1 00:00:04,230 --> 00:00:07,080 Sean Aylmer: Welcome to the Fear & Greed daily interview. I'm Sean Aylmer. 2 00:00:07,410 --> 00:00:09,990 Sean Aylmer: A lot of the talk in 2022 has been about 3 00:00:09,990 --> 00:00:13,170 Sean Aylmer: exchange traded funds. It seems that they've become a lot 4 00:00:13,170 --> 00:00:17,489 Sean Aylmer: more understood, more widely available, and in turn more popular 5 00:00:17,489 --> 00:00:20,488 Sean Aylmer: with investors. I wanted to wrap up what we've seen 6 00:00:20,520 --> 00:00:23,220 Sean Aylmer: this year in the ETF space and also what we 7 00:00:23,220 --> 00:00:27,030 Sean Aylmer: can expect in 2023. Remember, this is general information only 8 00:00:27,030 --> 00:00:30,420 Sean Aylmer: and you should speak to a professional advisor before making 9 00:00:30,420 --> 00:00:34,649 Sean Aylmer: investment decisions. Jon Maier is the Chief Investment Officer at 10 00:00:34,680 --> 00:00:38,340 Sean Aylmer: ETF provider Global X and joins me this morning from 11 00:00:38,400 --> 00:00:39,810 Sean Aylmer: New York. Good morning, Jon. 12 00:00:40,440 --> 00:00:42,030 Jon Maier: Good morning. Thanks for having me. 13 00:00:42,600 --> 00:00:46,139 Sean Aylmer: Now, Global X ETFs was founded in 2008. You've been 14 00:00:46,139 --> 00:00:49,559 Sean Aylmer: operating in this space for a long time. Can you 15 00:00:49,559 --> 00:00:52,830 Sean Aylmer: just give us a very potted history of how they 16 00:00:52,830 --> 00:00:55,320 Sean Aylmer: have progressed, particularly what's happened over the last year or 17 00:00:55,320 --> 00:00:58,320 Sean Aylmer: so, because we just talk a lot more about ETFs 18 00:00:58,320 --> 00:00:59,190 Sean Aylmer: than ever before? 19 00:00:59,520 --> 00:01:02,070 Jon Maier: Sure. Let me just take a step back. I've been 20 00:01:02,070 --> 00:01:06,690 Jon Maier: involved in the ETF industry since it began, essentially. When 21 00:01:06,690 --> 00:01:09,509 Jon Maier: I was at Paine Webber, which was purchased by UBS, 22 00:01:10,319 --> 00:01:13,080 Jon Maier: then Merrill Lynch and now at Global X. And the 23 00:01:13,080 --> 00:01:17,010 Jon Maier: ETF market, when my first report that I pulled up 24 00:01:17,069 --> 00:01:19,590 Jon Maier: fairly recently, it was about 50 billion dollars in assets 25 00:01:19,590 --> 00:01:21,240 Jon Maier: in 1999. I don't know if- 26 00:01:21,240 --> 00:01:21,241 Sean Aylmer: Right. 27 00:01:21,241 --> 00:01:24,809 Jon Maier: ... I got the exact number right, but now it's seven trillion 28 00:01:24,809 --> 00:01:28,529 Jon Maier: in the US, nine trillion globally, so the ETF market 29 00:01:28,529 --> 00:01:30,150 Jon Maier: has grown tremendously over time. 30 00:01:30,149 --> 00:01:33,510 Sean Aylmer: Okay. What about in the last couple of years and 31 00:01:33,510 --> 00:01:38,940 Sean Aylmer: even in 2022, is that gross rate consistent or has 32 00:01:38,940 --> 00:01:40,919 Sean Aylmer: it accelerated in the more recent years? 33 00:01:41,700 --> 00:01:44,459 Jon Maier: The ETF market is still growing meaningfully. I don't have 34 00:01:44,459 --> 00:01:47,580 Jon Maier: the exact number on me. Certain markets are growing faster 35 00:01:47,580 --> 00:01:51,570 Jon Maier: than others. Certain markets are less mature than others. Obviously 36 00:01:51,570 --> 00:01:53,880 Jon Maier: the US market is a lot more mature than some 37 00:01:53,880 --> 00:01:58,139 Jon Maier: other markets out there. Even this year when the overall 38 00:01:58,139 --> 00:02:00,420 Jon Maier: market, whether it be the Nasdaq or the S& P 39 00:02:00,420 --> 00:02:04,680 Jon Maier: 500 or other global markets, indexes haven't done particularly well 40 00:02:04,680 --> 00:02:09,839 Jon Maier: this year. There has been positive inflows into ETFs. It's 41 00:02:09,840 --> 00:02:12,150 Jon Maier: still a market that investors want to be a part 42 00:02:12,150 --> 00:02:15,030 Jon Maier: of, and it's just a great way to access the 43 00:02:15,030 --> 00:02:17,550 Jon Maier: overall market just because the structure is so great. 