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Speaker 1: Welcome to Trilliance. I'm Joel Webber in America. Bel tunis Eric.

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Speaker 1: We've talked about anti e t F on Trillions before

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Speaker 1: and we wanted to come back to it for this

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Speaker 1: episode because it is a recent phenomenon. They just started

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Speaker 1: this year, and I think it warn't a longer, deeper conversation. Yeah,

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Speaker 1: a couple of things on this. First of all, AUNT

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Speaker 1: is our own acronym stands for active non transparent. Other

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Speaker 1: terms for them have been semi transparent ETFs, non transparent ETFs. Uh.

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Speaker 1: Some people push for them just to be called active

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Speaker 1: and that's it, but for the time being, they are

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Speaker 1: a new structure. There's a couple of different types of

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Speaker 1: ANT structures and they're all born out of the same motivation,

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Speaker 1: which is over the years, active mutual funds, especially on

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Speaker 1: the equity side, have seen e t f s blossom

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Speaker 1: and wanted to get in there, but I just didn't

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Speaker 1: want to show their holdings every day, and that's really

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Speaker 1: part of what E t F do, and they're transparent.

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Speaker 1: Active managers don't want to give that up. Ants. These structures,

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Speaker 1: finally approved by the SEC, give them an opportunity to

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Speaker 1: have some of the benefits the e t f s,

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Speaker 1: namely tax efficiency, but without having to show their holdings

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Speaker 1: every day. So to me, with Active has upwards of

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Speaker 1: I don't know, fifteen to eighteen trillion dollars in assets.

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Speaker 1: This is a big deal. That's that chunk of money

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Speaker 1: now has a bridge over to the e t F world.

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Speaker 1: And we've seen companies like American Century, Fidelity, t Rowe Price,

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Speaker 1: UH and a few others launch active, non transparent e

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Speaker 1: t f s this year for the first time, and

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Speaker 1: we're probably going to see about a dozen others in

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Speaker 1: the next year. So so joining us to help us

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Speaker 1: understand the structure and sort of the future of this

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Speaker 1: Greg re Freedman of Fidelity, where he's senior vice president

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Speaker 1: and head of et F Management and Strategy, as well

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Speaker 1: Scott Livingston of t Rowe Price, who's of Global et

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Speaker 1: F Product. Also joining us as Morgan Barna, an e

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Speaker 1: t F and mutual fund analyst with Bloomberg Intelligence, this

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Speaker 1: time on Trilliance Invasion of the ants. Greg, Scott, welcome

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Speaker 1: to Trillions. Thank you for having us. So I wanna

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Speaker 1: I wanna start by asking you why does the world

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Speaker 1: need aunt e t s. Let's start with you, Greg.

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Speaker 1: First of all, uh, we don't believe you know the

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Speaker 1: term and I know is in house of brand. UM,

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Speaker 1: we don't really believe in that these are just active

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Speaker 1: equity e t f s. There's a notion that the

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Speaker 1: semi transparent nature of it is you know, a negative,

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Speaker 1: but it's really a positive. How do we protect our shareholders?

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Speaker 1: How do we protect the value that they're getting from

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Speaker 1: these active equity e t f s. And in some ways,

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Speaker 1: you know, the structure of how these work aren't any

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Speaker 1: different than how per say, you know non US equity

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Speaker 1: ETFs work today. You know, they're not hunt present progrative

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Speaker 1: just because of the nature of the markets, the time zones,

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Speaker 1: and the complications. So we've taken a model that exists

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Speaker 1: already with non US equity ETFs applied it to an

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Speaker 1: active strategy. And why this is important is if you

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Speaker 1: look at the history of ETFs, we've had a tremendous

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Speaker 1: growth with pure passive ribatis since the with the invent

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Speaker 1: of the Spider and through the Eye shares and Vanguard, etcetera. UM,

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Speaker 1: we've seen a tremendous growth in the last five years

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Speaker 1: around what I call Chapter two being smart data, which

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Speaker 1: our outcomes and solutions, very tactical, surgical type of applications

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Speaker 1: for institutional type of investing, for retail and individuals. And

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Speaker 1: this is the natural third chapter. It's active, How do

