Speaker 1: We could are trillions.
Speaker 2: I'm Joel Weber and I'm Eric Belchernas.
Speaker 1: Eric, you know what we haven't done forever is a
Speaker 1: mail bag episode where people ask us questions about things
Speaker 1: like ETFs or whatever else I guess, but probably ETFs.
Speaker 2: Yeah, it's good to get back to the basics. I
Speaker 2: felt when we started this podcast. A big part of
Speaker 2: our mission was education and just trying to educate people
Speaker 2: on what ETFs are, how to use them due diligence,
Speaker 2: and so it's interesting to ask people and to solicit
Speaker 2: them for their questions now and also just see where
Speaker 2: they're at, what are they curious about. I do this
Speaker 2: one show called The Money Show, which is a conference
Speaker 2: that you deal directly with retail investors, and it's a
Speaker 2: similar situation. It's nice to talk directly to the people
Speaker 2: because a lot of times we're working with advisors or
Speaker 2: the ETF industry itself, who's like talking shop constantly. But
Speaker 2: BA is a good time to go back to, like
Speaker 2: the basics, get the temperature of what people are thinking about,
Speaker 2: and you know what they don't know and are asking about.
Speaker 2: So I basically polled or solicited both LinkedIn and Twitter.
Speaker 2: Interesting the contrast on the types of questions on each
Speaker 2: site LinkedIn a little more longer and professional sounding as
Speaker 2: you might imagine Twitter, a little more quick, some trolling,
Speaker 2: and even some weird questions in there, but all pretty good.
Speaker 2: I thought. I thought there a lot of them are
Speaker 2: pretty solid questions, so looking forward to answering them best
Speaker 2: I can.
Speaker 1: Okay, well, here we go. We're gonna dive into a
Speaker 1: bunch of questions, maybe an abbreviated version of it if
Speaker 1: it's a little long, and we'll do our best to
Speaker 1: answer all of them. This time on trillions mail bag,
Speaker 1: I'm gonna start with a guy named Chuck Rose. He says,
Speaker 1: ETFs seem to have escaped the muddy waters of mutual
Speaker 1: fund share classes. But now you have SPY or SPLG
Speaker 1: or another example, QQQ or QQQM, same issuers, same index,
Speaker 1: but different expenses, different spreads. What's going on?
Speaker 2: Yeah, So I would call this trend the minime trend,
Speaker 2: because every one of those is a minime of the
Speaker 2: bigger original one.
Speaker 1: So like spy is the big dog, why are they
Speaker 1: doing that?
Speaker 2: It's a business decision on their part. So for example,
Speaker 2: let's say you're a state street and you have spy
Speaker 2: and you charge nine basis points and the liquidity is
Speaker 2: so good that you have a good audience. That said,
Speaker 2: Vanguard and I Shares came out with similar products at
Speaker 2: three basis points. So you start to lose money to
Speaker 2: the longer term investors, and in order to deal with
Speaker 2: this situation of losing some assets to these new competitors,
Speaker 2: you come out with sort of like a minime clone
Speaker 2: at a lower fee. This way for the people who
Speaker 2: really need volume, like the professional traders and hedge funds
Speaker 2: who are going to use SPY regardless, you can still
Speaker 2: earn your nine basis points, but you then have a
Speaker 2: cheaper version to help keep flows in house and coming in.
Speaker 2: So SPLG would be Spies Mini me, and this charges
Speaker 2: three basis points and it's been doing really well, like
Speaker 2: it's got forty one billion dollars now, and this has
Speaker 2: been happening for a long time. I Shares kind of
Speaker 2: invented this trend when EEM was losing a lot of
Speaker 2: assets to Vanguard's VWO, so it came out with IMG,
Speaker 2: which was a mini me at about a fourth of
Speaker 2: the cost, and it did a good job. IMG is
Speaker 2: now I think around as big as VWO and so
Speaker 2: this minime move is a business decision from the issuer's
Speaker 2: point of view because they just you know, they're trying
Speaker 2: to appease everybody without hurting their revenue too bad. Like
Speaker 2: they could just cut SPI's feet to three basis points,
Speaker 2: but that would be instantly killing a lot of their
Speaker 2: revenue in one shot. Sometimes they do do that, but
Speaker 2: for these gigantic products that have so much liquidity, you
Speaker 2: do have some pricing power there, so there you can
Speaker 2: keep that cash cow alive and still serve the cheap
Speaker 2: obsessed investors who don't care about volume. That's that's why.