44 00:02:18,150 --> 00:02:21,120 Sean Aylmer: Okay, so let's go into that. And for the uninitiated, 45 00:02:21,120 --> 00:02:23,790 Sean Aylmer: maybe just give us the very thumbnail on how ETFs 46 00:02:23,850 --> 00:02:27,480 Sean Aylmer: work and the attraction of ETFs, particularly in volatile times 47 00:02:27,480 --> 00:02:28,500 Sean Aylmer: like we've seen this year. 48 00:02:29,310 --> 00:02:33,030 Jon Maier: Well, ETFs are security thorough wrapper. They trade on an 49 00:02:33,030 --> 00:02:36,360 Jon Maier: exchange. They trade throughout the day, unlike a mutual fund, 50 00:02:36,750 --> 00:02:38,880 Jon Maier: where a mutual fund you can buy at the end 51 00:02:38,880 --> 00:02:42,029 Jon Maier: of the day, although these securities inside can be traded 52 00:02:42,029 --> 00:02:44,880 Jon Maier: depending if they're actively managed or follow track and index, 53 00:02:45,360 --> 00:02:47,520 Jon Maier: but these can be bought and sold throughout the day. 54 00:02:48,030 --> 00:02:52,110 Jon Maier: And they're just a structure that holds securities within that 55 00:02:52,110 --> 00:02:58,529 Jon Maier: structure. And they're very accessible, and the structure replicates any 56 00:02:58,529 --> 00:03:04,888 Jon Maier: index. And it's just easily understood. They're tax efficient, meaning 57 00:03:04,889 --> 00:03:08,429 Jon Maier: that typically they don't have... And this is very relevant 58 00:03:08,429 --> 00:03:13,048 Jon Maier: in the US. They typically don't have capital gains because 59 00:03:13,530 --> 00:03:16,829 Jon Maier: shares are created and redeemed and there are also some 60 00:03:16,829 --> 00:03:20,970 Jon Maier: underlying trading that goes on within the portfolio. Oftentimes what 61 00:03:20,970 --> 00:03:23,280 Jon Maier: happens with a mutual fund, say you bought a mutual 62 00:03:23,280 --> 00:03:27,509 Jon Maier: fund in October and the market did rather well from 63 00:03:27,510 --> 00:03:31,230 Jon Maier: January to October, but you just bought that mutual fund, 64 00:03:31,258 --> 00:03:33,629 Jon Maier: you're on the line for that capital gain when it distributes. 65 00:03:33,630 --> 00:03:33,690 Sean Aylmer: Yeah. 66 00:03:34,109 --> 00:03:35,640 Jon Maier: So that's a big deal. Big difference. 67 00:03:36,000 --> 00:03:40,080 Sean Aylmer: Okay, so let's bring it into Australia. Where is the 68 00:03:40,080 --> 00:03:42,900 Sean Aylmer: Australian market? I mean, I think it's worth 132 billion 69 00:03:43,080 --> 00:03:47,669 Sean Aylmer: dollars in terms of its maturity. Where is it... Obviously 70 00:03:47,670 --> 00:03:49,530 Sean Aylmer: a long, long way behind the US, but I think 71 00:03:49,530 --> 00:03:51,840 Sean Aylmer: everyone's behind the US in this. Where's Australia up to? 72 00:03:54,240 --> 00:03:58,500 Jon Maier: My understanding about Australia, it's as you mentioned, about 130 73 00:03:58,500 --> 00:04:01,800 Jon Maier: plus billion dollars in assets and it's growing at a 74 00:04:01,800 --> 00:04:07,680 Jon Maier: very strong pace. 35% annualized growth. The adoption is increasing. 75 00:04:07,980 --> 00:04:12,210 Jon Maier: The number of people in Australia that own ETFs is 1. 