Best of Bloomberg Intelligence (06/28/2022)

The video discusses new exchange-traded funds (ETFs) that focus on after-hours trading, aiming to exploit the 'night effect' where buying stocks at the close and selling at the open can yield better returns. Challenges such as high transaction costs are addressed by Night Shares ETFs, which plan to use treasuries and futures to offset costs. The strategy may appeal to institutional investors due to lower volatility and higher risk-adjusted returns.

What is the 'night effect' in the context of after-hours trading?

• A strategy that focuses on high-frequency trading

• A method of trading only during the day

• A phenomenon where stocks perform better when held overnight

• A strategy of buying stocks at the open and selling at the close

What is a major challenge faced by investors trying to implement the night trading strategy?

• Lack of available stocks to trade

• High transaction costs

• Inability to trade during the day

• Excessive market volatility

How do Night Shares ETFs plan to offset transaction costs?

• By focusing on long-term investments

• By reducing the number of trades

• By holding treasuries and using futures on margin

• By increasing the number of trades

Why is volatility generally lower during after-hours trading?

• Because the market is closed

• Because more retail investors trade at night

• Due to the absence of institutional investors

• Because there is less news flow and fewer retail trades

What could make night trading appealing to institutional investors?

• High transaction costs

• Increased market noise

• Low Sharpe ratios

• High risk-adjusted returns