Speaker 1: All right, next question, Garrett O'Hara asks what future innovations
Speaker 1: should we expect in the bond ETF space.
Speaker 2: Oh, that's a good question. So fixed in come is
Speaker 2: an area that is not quite doesn't get as much attention,
Speaker 2: but it's been evolving a lot. Like one thing that
Speaker 2: really took off that's recent is clos collateralized loan obligations.
Speaker 2: Janis has one that's over ten billion dollars and I
Speaker 2: thought that was proof that you can even discover new
Speaker 2: areas of the bond market. And I think that's what
Speaker 2: we're going to see is more slicing and dicing. Bond
Speaker 2: blocks has gone out and sliced and diced the credit buckets,
Speaker 2: like now you can get just triple c's. You know,
Speaker 2: I Share already has a double B. So they're going
Speaker 2: to go out and I think they're probably going to
Speaker 2: are slicing up sectors and they might even like do
Speaker 2: interesting things like maybe in the muni space they just
Speaker 2: give you like hospitals and schools. What would call that
Speaker 2: niche bond investing because you know, when you buy the AG,
Speaker 2: you know, the AG is like huge, you get a
Speaker 2: bunch of bonds. But what people are doing a little
Speaker 2: more because the AG hasn't worked as well, is trying
Speaker 2: to find pockets of fixed income that can like have
Speaker 2: more juice in it. One filing we recently saw was
Speaker 2: for catastrophe bonds. I don't know if that'll go through
Speaker 2: the SEC, but that would be really interesting. But yeah,
Speaker 2: I think that's what we're going to see is just
Speaker 2: more slicing and dicing as well as more active. But
Speaker 2: they people already do active, but there will be new
Speaker 2: managers coming in for sure, So I think that's probably
Speaker 2: what we can look forward to.
Speaker 1: Okay, Brian Williams asks, do you expect to see ETFs
Speaker 1: ever gain meaningful market share in the retirement planned world,
Speaker 1: stuff like four one k's, four O three b's, et cetera.
Speaker 2: Not really, as we discussed on a podcast back in
Speaker 2: the day, Camera which one, But ETFs it's like Superman
Speaker 2: two when he has to give up his superpowers to
Speaker 2: be with Lois Lane. So he goes in this box
Speaker 2: and when he's in the box, that's the box sort
Speaker 2: of like takes away his ability to fly and dodge
Speaker 2: bullets and all that stuff, and when he comes out
Speaker 2: of the box, he's a human again. That is just
Speaker 2: what ETFs and four to one K plans are. In
Speaker 2: a four to one K plan, you don't need to
Speaker 2: trade your fund, so the intrade liquidity goes away. In
Speaker 2: a four one K plan, you typically get the institutional
Speaker 2: share class of a mutual fund, which is the lower
Speaker 2: fee class because you're pulling all your money together with
Speaker 2: other colleagues, and so the cost goes away that advantage,
Speaker 2: and then the tax efficiency of ETFs goes away because
Speaker 2: it's a tax deferred plan, right, so you lose basically
Speaker 2: the three main superpowers of ETFs. In a four to
Speaker 2: one K plan. So what people do in four one
Speaker 2: K plans is if they want low cost pass that
Speaker 2: they just buy like any black Rock, State Street, Vanguard.
Speaker 2: They all have index mutual funds that are dirt cheap
Speaker 2: and the same thing you'd get from like vou or spy.
Speaker 2: You just buy the mutual fund version. So people are
Speaker 2: satisfied with that, again because they don't need to trade it.