76 00:04:12,449 --> 00:04:17,220 Jon Maier: 9 million people. Last year it is 1. 7. And 77 00:04:17,820 --> 00:04:21,960 Jon Maier: a further 230,000 Australians are expected to invest in ETFs 78 00:04:21,960 --> 00:04:25,138 Jon Maier: for the first time in 2023. If you compare it 79 00:04:25,139 --> 00:04:27,690 Jon Maier: to some other markets, like in Canada, the size is 80 00:04:27,690 --> 00:04:31,650 Jon Maier: about 255 billion, Europe an aggregate is trillion and a 81 00:04:31,650 --> 00:04:37,200 Jon Maier: half it's a newer market, but certainly has tremendous amount 82 00:04:37,200 --> 00:04:37,589 Jon Maier: of growth. 83 00:04:38,250 --> 00:04:40,139 Sean Aylmer: Stay with me, Jon. We'll be back in a minute. 84 00:04:46,080 --> 00:04:49,589 Sean Aylmer: My guest today is Jon Maier, Chief Investment Officer at 85 00:04:49,589 --> 00:04:54,750 Sean Aylmer: Global X. Okay, Global X has launched some ETFs in 86 00:04:54,750 --> 00:04:57,809 Sean Aylmer: Australia relatively recently. Can we run through a few of 87 00:04:57,809 --> 00:05:00,839 Sean Aylmer: those and just how you see them playing out and 88 00:05:01,110 --> 00:05:03,150 Sean Aylmer: what they are and how you see them playing out? 89 00:05:03,660 --> 00:05:07,800 Sean Aylmer: Green Metal Miners being... That's GMTL on the ASX here. 90 00:05:07,980 --> 00:05:09,270 Sean Aylmer: Green Metal Miners. 91 00:05:09,960 --> 00:05:14,790 Jon Maier: Well, Green Metal Miners, it's important... Certain metals are important 92 00:05:14,790 --> 00:05:20,428 Jon Maier: for renewables, whether it be lithium or copper or as 93 00:05:20,428 --> 00:05:25,320 Jon Maier: we move to clean tech, these renewable energy sources are 94 00:05:25,350 --> 00:05:28,860 Jon Maier: going to be ever more important. There's the economic environmental 95 00:05:28,860 --> 00:05:32,220 Jon Maier: realities of climate change and that has spurred a tremendous 96 00:05:32,220 --> 00:05:34,440 Jon Maier: amount of spending both pub public and private in the 97 00:05:34,440 --> 00:05:37,678 Jon Maier: US as well as globally, investments in clean tech and 98 00:05:37,678 --> 00:05:42,329 Jon Maier: these other technology de- carbonization. These metals are really necessary 99 00:05:42,660 --> 00:05:46,020 Jon Maier: for these new technologies. That was one of the reasons 100 00:05:46,020 --> 00:05:49,260 Jon Maier: we came out with the ETF, because there's going to 101 00:05:49,260 --> 00:05:51,959 Jon Maier: be continued adoption. We want investors to have the easy 102 00:05:51,960 --> 00:05:52,740 Jon Maier: access point- 103 00:05:53,160 --> 00:05:53,161 Sean Aylmer: Yeah. 104 00:05:53,161 --> 00:05:55,470 Jon Maier: ... to these companies in that space. 105 00:05:56,040 --> 00:05:57,960 Sean Aylmer: And I mean in a sense, you're spreading your risk 106 00:05:57,990 --> 00:06:01,020 Sean Aylmer: somewhat. You're not just going for a pure lithium play 107 00:06:01,020 --> 00:06:04,859 Sean Aylmer: or a pure nickel play. You're spreading across the green metals. 108 00:06:05,880 --> 00:06:08,940 Jon Maier: Well, that's the great thing about an ETF, is that 109 00:06:09,330 --> 00:06:13,409 Jon Maier: you have diversified exposure within that structure. The structure is the ETF. 110 00:06:13,770 --> 00:06:17,699 Jon Maier: It holds a number of companies, miners in this case. 111 00:06:18,570 --> 00:06:22,710 Jon Maier: And then you're further diversified, in this particular ETF, across 112 00:06:23,040 --> 00:06:24,120 Jon Maier: different types of miners. 