In this episode of Rabbithole, Dave Nadig is joined by Bloomberg’s Eric Balchunas for a candid and wide-ranging conversation on the explosion of new ETFs—some useful, some ridiculous, and some outright dangerous. They debate where the line should be drawn between investor freedom and regulatory responsibility, why the current ETF boom feels different, and whether the rise of private markets and derivatives in ETFs is creating cracks in the financial system. From yield-maxing “hot sauce” products to private equity in public wrappers, this is a no-holds-barred look at where the ETF industry is heading.
🔍 Topics Discussed:
Why not all ETF buyers are your mom—and why that matters
The ETF rating philosophy: truth in labeling over moral judgment
ESG ETFs and the dangers of overpromising
The rise of “YieldMax” style products and their behavioral appeal
Are leveraged and options-based ETFs pushing the ecosystem too far?
ETF structure vs. mutual funds during liquidity crises
When ETFs outgrow their underlying markets (and what that breaks)
The problem with private equity ETFs and mark-to-myth pricing
Buffers, derivatives, and the new face of retail-friendly structured products
Eric’s crypto ETF picks, hopes for a uranium spot ETF, and more
⏱️ Timestamps:
00:00 - Cold open: Quentin Tarantino and ETF regulation
00:45 - Are there too many ETFs?
01:28 - The problem with judging ETFs based on one type of investor
04:28 - The importance of truth in labeling
06:00 - ESG and the promise of doing good + doing well
08:00 - Why ESG disappointed when energy came roaring back
10:00 - The role of ETF structure in avoiding nasty surprises
13:00 - When funds “run the stop sign” with the SEC
15:00 - Cat bond ETFs and market maker gaps
18:00 - Why ETFs might be safer than mutual funds during crises
21:00 - The hidden risks of derivatives and options-based ETFs
24:00 - Leveraged ETF blowups and the hard rain theory
26:00 - The strange psychology behind high-yield option products
29:00 - Are buffered ETFs really conservative?
31:00 - ETF fish that outgrow their pond
33:00 - Can single-stock ETF derivatives distort the market?
35:00 - Lessons from XIV and ETF tail risk
38:00 - Private equity in ETFs and the problem with stale pricing
41:00 - Do ETFs force better pricing transparency on privates?
44:00 - The Trump coin ETF thought experiment
46:00 - What Eric is actually excited about: crypto, uranium, and more
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