Speaker 2: The tax efficiency is not there. So I just am
Speaker 2: a big fan of the marketplace needing it and it
Speaker 2: doesn't need it here. So even though I think ETFs
Speaker 2: are great, I think you know, they solve a lot
Speaker 2: of problems. The only caveat to that is if you
Speaker 2: have a small business and you can't afford the institutional
Speaker 2: class like this. It's like I don't know a dozen
Speaker 2: employees and collectively you don't have enough minimum investment to
Speaker 2: get the E class pricing, that might make sense for
Speaker 2: an ETF. The other situation would be to get really
Speaker 2: like unique new stuff, like there's no way you can
Speaker 2: get a bitcoin mutual fund, right, but if you wanted
Speaker 2: a bitcoin ETF, they're available now. So a lot of
Speaker 2: mutual funds will have a brokerage window where you can
Speaker 2: go out and like add to your mutual funds with
Speaker 2: some ETF and I think that's probably the perfect solution.
Speaker 2: So they'll have a tiny little role, but I don't
Speaker 2: think they'll ever like push out mutual funds. Four one
Speaker 2: K plans are sort of going to be filled with
Speaker 2: mutual funds for a long time. There is one other
Speaker 2: thing is mutual funds are actually also offering CIS. I
Speaker 2: won't go into that, but it's a customized mutual fund
Speaker 2: and those are actually getting traction inside plans too because
Speaker 2: people want to like negotiate the fee a little bit.
Speaker 2: But yeah, so I'll leave it there, but I don't
Speaker 2: really see much movement there.
Speaker 1: Randall Moore asks what are your thoughts on return stacking
Speaker 1: that is now available in an ETF wrapper going forward?
Speaker 1: Would will this be a viable strategy to add into
Speaker 1: an alt bucket in a retirees portfolio.
Speaker 2: Yeah, so this is a new area. Again, that's it's small,
Speaker 2: but it's growing quickly. An example is our sst the
Speaker 2: return stack US stocks and managed futures ETF. To keep
Speaker 2: it simple, these have different arrangements, but basically this is
Speaker 2: a strategy that gives you one hundred percent exposure to
Speaker 2: US stocks and one hundred percent exposure to a managed
Speaker 2: future's strategy. Because the futures you don't actually have to
Speaker 2: buy the futures, you can borrow them. You're able to
Speaker 2: have two hundred percent exposure essentially. So I think in
Speaker 2: the institution world they call this portable alpha, and so
Speaker 2: in a way you're able to sort of like have
Speaker 2: two things at once using leverage. Now, of course, if
Speaker 2: both of those things go down, you can get hit
Speaker 2: with a double whammy. But the idea here is just
Speaker 2: getting more bang for your buck, and I get it.
Speaker 2: I think you know, some of them are like ninety sixty.
Speaker 2: They have different varieties, as every ETF category does, but
Speaker 2: you know, I'm okay with them. I think, like I said,
Speaker 2: this is something that an institution would do normally regularly,
Speaker 2: and people are trying to again try to democratize this
Speaker 2: for regular investors. Just obviously, you know, make sure that
Speaker 2: you understand the category and that anything that has leverage
Speaker 2: does have that. You ask yourself, Okay, what's the environment
Speaker 2: where both things go down? And I think you have
Speaker 2: we make sure you're ready for that.
Speaker 1: And Rita Nanda Kumar asks, what is the ETF product
Speaker 1: innovation over the last few years that you are most
Speaker 1: impressed by. I love that question.
Speaker 2: Yeah, I got to go with the buffers. This which
Speaker 2: is also called targeted outcome. Bruce Bond used to run
Speaker 2: power Shares. Great guy and he left power Shares. Bruce
Speaker 2: Bond basically started smart Beta in my opinion, and themes
Speaker 2: he launched the first two and those are massive categories.
Speaker 2: This guy's like a he's a very entrepreneurial dude in
Speaker 2: the ETF space, and so he went I was looking
Speaker 2: for something to do and found this idea of targeted outcome.