113 00:06:24,480 --> 00:06:26,970 Sean Aylmer: Yeah, a slightly different one is Copper Miners, which is 114 00:06:26,970 --> 00:06:30,389 Sean Aylmer: the ASX codes WIRE, W- I- R- E, the copper 115 00:06:30,389 --> 00:06:35,009 Sean Aylmer: miners' ETF. Presumably that's much more on copper, which of 116 00:06:35,010 --> 00:06:40,349 Sean Aylmer: course is one of the most fundamental commodities for the way we live. 117 00:06:41,580 --> 00:06:46,620 Jon Maier: Well, copper is important, and I also think as China 118 00:06:46,980 --> 00:06:50,488 Jon Maier: reopens, and I think you'll see an opening of China 119 00:06:50,520 --> 00:06:53,490 Jon Maier: probably in the second half of the year, and because 120 00:06:53,490 --> 00:06:57,240 Jon Maier: of that and the industrial production out of the reopening, 121 00:06:57,870 --> 00:07:01,020 Jon Maier: I do believe that copper... It's the right time right 122 00:07:01,020 --> 00:07:05,190 Jon Maier: now. You are seeing increased interest in that commodity and 123 00:07:05,190 --> 00:07:07,799 Jon Maier: it's done rather well. Pulled back some, but now there's a 124 00:07:07,799 --> 00:07:09,000 Jon Maier: lot of interest going forward. 125 00:07:09,299 --> 00:07:12,270 Sean Aylmer: And just one final one, one local ETF here, which 126 00:07:12,270 --> 00:07:15,180 Sean Aylmer: I've got to mention because I love the ASX code 127 00:07:15,180 --> 00:07:18,930 Sean Aylmer: which is ATOM, A- T- O-M. It's the uranium ETF. 128 00:07:18,930 --> 00:07:24,689 Sean Aylmer: Very controversial commodity in Australia, uranium. But tell me about 129 00:07:24,690 --> 00:07:26,699 Sean Aylmer: that one. Why an ETF on uranium? 130 00:07:27,030 --> 00:07:31,230 Jon Maier: Well, in the US our uranium ETF is one of 131 00:07:31,230 --> 00:07:37,080 Jon Maier: our largest ETFs. Now, uranium is needed for nuclear power 132 00:07:37,170 --> 00:07:40,470 Jon Maier: plants. Nuclear power is actually considered green energy. 133 00:07:41,010 --> 00:07:41,160 Sean Aylmer: Yeah. 134 00:07:41,219 --> 00:07:44,279 Jon Maier: I know there's been some accidents globally, but you take 135 00:07:44,280 --> 00:07:49,500 Jon Maier: that out, there's virtually no emissions. And you consider what's 136 00:07:49,500 --> 00:07:53,280 Jon Maier: going on in Europe with the reliance on fossil fuels 137 00:07:53,280 --> 00:07:56,790 Jon Maier: from Russia. The war in Ukraine highlighted the need for 138 00:07:56,790 --> 00:08:01,379 Jon Maier: alternative sources of power. You saw that Germany was planning 139 00:08:01,380 --> 00:08:05,699 Jon Maier: on decommissioning three of their last nuclear power plants. They 140 00:08:05,699 --> 00:08:09,840 Jon Maier: put that on hold because they had to because of 141 00:08:10,170 --> 00:08:13,500 Jon Maier: energy needs during the Russian War on Ukraine. 142 00:08:14,550 --> 00:08:16,830 Sean Aylmer: I mean Japan recently came out, and if they want 143 00:08:16,830 --> 00:08:21,929 Sean Aylmer: to reach their carbon emission goals, Japan for example, has 144 00:08:21,929 --> 00:08:25,440 Sean Aylmer: to go back to nuclear energy. There's no alternative at 145 00:08:25,440 --> 00:08:26,040 Sean Aylmer: the moment. 146 00:08:26,700 --> 00:08:29,730 Jon Maier: None at the moment, but as I mentioned earlier, the 147 00:08:29,730 --> 00:08:34,440 Jon Maier: Green Metal Miners, that ETF serves the clean tech space 148 00:08:34,440 --> 00:08:37,139 Jon Maier: and there has to be more in that area over 149 00:08:37,139 --> 00:08:38,189 Jon Maier: time. And there will be. 150 00:08:38,670 --> 00:08:44,100 Sean Aylmer: What about ETFs from Global X in emerging markets? I 151 00:08:44,100 --> 00:08:49,500 Sean Aylmer: mean, just explain what the ETFs are doing and I 152 00:08:49,500 --> 