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Speaker 1: I get active equity and active fixed income? Active fixed

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Speaker 1: income has been around for a while, but the one

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Speaker 1: piece that's been missing its active equity. And now, through

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Speaker 1: the invent of the technology and approvals that a lot

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Speaker 1: of us god from the SEC we're able to add

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Speaker 1: to our clients repertoire a active equity e TP that

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Speaker 1: gives int the excess return. So you know, when people

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Speaker 1: are building these portfolios for themselves, either strategists, individuals, institutions,

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Speaker 1: they've got all the tools in front of them. They've

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Speaker 1: got passive, they got smart data, and now they have

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Speaker 1: active for both equity and fixed incomes. The biggest difference

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Speaker 1: here is that the z t F side outphits an

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Speaker 1: investor of portfolio, and we know that even a little

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Speaker 1: bit of alpha can drastically have an impact on investor outcomes.

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Speaker 1: Many of the strategies brought to market have had that

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Speaker 1: track record of strong performance and increasing returns for clients.

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Speaker 1: And yeah, so let me come in with my aunt

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Speaker 1: defense I hear you, and I think ultimately, I don't

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Speaker 1: think transparency. It's arguably not the most important aspect of

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Speaker 1: an e t F. I think it's probably fifth or

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Speaker 1: sixth on the list of advantages or things people like

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Speaker 1: about e t s, And especially here, I think people

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Speaker 1: just want to see if it performs, right. I just

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Speaker 1: think as us in the media, and uh, you know,

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Speaker 1: looking at something new in the industry, it does moret

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Speaker 1: a different label. That's how people so it's more of

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Speaker 1: a communication. I will say that the et F industry

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Speaker 1: is full of unique term spiders. I mean that that

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Speaker 1: worked out pretty well for State Street vipers. That worked

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Speaker 1: out well for Vangard until they dropped it. But anyhow,

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Speaker 1: um aunt seems to fit in that whole, like stuff

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Speaker 1: you don't want in your house. But it has a

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Speaker 1: cool acronym kind of thing, I guess. But anyway, let

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Speaker 1: me ask some tough questions for you guys. I have

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Speaker 1: I have a one two punch tough question. But I'm

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Speaker 1: sure you're ready for it. Um You probably get asked

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Speaker 1: this a lot. First of all, you look at these strategies,

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Speaker 1: they're all large cap. Now, if you look at the

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Speaker 1: flows of active mutual funds, all cap sizes, all international,

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Speaker 1: all fixed income. The worst hardest hit is large cap.

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Speaker 1: People just say, you know, Amazon's got fifty analysts covering it.

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Speaker 1: There's no new information there. I'll just go passive. That

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Speaker 1: seems to be a lot of what advisers saying. When

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Speaker 1: it goes to small cap or international, they think, okay,

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Speaker 1: well there's less coverage, there's more opportunity for alpha uh

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Speaker 1: and the flows show it. So why go to large cap?

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Speaker 1: What's to say these will succeed if the mutual fund struggles,

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Speaker 1: and you know, why not put out something that's maybe

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Speaker 1: a little different, like international or small. I'll start with Greg. Sure, No,

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Speaker 1: it's a question we've heard before. You know, in three

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Speaker 1: to five years, no one should talk about the structures.

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Speaker 1: All the structures out there work, and they all are

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Speaker 1: produced by quality shop. It's really gonna be how's your

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Speaker 1: client experience? What is your fund perform? What's my client experience?

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Speaker 1: Build on to what you're you're asking Eric. You know

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Speaker 1: right now the SEC is only allowed us to do

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Speaker 1: large cap us equity um. It follows the same pattern

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Speaker 1: we saw with the h F industry. You know, if

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Speaker 1: you look at the spider. In the early et F

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Speaker 1: they're all large cap. Then they went to MidCap, small cap,

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Speaker 1: non US equity, fixed income, commodities, et cetera. We'll probably

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Speaker 1: follow the same game plan. So right now, the only

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Speaker 1: reason you're seeing large cap US equally only if that

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Speaker 1: the only thing allowed by the SEC. You know, they

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Speaker 1: want us to test and make sure this works. You know,

