Il ritorno degli ETF "monetari": ERNE, ECR1 e PEU!

Summary

The speaker discusses the use of ETFs (Exchange-Traded Funds) as emergency funds, emphasizing the importance of considering specific features when choosing one for this purpose. They evaluate various ETFs, including the iShares Euro Ultra-Short Bond UCITS ETF, noting its acceptable expense ratio and replication method, but expressing concerns about its exposure to variable-rate corporate bonds and its performance during market downturns. The speaker also mentions the Amundi ETF, which tracks environmental, social, and governance criteria, but notes its higher tracking error. They highlight the benefits of a true money market ETF, such as the PEPP 06mth Eurozone Government Bill ETF, for its stability and automatic adjustment to current interest rates. The discussion also touches on the personal choice of using an ETF over a savings account for an emergency fund due to ease of access, automatic updates, and despite the minor drawbacks like transaction fees. The speaker advises maintaining some liquidity in a current account for unexpected needs and concludes by encouraging viewers to carefully consider their options before making a decision.

Takeaways

• 📈 The speaker is discussing ETFs (Exchange-Traded Funds), specifically those used as emergency funds, and their evaluation based on various factors.
• 💡 The first ETF mentioned, iShares Euro Ultra-Short Bond UCITS ETF, has an acceptable expense ratio of 0.09% and is designed for accumulation without expecting dividends.
• 🔍 The ETF replicates the Markit index, which consists of short-term, investment-grade, Euro-denominated corporate bonds with a maturity of up to one year.
• ⚠️ The speaker points out that the ETF has a higher volatility compared to typical money market funds, especially during the COVID-19 crisis, which could be a downside for an emergency fund.
• 🌍 The fund has a geographical exposure of 18% to the United States, despite being Euro-denominated, which introduces a consideration for currency risk.
• 📊 The fund uses a sampling technique, which means it does not hold all the components of the index, leading to potential deviations from the index performance.
• 💹 The fund can engage in securities lending, which could be seen as a risk for a product intended to be more secure, like an emergency fund.
• 🚫 The speaker concludes that the discussed ETF may not be suitable as an emergency fund due to its distribution, variable-rate bonds, and corporate bond nature, which are more volatile.
• 🏦 The speaker also discusses a preference for money market ETFs over savings accounts due to the automatic updating of interest rates and less bureaucracy.
• 💬 A comment from Corrado is mentioned, who suggests keeping a liquid percentage in money market funds for immediate access during market closures.
• 💭 The speaker emphasizes the importance of always having some liquidity on hand for unexpected needs, even beyond the dedicated emergency fund.

Q & A

What is the primary concern when considering ETFs for an emergency fund?

The primary concern is the stability and liquidity of the ETF, ensuring it can be reliably used as a safety net without significant fluctuations in value.

What is the role of 'replicazione' or 'replication' in the context of ETFs?

Replicazione refers to how the ETF mimics the performance of its underlying index. It can be done through physical replication, where the ETF holds the same assets as the index, or through synthetic replication, which may involve derivatives.

Why might an investor prefer an ETF over a savings account for an emergency fund?

An investor might prefer an ETF because it can provide automatic updates to interest rates and returns without the need for manual intervention, offering more flexibility and potentially higher returns.

What is the significance of the 'distribuzione' or distribution mentioned in the script?

Distribuzione refers to the distribution policy of the ETF, which can be important for an emergency fund as investors may prefer reinvestment of dividends rather than receiving them as income.

How does the script differentiate between a true money market ETF and one that only appears similar?

The script differentiates by looking at the underlying assets, regulatory requirements, and the nature of the ETF's holdings. A true money market ETF would hold very short-term, high-quality debt instruments and be subject to specific banking regulations.

What is the impact of exposure to different geographical regions on an ETF's performance?

Geographical exposure can introduce currency risk and affect the ETF's performance due to varying economic conditions in different regions. Diversification across regions can mitigate risk but may also introduce complexity.

Why might an investor be wary of ETFs with corporate bonds in their holdings?

Corporate bonds can be more volatile and subject to greater fluctuations in value compared to government bonds, which are typically found in money market ETFs. This increased risk may not be desirable for an emergency fund.

What is the significance of the 'tasso variabile' or variable rate mentioned in the script?

Variable rate refers to bonds with interest rates that can change over time. This can introduce additional risk to the ETF's returns, especially in a rising interest rate environment.

How does the script evaluate the size of the ETF in terms of its suitability as an emergency fund?

The script evaluates the size of the ETF by looking at its total assets under management. A larger ETF is generally preferred as it can offer more liquidity and stability.

What is the 'tracking error' mentioned in the script, and why is it important?

Tracking error is the divergence between the ETF's performance and that of its underlying index. A low tracking error is desirable as it indicates that the ETF is closely replicating the index's performance.

Why might an investor choose an ETF over a savings account for an emergency fund despite potential transaction fees?

An investor might choose an ETF for its automatic updating of interest rates, higher potential returns, and the convenience of managing the fund through an existing brokerage account without the need to open a new savings account.

What are the considerations for liquidity when choosing an ETF for an emergency fund?

Liquidity considerations include the ease of redeeming the ETF's shares for cash, the trading volume of the ETF, and the potential impact of market closures on the ability to access funds.