Speaker 2: This is an ETF that uses flexible options, which are
Speaker 2: just ctimize options that the issuer negotiates and so they
Speaker 2: come up with these customize options that limit your downside.
Speaker 2: So they'll be something like, okay, for the next two years,
Speaker 2: we will give you up to ten percent of the
Speaker 2: returns of the S and P, but on the downside,
Speaker 2: you will only have to eat five percent. The rest
Speaker 2: the options will cover, and so you give up some
Speaker 2: of the upside. Usually it's the big upside for downside protection.
Speaker 2: And many older investors, this is why we call them
Speaker 2: boomer candy. Many older investors are very happy to make
Speaker 2: that trade off because they want to be in the market.
Speaker 2: They like the market, but they want protection. They want
Speaker 2: to sleep at night. Reminds me of the biotech industry
Speaker 2: making drugs for boomers to live longer and sleep better
Speaker 2: and all that, Like, this is the same thing. These
Speaker 2: are etfishoers trying to make boomers feel better and manage
Speaker 2: their nerves. And honestly, when they first came out, I
Speaker 2: didn't see it that way. I thought these are just
Speaker 2: too complicated, but they sold them, and I'd heard of
Speaker 2: advisers who were like, nah, I'd rather just stay diversified
Speaker 2: with stocks and bonds. These aren't really worth it, because remember,
Speaker 2: you can buy a money market fund now and get
Speaker 2: five percent a year locked in no risk. So a
Speaker 2: lot of of I was like, why don't I just
Speaker 2: do that? Then I can almost replicate the buffers with
Speaker 2: the regular portfolio. But the clients were like, no, I
Speaker 2: want these, Like they were like chomping at the bit
Speaker 2: to get these products. So these were a grassroots hit,
Speaker 2: and I think the door on these opened big time
Speaker 2: in twenty twenty two when the bark the aggregate bond INDECKS,
Speaker 2: which is agg went down thirteen percent. So stocks were
Speaker 2: down nineteen percent, but your AG was down thirteen percent.
Speaker 2: In other words, your sixty was down and your forty
Speaker 2: was down. Normally, boomers in particular are so used to
Speaker 2: as bonds going up when stocks go down. So when
Speaker 2: the AG went down with the stocks, they're like, wait, well,
Speaker 2: where's my protection now? And they got all this nest
Speaker 2: egg and they're like, I'm scared now. And so also,
Speaker 2: the AGG hasn't kept up with inflation at all, and
Speaker 2: so I think this opened the door to something more crafty,
Speaker 2: some kind of a solution, and these are you know,
Speaker 2: essentially structure products, and so I think we're going to
Speaker 2: see a huge boom in these. You've now got black
Speaker 2: Rock getting into this game, a lot of other big
Speaker 2: firms have jumped in, so so I think we'll continue
Speaker 2: to see more and more firms get get involved here
Speaker 2: and you can make more money. The fees are higher,
Speaker 2: so we call these vanguard free zones. So issuers love vfzs,
Speaker 2: So you know we're going to see a lot of
Speaker 2: action here.
Speaker 1: William Donnie Hugh asks do you consider direct indexing to
Speaker 1: be competition for ETFs or more like the buffalo bills
Speaker 1: of investment products.
Speaker 2: The bills have lost like force ruper bowls, I think,
Speaker 2: and they're always like missing field goals at the worst time.
Speaker 2: They're like a lot of hope and hype and then
Speaker 2: they always disappoint. Yeah, direct indexing is something like that
Speaker 2: for sure. My metaphor for direct indexing is the segue Joel,
Speaker 2: Remember that that thing that you stand on that was
Speaker 2: supposed to revolutionize transportation.
Speaker 1: Why at a convention when you can segue somewhere?
Speaker 2: Yeah, I mean I went back in Google, by the way,
Speaker 2: when I wrote my article on this, and they this
Speaker 2: was really heavily pitched like that. I believe Bill Gates
Speaker 2: might have been like one of the voices behind it.