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Speaker 1: we've spent fidelity. We really started the first application two

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Speaker 1: thousand seven and really started working with the SEC and

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Speaker 1: earns in two thousand and twelve, so it's taken eight

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Speaker 1: years to get the SEC comfortable. So they're not going

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Speaker 1: to allow any of US sponsors to go out with

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Speaker 1: an emerging market small cap. It's gonna be a large

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Speaker 1: cap US equity and proved that works, and every product

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Speaker 1: so far that's not launched has worked. Now. In terms

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Speaker 1: of flows, yes, we've seen some outflows in the mutual

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Speaker 1: fund industry, but remember that the client based avias ETFs

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Speaker 1: are different, the different user, the different profile, it's a

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Speaker 1: different client. So for us, each F client is very

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Speaker 1: different than the mutual phone client. The each of clients seems,

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Speaker 1: you know, in some cases are no more sophisticated, more

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Speaker 1: educated using more of the offerings that a fidelity has.

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Speaker 1: So it's it's it's a very profitable client where in

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Speaker 1: some cases the mutual clients, it's a different client base

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Speaker 1: and a lot of learned DC plan so you have

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Speaker 1: a different flow pattern just because of that alone. Um,

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Speaker 1: we've got some experience through our sectors and our fixed income.

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Speaker 1: Yet when we launched the US the active ETF for

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Speaker 1: the path VTS, we didn't see cacunibalization. In fact, we

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Speaker 1: saw both tides rise. Scott, do you have I mean,

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Speaker 1: I'm guessing you echo of that or it. Do you

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Speaker 1: have anything else to add? It's it's hard to continue

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Speaker 1: to agree with Greg, but I think he did a

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Speaker 1: nice job there and honestly, I think it was reasonable.

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Speaker 1: So t RO has had a similar timeline and while

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Speaker 1: over a decade trying to bring this to market. Um,

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Speaker 1: you know, really constructive conversations with the SEC throughout. I

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Speaker 1: think they were very thoughtful about this, and you know,

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Speaker 1: one of the key requirements was you know, we're hearing

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Speaker 1: from from you and from others that this will work.

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Speaker 1: You know, we worked with market makers who are very

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Speaker 1: thoughtful through the design phase. Tons of different tests and

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Speaker 1: back test and and tools we played put in place

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Speaker 1: to ensure that these ets trade efficiently. Um. So we're

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Speaker 1: able to convince the SEC, but they really wanted to

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Speaker 1: make sure that we started in in the most liquid

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Speaker 1: area of the market, which is which tends to be

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Speaker 1: larger cap us names. But I think the best thing

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Speaker 1: that Gregg said, um, was this is early inns. So

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Speaker 1: this is very early on. Um. You know, I think

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Speaker 1: all these firms that have come to market have truly

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Speaker 1: been innovators and offering their client's choice. And this is

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Speaker 1: going to play out over many years. And I think

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Speaker 1: it's a relatively easy argument. Eric, you commented on the

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Speaker 1: amount of money that's that's managed by active investors or

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Speaker 1: active managers excuse me at the top, Uh, it's a

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Speaker 1: big bucket of of money. And to package that invest

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Speaker 1: the active investment and potentially a more efficient rapper for

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Speaker 1: certain types of clients is is a pretty easy argument

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Speaker 1: to me. Okay, So here's my second tough question, which

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Speaker 1: is just how the environment has changed since the nineties. Right.

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Speaker 1: You know, when you think Fidelity tro you guys kind

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Speaker 1: of ruled the nineties. The vanguard was even a small

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Speaker 1: layer until the mid nineties, and they really blew up

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Speaker 1: in two thousand and eight till now, and passive has

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Speaker 1: become a huge deal in that process. Active has then

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Speaker 1: taken the index and done active things with it. So

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Speaker 1: you have smart beta where you take fundamental strategy put

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Speaker 1: into a rules based index. You've got themes, You've got

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Speaker 1: E s G now which is active. You've got Cathy

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Speaker 1: Wood who's like high Babe Ruth Swing for the Fences active,

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Speaker 1: and now you've got something like d f A coming

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Speaker 1: in as cheap active. And I just wondered how you

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Speaker 1: evaluated that landscape and if you thought of any other

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Speaker 1: possible ways to enter the E t F world, and

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Speaker 1: how you chose to do this method. I'm assuming it's

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Speaker 1: because this is your DNA, this is what you do.

