost.
So said ETF Trends CEO Tom Lydon on the new president’s first full day of office as stocks continued their march to new records.
“Initial indication … is the new administration, the SEC, will continue to support ETF issuers after a record year of flows last year,” Lydon told CNBC’s “ETF Edge” on Thursday.
He predicted a Biden-appointed Securities and Exchange Commission would focus on “all the right things — transparency, diversification, low costs, tax efficiency and this big wave we’re seeing of transitioning mutual funds into ETF wrappers.”
More specifically, the Biden administration could bring much-needed clarity to the world of investing based on environmental, social and governance factors, Lydon said.
“Recently there’s been an interest in the standardization in ESG research. As most issuers and index providers that they partner with have their own proprietary definition and offering of ESG, I think it will be one of the mandates for the SEC to standardize that a bit,” he said.
Cryptocurrencies could also see increased attention under Biden’s SEC nominee Gary Gensler, particularly on the ETF front, Lydon said.
“Even though [Treasury Secretary nominee] Janet Yellen is somewhat concerned about crypto, it’s really not her job,” Lydon said. “Gensler … actually may help for the mandate to get cryptocurrencies in ETF form.”
Lydon also had his eye on the initial public offering market, which saw a record year in 2020 with the Renaissance IPO ETF (IPO) more than doubling in market value.
“There’s a big hunger among ETF investors for IPOs and pre-IPOs in the form of SPACs,” or special purpose acquisition companies, Lydon said. “I think that’s an area that Gensler’s going to look at. He’s expressed some concern over transparency and the internal interest of those behind the SPACs as far as ownership and incentives.”