Speaker 2: But everybody's like, these are going to take over the world,
Speaker 2: and they basically are used by mall cops and city
Speaker 2: tours and that's it. And I think direct indexing is
Speaker 2: the same thing, because direct indexing is essentially saying, hey,
Speaker 2: instead of buying a cheap etf and you know, let's
Speaker 2: sell that, give me your money and I'll buy I'll
Speaker 2: recreate the ats by buying all the stocks. But if
Speaker 2: you want, we can pick out a stock or two
Speaker 2: to customize it to your needs, and then we can
Speaker 2: do some tax loss harvesting maybe to give you some
Speaker 2: extra basis points of return. There. It's a pretty decent idea.
Speaker 2: I think for very wealthy people that tax benefit could
Speaker 2: be helpful, but arguably it charged it. They want to
Speaker 2: charge you like three or four times more than an ETF,
Speaker 2: even ten times more. I think schwabs and fidelities di
Speaker 2: I products are forty. But again, you can the whole
Speaker 2: market for four or three basis points. You also find
Speaker 2: that once you buy all these stocks and people start
Speaker 2: moving stuff around, you're you're kind of being active, and
Speaker 2: you can underperform, right, And I think people generally like
Speaker 2: an incomes like a statement with like six or seven tickers,
Speaker 2: not like thousands of stocks. And I think it can
Speaker 2: get confusing with di I. So d I to me
Speaker 2: tries to reverse three massive trends, simple, passive, and cheap,
Speaker 2: and I just think those trends are way too powerful,
Speaker 2: and so it'll be a niche vehicle at best.
Speaker 1: Eric, here's an interesting what you win US. Do you
Speaker 1: have data on how much US listed ETFs are owned
Speaker 1: by non US investors.
Speaker 2: Yeah, that's an interesting question. It depends on the ETF.
Speaker 2: But generally speaking, for like the big dogs like SPY
Speaker 2: vu IVV, you're looking at around fifteen percent would be
Speaker 2: foreign owned, and these would be like usually big institutions.
Speaker 2: What we have in the US that you really don't
Speaker 2: have anywhere else is like big boy liquidity. When you
Speaker 2: go to like I don't know, a country, like you know,
Speaker 2: I was in Mexico recently, I was in France recently.
Speaker 2: The volume on these ETFs is just pretty low. So
Speaker 2: but a retail investor, no big deal. But if you're
Speaker 2: like a big institution, you want an ETF that trades
Speaker 2: over a billion dollars a day, so you can come
Speaker 2: in and out without anybody noticing. Low impact cost. Our
Speaker 2: ETFs also tend to be cheaper than elsewhere in the world,
Speaker 2: so you get lower expense ratios. That's an interesting question
Speaker 2: also this year because this year in particular and last year,
Speaker 2: we've actually seen more people using ETFs in their own
Speaker 2: countries to get into the US. Like in China, they're
Speaker 2: rushing to buy the NASAQ one hundred. That said, it's
Speaker 2: through an ETF there that invested in NASDAC. So I
Speaker 2: do think that the fifteen percent's probably got somewhat of
Speaker 2: a lid on it. It's just big institutions who need liquidity.
Speaker 2: But the money pouring into the into the US itself
Speaker 2: via local ETFs that invest in the US is going
Speaker 2: up quickly. And in Europe. Get this, there's more money
Speaker 2: the Europeans have in US stock ETFs than in their
Speaker 2: own local European stock ETFs.
Speaker 1: Fascinating.
Speaker 2: Yeah, I mean, you know, there's just nope, nothing like
Speaker 2: like the Magnificent Seven is like a US phenomenon. And
Speaker 2: so sometimes my first book I said that the US
Speaker 2: we export liquidity. That's how liquid some of these names are.
Speaker 2: Plus these ETFs again own the best companies in the
Speaker 2: world pretty much, or at least the best performing, and
Speaker 2: so it's a double magnet. Really.
Speaker 1: Next one from Mungo Park who asks I'd be interested
Speaker 1: in your take on alt meme style ETFs. There's INDIESH Kramer,
Speaker 1: Nancy Pelosi, Tracker Space, qqq fis AI, and other concept
Speaker 1: ETFs that almost seem to be a parody similar to
Speaker 1: doge or bonk. Does this cheapen finance or are these
Speaker 1: alt DeFi style ETFs important?