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Speaker 1: You're not going to stray from it. But some of

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Speaker 1: the firms have converted some of their active into smart

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Speaker 1: beta or these other methods. Um, so can you just

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Speaker 1: talk about the changing because all that to us is active. Yeah,

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Speaker 1: I think it's I think it's a good question. Um.

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Speaker 1: You mentioned smart data and I think it's a form

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Speaker 1: of active, right, So if you think about the penduloum

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Speaker 1: er or the or the scale from from passive to

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Speaker 1: fully active. I think that's probably in the middle. Um,

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Speaker 1: you know, it's still a benchmark, it's still it's sort

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Speaker 1: of an automatic rebalance in many cases. Um, but it's

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Speaker 1: it's it's a smart index, right, So I kind of laugh.

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Speaker 1: You know, we certainly are aware of the growth of

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Speaker 1: those strategies. We've looked at it. To answer your question initially,

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Speaker 1: be where you go down the path, Erika, you know

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Speaker 1: this this is our d n A, right, So when

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Speaker 1: we thought about coming to e T f s, this

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Speaker 1: was a play for us to bring our best strategies

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Speaker 1: to market, and to do that, we really needed the

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Speaker 1: ability to shield IVP and protect investor performance. So I

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Speaker 1: think it's logical that we started with flagship funds that

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Speaker 1: tour Price is known for that have large retail franchises

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Speaker 1: investors that wanted to access these strategies through an e

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Speaker 1: T A crapper. That's not to say longer term, we

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Speaker 1: won't consider uh smart data or some of the other

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Speaker 1: types of products you mentioned as it pertains to smart data. Um,

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Speaker 1: you know, there's some interesting ideas in that space, but

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Speaker 1: it still goes back to the fact that they're sort

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Speaker 1: of automatically rebalanced. There's not really a PM, you know

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Speaker 1: that that has this hand or her hand on the wheel. Um.

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Speaker 1: We still prefer the way that we do active. I

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Speaker 1: think there's uses for some of those other types of strategies. UM,

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Speaker 1: but ultimately what we're talking about is full active, where

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Speaker 1: a PM has the ability to make decisions intra day. Uh.

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Speaker 1: They're not constrained of a specific index or um, you know,

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Speaker 1: some sort of calculation on the back end. They're really

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Speaker 1: able to monitor the markets, kind of work through the volatility,

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Speaker 1: identify interesting opportunities. Um. Everything he's here, It's true. I

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Speaker 1: mean your passive has been great acid gather and our minds. However,

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Speaker 1: smart data is outcome and solution oriented. So the focus

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Speaker 1: is like, how do I fix volatility. I've got a

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Speaker 1: concern around that, or I'm looking for extra yield or

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Speaker 1: I'm looking to farmer French is you know a guide

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Speaker 1: to factors? How do I get very scalpel type precision

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Speaker 1: into my investment with the solution or outcome. So that's

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Speaker 1: how we think of smart data. Active is just that

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Speaker 1: excess return. So when we think about our landscape and

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Speaker 1: how we build out our et F enterprise, it's the

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Speaker 1: passive building blocks with our own sectors one queue and

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Speaker 1: our partnership with black Rock too. It's the smart data,

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Speaker 1: which are solutions or outcomes, volatility, momentum value, et cetera.

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Speaker 1: And then the third piece of it is the active piece,

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Speaker 1: which is the excess return above benchmark. Now, you know,

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Speaker 1: as you said, there's other flavors out there which we're

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Speaker 1: excited about and we're thinking about as well. Thematic In

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Speaker 1: our minds, it's a compliment hip, you know, the next

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Speaker 1: wave of sector investing and thematic investing. So there's no

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Speaker 1: clear delineation, but our goal is how do we take

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Speaker 1: our fundamental research and our bombs up approach and our

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Speaker 1: heritage and put into different products and different strategies that

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Speaker 1: our clients can can use. I think one thing that's

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Speaker 1: really interesting, you know, how are you going to introduce

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Speaker 1: the active managers of these strategies to this new audience.