00:08:53,160 Sean Aylmer: suppose the attraction of investing in emerging markets in an 153 00:08:53,160 --> 00:08:55,080 Sean Aylmer: ETF as opposed to another way. 154 00:08:56,280 --> 00:08:58,859 Jon Maier: Well, there's different ways to access different markets. I mean, 155 00:08:58,859 --> 00:09:02,040 Jon Maier: there's actively managed exposures. And you can actually have actively 156 00:09:02,040 --> 00:09:07,200 Jon Maier: managed exposures inside an ETF. We have an emerging market 157 00:09:07,230 --> 00:09:10,890 Jon Maier: debt ETF in the US, which is actually actively managed. 158 00:09:11,490 --> 00:09:14,879 Jon Maier: It doesn't necessarily have to be purely passively managed, but 159 00:09:14,940 --> 00:09:18,240 Jon Maier: in any structure, the diversification is really what you're looking 160 00:09:18,240 --> 00:09:21,750 Jon Maier: for. And in an emerging market ETF, you may get 161 00:09:21,750 --> 00:09:25,319 Jon Maier: that, or you may get specific exposure to an emerging 162 00:09:25,320 --> 00:09:27,478 Jon Maier: market. For example, in the US we have a whole 163 00:09:27,480 --> 00:09:29,040 Jon Maier: suite of China's sector ETFs. 164 00:09:29,040 --> 00:09:29,670 Sean Aylmer: Yeah, right. 165 00:09:30,090 --> 00:09:33,900 Jon Maier: And obviously China is considered an emerging market, although is 166 00:09:34,529 --> 00:09:38,340 Jon Maier: one of the largest economies. But within a sector, you'd 167 00:09:38,340 --> 00:09:41,280 Jon Maier: get exposure or just China, you'd get broad exposure within 168 00:09:41,280 --> 00:09:44,610 Jon Maier: China. Or you'd have just a general emerging market ETF for 169 00:09:44,610 --> 00:09:47,910 Jon Maier: whether it be China, Brazil, other emerging (inaudible) countries. 170 00:09:49,230 --> 00:09:52,919 Jon Maier: It's just a diversification component in any other structure that's 171 00:09:52,920 --> 00:09:57,210 Jon Maier: investing in a wide variety of wide geographical area. 172 00:09:57,929 --> 00:10:01,320 Sean Aylmer: Okay. Jon Maier, tell me 2023 for ETFs, they'll keep 173 00:10:01,320 --> 00:10:03,180 Sean Aylmer: growing? How do you think they'll perform? 174 00:10:03,420 --> 00:10:06,240 Jon Maier: No doubt. I mean, they will continue growing. They've grown 175 00:10:06,240 --> 00:10:09,869 Jon Maier: through up markets and down markets. These ETFs are just 176 00:10:11,039 --> 00:10:16,738 Jon Maier: this innovative structure that wraps around many different things. You're 177 00:10:16,740 --> 00:10:19,860 Jon Maier: not investing in an ETF, you're investing in a local 178 00:10:19,860 --> 00:10:25,500 Jon Maier: market, a broad market, a certain commodity. It's just an 179 00:10:25,500 --> 00:10:27,598 Jon Maier: easy way to access a lot. 180 00:10:28,500 --> 00:10:30,328 Sean Aylmer: Jon, thank you for talking to Fear & Greed. 181 00:10:30,660 --> 00:10:31,200 Jon Maier: Thank you. 182 00:10:31,679 --> 00:10:35,160 Sean Aylmer: That was Jon Maier, Chief Investment Officer at Global X. 183 00:10:35,370 --> 00:10:37,920 Sean Aylmer: This is the Fear & Greed daily interview. Remember, this is 184 00:10:37,920 --> 00:10:40,919 Sean Aylmer: general information only and doesn't take into account your personal 185 00:10:40,920 --> 00:10:45,060 Sean Aylmer: circumstances. You should get professional advice before making investment decisions. 186 00:10:45,360 --> 00:10:47,578 Sean Aylmer: Join us every morning for the full episode of Fear & 187 00:10:47,580 --> 00:10:51,630 Sean Aylmer: Greed, Australia's most popular business podcast. I'm Sean Aylmer. Enjoy 188 00:10:51,630 --> 00:10:51,990 Sean Aylmer: your day.