Speaker 2: Okay, first of all, all of them are in the
Speaker 2: same kind of like wacky bucket, but then he throws
Speaker 2: the cues in there. I would not call QQQ anything
Speaker 2: that is a powerhouse, locomotive stud ETF that is serious business.
Speaker 2: But removing that one. Yeah, Nancy Pelosi, Jim Kramer, the
Speaker 2: vice ETFs. Look, this is kind of like fun and games.
Speaker 2: But I'm fine with it, and I'll tell you why.
Speaker 2: Over the last thirty years, portfolios have changed and people
Speaker 2: have stopped. They used to date active managers. They'd go
Speaker 2: with the five star manager. When they went down, they'd
Speaker 2: go with the new five star manager, and they were
Speaker 2: trading their cores a lot. And then Vanguard came along
Speaker 2: made cheap index funds, and people got married. To be honest,
Speaker 2: they stopped dating active managers and got married to the
Speaker 2: index fund that said married life is a little boring, right,
Speaker 2: So you got to just wait thirty years for that
Speaker 2: index fund to compound. So they like to have a
Speaker 2: little fund. So there's a little portion of a portfolio
Speaker 2: for fun and games. We call it the hot sauce bucket,
Speaker 2: and there's a lot of product coming out. You can
Speaker 2: charge a little more there. People have a higher feed
Speaker 2: budget to spend there. So I'm okay with it. And
Speaker 2: if playing around and having fun and games and you know,
Speaker 2: having a little you know, scratching your speculative itch a
Speaker 2: little bit, if that keeps you from touching the core
Speaker 2: that has to comp that you know, has to grow
Speaker 2: for thirty years, it may even serve a behavioral purpose.
Speaker 2: So that's how I see it, and that's why I'm
Speaker 2: okay with the crazy stuff.
Speaker 1: Hernando Cortina asks, are actively managed ETFs taking market share
Speaker 1: from passive or from mutual funds?
Speaker 2: Almost all mutual fun I'm assuming they may active mutual funds. Yes,
Speaker 2: I think it's new money coming in and it's from
Speaker 2: active mutual funds. Passive is tough. The only situation with
Speaker 2: passive would be like in Vanguard's case, they're letting people
Speaker 2: move from the index mutual fund into the ETF. They're
Speaker 2: both doing the same thing and they can do that
Speaker 2: tax free, but removing that unique situation aside. I think
Speaker 2: in general, again, if you're in a fidelity index mutual
Speaker 2: fund that charges two basis points or VOO, which is
Speaker 2: a ETF that charges two basis points, no big difference.
Speaker 2: I think that it's harder, though, for an active manager
Speaker 2: to peel away money in passive because, like I said,
Speaker 2: most people who are impassive, especially you know, because they
Speaker 2: had to find it themselves. Passive doesn't pay any brokers
Speaker 2: to put people in it. So if you were in
Speaker 2: a passive fund, you had to find that thing, and
Speaker 2: then you're like, damn, this is a good deal. It's
Speaker 2: like getting married. And so an active manager promising like,
Speaker 2: oh I think I can beat the market is just
Speaker 2: not going to be enough to get someone out of
Speaker 2: a happy marriage. So all the money is going away
Speaker 2: from Active generally. That said, there are portions of the
Speaker 2: portfolio that people do available for Active, and one thing
Speaker 2: Active has done that's worked has gotten cheap. So now
Speaker 2: Active is getting like below twenty even ten base points
Speaker 2: and people are like, okay, well that's almost as cheap
Speaker 2: as the next one. And I know you're Active, so
Speaker 2: well you know, you're only charging me like ten basis
Speaker 2: points for the quote Active and they're getting a little more.
Speaker 2: It's more, a little more seducing droll. Low cost Active
Speaker 2: is probably pulling from high cost Active, to be honest,
Speaker 2: more than it is from passive. But you know, who knows.
