Blondemoney CEO steps into ETF debate

Helen Thomas, Blondemoney

Helen Thomas, CEO of financial consultancy Blondemoney, has stepped bravely into the role of being the second proposer in the debate at the heart of the etfLIVE Europe event ETF Express is hosting in May this year.

Thomas will be ably supporting LNG Capital’s Louis Gargour in proposing the motion: This house believes ETFs will ultimately increase instability in the capital markets.

Thomas has almost two decades of experience working in financial markets for banks and fund managers. Most recently she was Head of Currency Alpha at SSGA. She was also an adviser to the former Chancellor of the Exchequer, George Osborne during the financial crisis and Director of the Financial Markets Reform Programme at Policy Exchange. She’s also a Board Member of CFA UK and a Freeman of the City of London.

Despite the political experience, Thomas found that she did not like politics as a job. “Financial markets are my passion,” she says and her Blondemoney research and consultancy business came from expressing that passion in a blog which launched seven years ago. 

“I found that writing things down helped me understand the world better and a blog is good because you can go back and refer to previous posts,” Thomas says. “It’s easy to waffle but investment is about making decisions and assessing risks and the blog was a disciplining tool.”

The blog became a company two years ago so that she could use her ideas to help others.

“The idea is that you can monitor the unpriced risks in financial markets and see what ice bergs lie ahead.”

Thomas sees ETFs as one of those potential ice bergs.

“I know that markets can do irrational things so you need to look at the structure of the market. It’s just like a farmers’ market with supply and demand making a big difference to prices. You can’t just see economics in isolation or the market price in isolation and so I often look at market structure and who is in this market, what are they doing and why and over the last 10 years, there has been this big shift to passive investment.”

Thomas had had experience of working with a passive fund manager and found ETFs exciting, interesting and popular. “But I asked ‘what are they?’ and as I educated myself all I found was more questions than answers,” she says.

“What is going on here is a risk. Any product that has the exponential growth which ETFs have had can have a distorting impact. Back in that farmers’ market, it’s as if pineapples turned up when normally there were just apples and oranges. It distorts what is going on elsewhere.”

Thomas is concerned that the amount of inflows into ETFs has been so high, that no one knows what would happen if those flows were to reverse.

It’s not that she doesn’t like ETFs. She says: “I like the concept of an ETF. I love that it democratises investing because the financial knowledge should not be just in the hands of the big players and ETFs are cheaper. Also, active managers have not covered themselves in glory so they can’t whinge that people aren’t paying them for their genius anymore.”

It is the size of the ETF industry that concerns Thomas. “It’s create a potential imbalance in the market,” she says.

The relationship between an ETF provider and the authorised participants and market makers who help control the price of the ETF also concerns her.

“Why cannot I know who is the authorised participant on a particular ETF?” she says. “If I hold a BlackRock ETF, where is my risk? I think it’s BlackRock but they are almost the administrator.”

Thomas’s business Blondemoney has clients drawn from a mixture of institutions, classic pension funds, asset managers and hedge funds, plus high net worth individuals and private wealth managers.

“It’s an eclectic mix,” she says. “We provide concise commentary which will help people manage the risks in their portfolios.”

The material is disseminated through regular emails and more indepth quarterly reports.

In the Great Debate at etfLIVE on 20th May in London, Thomas and Gargour will be up against the opposing duo of Allan Lane from Algo-Chain and Alan Miller from SCM Direct. To register to be part of the audience for this event, please follow the link here. 

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