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Speaker 1: I think that is one of the more interesting areas

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Speaker 1: here where you know, the the former um you know,

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Speaker 1: base of investors that are typical mutual fund investors maybe

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Speaker 1: sought out or were placed into these funds by advisors.

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Speaker 1: And you know, I'm curious, you know, with with your

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Speaker 1: familiarity of of the E t F distribution landscape and

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Speaker 1: and through the channels, especially Fudelity has some of its

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Speaker 1: own distribution channels. You know, who you you intend to

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Speaker 1: be these incremental investors and how you plan to introduce

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Speaker 1: the portfolio managers to them. Well, yeah, it's it's a

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Speaker 1: interesting question. You know. Our first three tfs are what

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Speaker 1: we're calling clon is, where they're similar to existing strategies,

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Speaker 1: you know, the Scott point, and we have a heritage

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Speaker 1: of successful mutual funds and the ones that we think

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Speaker 1: would translate well into an ETF form as well. In

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Speaker 1: addition to you know, we've made clonish. Our job is

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Speaker 1: to present clients solution and philosophies to help them with

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Speaker 1: their investing. Whatever vehicle they want, they can choose the

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Speaker 1: I T S, S M as models ETFs except for

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Speaker 1: mutual funds. UM. Not every of our active equity ETFs

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Speaker 1: are gonna be clonish. Some are a good brand new strategy.

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Speaker 1: So while you know, the stars of the show are

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Speaker 1: still the investors and they're still the ones that creating

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Speaker 1: the alpha, we're producing products that fit clients needs. So

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Speaker 1: it might be clonish UM like our first three. We

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Speaker 1: might have a series that aren't run by you know,

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Speaker 1: an existing strategy that they're run by new managers, So

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Speaker 1: more important to us it's you know, what's the strategy,

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Speaker 1: How's it solved a client's needs necessarily than UM you

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Speaker 1: know the manager's name behind it. You know, I think

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Speaker 1: the days of single ticker sales either stocks or funds

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Speaker 1: have diminished. Investors are now looking for how do I

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Speaker 1: sell my needs? Isn't ETF? Is a mutual fund? Is

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Speaker 1: a model, is an s m A. And for advisors

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Speaker 1: like Fidelity, it's how do we add all our capabilities

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Speaker 1: and put into a position where clients can then choose

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Speaker 1: what's the rapper? What's the strategy? Why you use? Yeah?

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Speaker 1: Last week, I mean, Dimensional Fund advisors said they're going

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Speaker 1: to convert six mutual funds um directly to an et F.

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Speaker 1: These were tax managed strategies, but but basically, you know

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Speaker 1: the way we were speaking with the team, I mean

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Speaker 1: they said, shareholders are are going to go to sleep

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Speaker 1: with mutual fund and wake up with with shares of

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Speaker 1: an e t F. I mean to me, that is

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Speaker 1: a very customer centric way to do this. UM. There

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Speaker 1: are obviously some some technical hurdles, but they're going to

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Speaker 1: start off with the assets that they formerly had in

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Speaker 1: these strategies, which is around twenty nine billion for the

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Speaker 1: six funds. You know, what does this mean for you know,

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Speaker 1: for you guys, and what does it mean for the

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Speaker 1: mutual fund companies that haven't yet launched? You know, do

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Speaker 1: you think they'll take a harder look at conversion. We've

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Speaker 1: heard and I know you can. There's a lot of

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Speaker 1: technical steps that have to be done. I think some

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Speaker 1: of the concerns around broke which accounts happen to be

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Speaker 1: open shareholder approval, so there's some some sticky issues out

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Speaker 1: there as well as you know board responsibility. Um, we're

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Speaker 1: rap agnostic. We believe in in mutual funds. We believe

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Speaker 1: in ETFs, s M A s C I, T S models,

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Speaker 1: et cetera. So you know, we don't at this point

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Speaker 1: see a huge need for us to convert because some

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Speaker 1: of our our mutual funds are still being used across

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Speaker 1: our different platforms and in some cases the mutual fund