Speaker 2: We'll see what happens. But right now, again, if you
Speaker 2: can get the whole market for like three basis points,
Speaker 2: and the market keeps going up like ten percent to
Speaker 2: twenty percent every year. I mean, it's just impossible almost
Speaker 2: to like disrupt that at this point.
Speaker 1: All right, this one's from Twitter. Uh pre State of
Speaker 1: Florida asks explain the pre market volume.
Speaker 2: Yeah. So if you look at an ETF like Spy
Speaker 2: or any any of them, well not all of them
Speaker 2: trade pre market, the big ones do. You'll see a
Speaker 2: price movement at like eight in the morning, and you'll
Speaker 2: see volume at eight. It's not huge volume, but it's there.
Speaker 2: So it's a little tricky. There's a services that allow
Speaker 2: you to trade these ETFs outside of US market hour.
Speaker 2: So one is called blue Ocean, and so if you
Speaker 2: have a brokerage that's hooked up to blue Ocean, you
Speaker 2: can trade Spy whenever you want, but you need this
Speaker 2: sort of third party service to do it. And that's
Speaker 2: how pre market volume happens. I think the big dogs
Speaker 2: out there, like big trading shops that there also obviously
Speaker 2: can do this. And so when there's something massive in
Speaker 2: the market that happens, like you know, after a major event,
Speaker 2: I will go to Spy, like seven thirty eight in
Speaker 2: the morning and just see where it's moving. And so
Speaker 2: now you don't have to use the futures market anymore
Speaker 2: to find out how people are reacting, can actually use
Speaker 2: the pre market trading.
Speaker 1: Sean Tufvey asks, is an ETF a mutual fund?
Speaker 2: Yeah, it's a good question. Yes. In fact, when ETFs
Speaker 2: first were finally had to get on the market, they
Speaker 2: would file for exempt of relief because they weren't quite
Speaker 2: checking all the boxes of mutual fund. But at their
Speaker 2: core they are a mutual fund. Now there are other
Speaker 2: things like gold and bitcoin, ETFs are trusts, they're not
Speaker 2: actually funds, but the vast majority of the ETF assets
Speaker 2: are an open ended investment vehicles, which are mutual funds
Speaker 2: at their core. So, as Reggie Brown put at, ETFs
Speaker 2: are essentially mutual funds with benefits.
Speaker 1: Okay. Ken Natal asks what product strategy security needs to
Speaker 1: be etfized.
Speaker 2: Yeah, so there's a couple of things. It's hard to eat.
Speaker 2: This private equity is something they're going to continue to
Speaker 2: try to ETF I's black Rock says they're going to
Speaker 2: try to do it. I'm not sure how you do it.
Speaker 2: You kind of need the underlying to be somewhat liquid
Speaker 2: to make an ETF, but maybe that would be great.
Speaker 2: If ETFs could get you access to private equity, they
Speaker 2: would sell also money market funds. There's no true like
Speaker 2: dollar nav money market fund ETF, although the Texas issuer
Speaker 2: is going to try. We'll see if they can get
Speaker 2: that out. Physical diamonds, there was a couple of ets
Speaker 2: filed to track physical diamonds like physical gold. They never
Speaker 2: got through, but I could see somebody trying that again,
Speaker 2: and then like something like physical farmland or even physical
Speaker 2: real estate, that would be again. I don't know how
Speaker 2: they'll do it, but that's something that I think would
Speaker 2: play well. I think some of these things are going
Speaker 2: to be tokenized any area that can't be ETF as
Speaker 2: I think tokens using the blockchain down the road will
Speaker 2: be how they solve that. But there is one product
Speaker 2: that Ethan and I talk about, a lot that actually
Speaker 2: Tom Keen back in the day used to bring up
Speaker 2: a lot as a joke. I'd go on his radio
Speaker 2: show and he'd be like, when's the triple leveraged cash
Speaker 2: ETF coming out? And because there was all these crazy launches,
Speaker 2: but now that cash yields five percent we're surprised nobody
Speaker 2: has tried a two x or three x money market
Speaker 2: type like a treasury built fund where you could double
Speaker 2: or triple that that yield. Just like that, I think
Speaker 2: people would like that load duration and plus the yield
Speaker 2: with a little leverage. I can see something like that
Speaker 2: coming out too, but that's just it's an example of
Speaker 2: like a product that I that I could see coming out,
Speaker 2: But those other areas are bigger, but it'd be interesting.
