Who Is Dave Nadig?
Dave Nadig is the Financial Futurist of VettaFi. Dave has over 30 years in the investment management and ETF business, having served as the CEO of ETF.com, Director of Research at ETFTrends.com, Director of Exchange Traded Funds at FactSet Research Systems, and Managing Director & Chief Strategy Officer of Barclays Global Investors. You can follow Dave in his regular column at VettaFi, his frequent CNBC appearances, or you can read his book, “A Comprehensive Guide To Exchange Traded Funds” which was published by the CFA Institute. You can follow Dave on Twitter @DaveNadig.
1) Much of your work involves the intersection of capital, innovation and humanity. What are some issues in this nexus that you think are often misunderstood?
I think I like how you put this even better than I do…the intersection of capital innovation and humanity! My answer is that people tend to be the missing piece. Most of my career has been spent in the mines of market structure and technology and regulation — all of which really determine the “how” of money moving through the global economy. But the “why” is usually the result of human beings making decisions, complete with all the failings of human behavior. While we have a whole branch of economics looking at human behavior now, it’s not nearly enough. This is part of why I’m so into the financial advisor community — advisors are right there at the face of the coal mine dealing with real human behavior. If you understand *why* people do things, often the rest falls into place logically.
2) You describe yourself as a “Financial Futurist”. What does that mean?
So, to be honest, I invented the title to describe the work I believe I spent most of my career doing. That is: trying to understand the historical context of the current state of money and markets, because without that you don’t know what decisions people made or why they made them. Then it’s about understanding the present at a deep structural level. I sometimes describe it as “knolling” which is when folks take apart a machine and lay out all the pieces for a pretty picture. I think you have to do that with market structure — how PFOF interacts with capital requirements. How settlement really works. How individual product structures perturb markets, and so on. And then last, the human piece — staying at the forefront of both culture and the endless human search for meaning and purpose. Maybe that sounds squishy, but it’s also how trillions of dollars get allocated — based on human attachments and aversions.
3) As someone steeped in financial markets, what traits have you found to be common among top performers – asset managers that consistently do well for clients, and individual investors?
Success metrics? Look, my jam is not picking hot hand managers. If anything, I would say that the *happiest* people I know in the finance industry (who aren’t necessarily the top of a performance leaderboard or compensation table) are those that approach the world with curiousity and humility. To me, it’s absolute catnip when someone answers a question on TV or on stage with “I don’t know.” That’s a person I immediately trust more. I start from the assumption, every day, that I’m wrong about the world. And of course, I am, every day. We process minute fractions of input from the world around us, and rely on countless layers of filtering to get to what we think we “know.” Whether that’s how gold and stocks interact, how crypto works, or how fed policy impacts households — whatever your belief is, it’s both wrong and incomplete, and anyone who feigns absolute certainty I view with skepticism, if not disdain.
4) ETFs have rapidly grown in popularity in the last decade. What do you believe accounts for this and do you think they are a superior investment vehicle relative to other funds?
ETFs: I believe that pretty much any complex system will eventually find the path of least resistance and complexity. When ants hunt for food, they explore widely until a food source is found, and then all the ants converge on that source until its gone. Water always seeks the lowest level, least complex path. Capital is the same way. ETFs are, for now, the most efficient, least complex way of moving capital around the global marketplace. Short commodities, levered long rates? Volatility? Beta? ETFs globally are just the most efficient, lowest friction way to get access. That doesn’t mean that stays that way — long term — maybe 5-10 years out — we’re going to move towards a tokenized system of bearer-ownership, like we see in DeFi right now. We’ve got a lot of regulatory work to do to get there, but ultimately — water will find the way.
5) From your perspective, what do you believe are the trends that will shape the future of financial markets?
Helping asset managers and advisors keep on top of key trends is kind of the whole point of VettaFi and the Exchange conference we run in Florida (Feb 5-8, Miami Beach). But looking right now at what’s exciting, the DeFi sandbox still has a lot to teach us, and I definitely think that’s key. The immediate term trend has to be rates. We have a live rate market for the first time in decades, and we’re going to be in spasms dealing with that for some time to come. I think that’s actually really exciting. There’s incredible work being done in academic circles testing a lot of our core beliefs about how markets work. So we’re absolutely going to look back in a decade and realize a bunch of things we were wrong about in how we build portfolios.
At the same time, (to be a bit squishy), I think culturally we’re in a bit of a meaning crisis coming out of Covid-19. De-globalization, re-localization, inflation — those are the economic pieces. But we also have to acknowledge the impacts of social media, the rise of populism, the increase in despair, etc. When I talk to advisors, I hear a lot of discussion about “soft” topics we never heard about 10 years ago — philanthropy, holistic happiness, investing for lifestyle, ESG, values, the idea of “enough”. Good advisors recognize that they do more than just make numbers go up