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Speaker 1: outperforms and it's better for some clients and some platforms

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Speaker 1: in the e t F. So we want to be

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Speaker 1: rapor agnostic and offer our clients all the different rappers. Um,

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Speaker 1: if we think of strategy is good, we might open

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Speaker 1: in et F and a mutual fund, but then the

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Speaker 1: client can choose between SM a mutual fund and ETF

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Speaker 1: because once again the client base we're scene is different

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Speaker 1: that the actual client of mutual fund is very different

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Speaker 1: as I said in the beginning, than a client in

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Speaker 1: the ETF. And we don't want necessary alien or force

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Speaker 1: someone into a rappid it in by initially, so you know,

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Speaker 1: for us, it's choice value innovation rather than necessary emergence.

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Speaker 1: So I want to ask, I mean, you guys have

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Speaker 1: given us a pretty high level overview, um uh. And

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Speaker 1: I want to kind of dive into just a very

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Speaker 1: kind of specific example. So I pulled up the t

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Speaker 1: rowe price blue Chip growth e t F, the tickers

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Speaker 1: tc HP, and I'm also pulling up the the holdings

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Speaker 1: on on the Bloomberg terminal so I can see what's

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Speaker 1: in here, and it shows Amazon, Facebook, Alphabet Apple. But

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Speaker 1: this this is actually a proxy, right, So I'm curious, like,

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Speaker 1: what what is that showing? Exactly what am I? What

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Speaker 1: would I own as an investor? There? What we've done

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Speaker 1: is what you've pulled up is our proxy basket. So

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Speaker 1: if we think about what we view as the reason

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Speaker 1: for Delhi disclosed holdings and passive products, it's for pricing

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Speaker 1: and valuation of products that are trading intra day. Passive

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Speaker 1: products are UM in our case, you know, for the

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Speaker 1: reasons we discussed, we're not able to show those those

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Speaker 1: daily holdings disclosures, so instead we're producing. Just as Fidelity

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Speaker 1: is a proxy basket or tracking basket, and that basket

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Speaker 1: really is intended to give market makers the information they

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Speaker 1: need to accurately price ets in market. What I mean

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Speaker 1: by that is essentially that's a basket designed to as

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Speaker 1: closely replicate for performance of the underlying fun as possible.

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Speaker 1: But that basket isn't a percent overlap. Um. There are

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Speaker 1: names that we're working into are out of each day.

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Speaker 1: Those are the names where we have the most sensitivity

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Speaker 1: from an IP perspective in order to keep our transaction

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Speaker 1: costs inlineing and seek best execution for our clients. UM,

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Speaker 1: they're not in our proxy basket. So the proxy baskets

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Speaker 1: the primary pricing signal. Market makers use that just like

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Speaker 1: they would a daily disclosed basket for a passive product.

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Speaker 1: In addition, the proxy basket serves as our creation redemption basket.

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Speaker 1: Again that's really important in the e t F construct.

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Speaker 1: There's the create redeem is really where you get that

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Speaker 1: tax efficiency. So when we publish our proxy each day,

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Speaker 1: market makers use it for pricing, they can use it

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Speaker 1: to create redeem if there's excess supplier demand and market

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Speaker 1: for shares. Again, that's how ets have operated here in

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Speaker 1: since ninety three in the US, so it just really

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Speaker 1: uh fits right into their existing workflow. In addition to

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Speaker 1: that proxy basket, we give a fifteen second i D

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Speaker 1: or INTROD excuse me, interday indicative value UM every fifteen

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Speaker 1: seconds to seminating via the exchange of our actual fund.