Speaker 2: You know, the ETF industry, as you know, joels like
Speaker 2: the Silicon Valley of the asset management world, and they
Speaker 2: are going to just keep you know, experimenting and trying
Speaker 2: what whatever they can because there is it's like a
Speaker 2: you know, it's like the gold rush. There is rewards
Speaker 2: to be had if you can get into something first,
Speaker 2: and that will keep people trying almost anything and pushing
Speaker 2: the envelope.
Speaker 1: Okay, Eric Terry Lennox asks, did you know that vt
Speaker 1: I and chill is something teens say to each other.
Speaker 1: Did you know that? I did not know that?
Speaker 2: I did? I did? I did I? Well, I didn't
Speaker 2: know that, but I first of all, I'm just assuming
Speaker 2: vt I is is the ETF ticker and not something else.
Speaker 1: Yeah, that's my assumption too, assuming.
Speaker 2: It's the Vanguard Total Market fund. That is interesting to
Speaker 2: me and a good sign. I was recently at my
Speaker 2: friend's fiftieth birthday and I was talking to my old
Speaker 2: friend from college who is a doctor now, and he
Speaker 2: was talking about listening to more financial radio. He's like,
Speaker 2: I know, I could just VO and chill, but I'm
Speaker 2: interested for more. And so I was like, wait, would
Speaker 2: you just say vo and chill? So I do think
Speaker 2: the retail world has uh, you know, it's almost like
Speaker 2: Netflix and Chill. I guess for Vanguard, Vanguard should run
Speaker 2: with that there, you know, stop the commercials with like
Speaker 2: old people going to graduations and run with something more
Speaker 2: fun like this. If people are naturally coming out with
Speaker 2: these sort of viral phrases about your products, I think
Speaker 2: it's great. I mean VO and chill, VTI and chill.
Speaker 2: That is a pretty good way to invest. I mean,
Speaker 2: that's smart in my opinion. So it's good they're saying that.
Speaker 2: I'm surprised.
Speaker 1: Last question comes from a fellow named Todd Rosenbluth, who
Speaker 1: shows up on the podcast from time to time a
Speaker 1: little bit of a rival of yours. Peer when is
Speaker 1: the last time you won an ETF stick dinner bet?
Speaker 1: Derek Paultchunis and then he has a photo of you
Speaker 1: guys having dinner together. So I guess you've been on
Speaker 1: a little losing streak.
Speaker 2: I have these bets, though, I gotta be honest. I
Speaker 2: feel like I win in spirit. I just lose by
Speaker 2: some slight technicality. But I think I'm three and two still.
Speaker 2: I think I won the first three and then he's
Speaker 2: won the next two. Yeah, so I guess it's been
Speaker 2: a couple of years, but I'm gonna be back.
Speaker 1: Okay, you heard it there, Todd Eric. These are some
Speaker 1: great questions. I just want to say thank you to
Speaker 1: everybody who asked them and everybody who listened to the podcast.
Speaker 1: Will do another one of these episodes before too long,
Speaker 1: and hope that everybody brings some more great questions for us.
Speaker 1: Thanks for joining us on Trillions, Eric, Thanks for listening
Speaker 1: to Trillions until next time. You can find us on
Speaker 1: the Bloomberg terminal, Bloomberg dot com, Apple Podcasts, Spotify, or
Speaker 1: wherever else if you'd like to listen. We'd love to
Speaker 1: hear from you. We're on Twitter. I'm at Joel Weber Show.
Speaker 1: He's at Eric Baltuna's. This episode of Trillions was produced
Speaker 1: by Magnus Hendrickson. Bye