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Speaker 1: So if you're a market maker, you have a proxy

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Speaker 1: basket your primary pricing signal, you have a fifteen second

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Speaker 1: I I D every fifteen seconds you get a check

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Speaker 1: of the real fund value. And then third we give

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Speaker 1: risk metrics. And these risk metrics are produced daily, published

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Speaker 1: on our website. And really what they do is they

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Speaker 1: quantify the close relationship between that proxy basket you pulled

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Speaker 1: up Joel and the current fund holdings. So I think

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Speaker 1: they're going to show that there's a high degree of

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Speaker 1: of of overlap portfolio overlap between the two baskets. They're

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Speaker 1: going to show that there's a low degree of tracking

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Speaker 1: or high degree of correlation. And again that's really to

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Speaker 1: get people comfortable, people meaning market makers comfortable that the

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Speaker 1: proxy basket is really an accurate representation of the current

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Speaker 1: basket and they can use a price and purposes for

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Speaker 1: the end investor. The proxy basket does show you the

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Speaker 1: types of names you can expect to own. You know,

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Speaker 1: our clients are used to getting full holdings on a

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Speaker 1: quarterly basis, on a fifteen day lag for our mutual

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Speaker 1: fund holdings, they're going to get the same thing here

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Speaker 1: for the e t F they get top ten holdings

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Speaker 1: monthly and some other portfolio information. Again, they get the

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Speaker 1: same thing here for the e t F S. I

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Speaker 1: look at the the all the list of the active

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Speaker 1: non transparents et F s here, there's about a dozen.

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Speaker 1: The assets are about seven forty one million, and some

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Speaker 1: have over a hundred millions. So you can't knock that.

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Speaker 1: Within six months now, Todd rosen Bluth and I have

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Speaker 1: a bet and it's made its way on Twitter. Basically

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Speaker 1: he said they're gonna these will have over ten billion

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Speaker 1: with in a year. I said, no, I'll take the

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Speaker 1: under on that, and a year would be April one,

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Speaker 1: So we still have five months, but they're barely at

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Speaker 1: a billion. I guess could you guys provide insight. I

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Speaker 1: think Todd was thinking that you might actually have more

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Speaker 1: of your existing clients come over, like maybe transfer over,

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Speaker 1: and and I think he was expecting more of that.

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Speaker 1: And I'll be honest, I thought there would be a

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Speaker 1: little more already too. Can you talk about when we

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Speaker 1: might see ten billion? You think I'll I'll win the

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Speaker 1: bet or we'll Todd or if not, when when do

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Speaker 1: you think ten billion would be something we'll see? Yeah,

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Speaker 1: you know this is a slow process. Um. You know,

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Speaker 1: these have been around for six months, their new technology,

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Speaker 1: they are launched, you know, in the pandemic, during a

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Speaker 1: controversial presidential election. There's a lot of things going on

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Speaker 1: in people's lives. So we're pleased with where we are.

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Speaker 1: Room set a billion at you know, as an industry,

428
00:22:53,200 --> 00:22:57,040
Speaker 1: after six months for a rollout, that's gonna take time.

429
00:22:57,359 --> 00:23:00,480
Speaker 1: It's gonna take education is a new product type, this

430
00:23:00,680 --> 00:23:04,240
Speaker 1: is gonna be months and years. So I think, you know,

431
00:23:04,359 --> 00:23:07,560
Speaker 1: the under is probably a safe that after one year,

432
00:23:07,640 --> 00:23:09,200
Speaker 1: and I'll be happy to take the art if you

433
00:23:09,200 --> 00:23:12,280
Speaker 1: want to at least give me an appetizer of your stake. Um.

434
00:23:13,280 --> 00:23:16,200
Speaker 1: But it's gonna grow over time. So once again, you

435
00:23:16,280 --> 00:23:19,720
Speaker 1: know we have EKF users. They have been looking for

436
00:23:19,920 --> 00:23:23,520
Speaker 1: act for excess return in the e KF package. You'll

437
00:23:23,560 --> 00:23:26,600
Speaker 1: see some conversions of people. But so far, you know,

438
00:23:26,680 --> 00:23:32,440
Speaker 1: our numbers for campbelization are extremely low, single digits. So, Scott,

439
00:23:32,800 --> 00:23:34,840
Speaker 1: I'm going to guess you are agree with most of that.

440
00:23:34,920 --> 00:23:36,239
Speaker 1: So let me just get you to answer the other

441
00:23:36,280 --> 00:23:37,680
Speaker 1: part of the question that was in there, which is

442
00:23:38,480 --> 00:23:40,480
Speaker 1: do you think we'll see some of these issuers move

443
00:23:40,600 --> 00:23:43,200
Speaker 1: over existing money as we frequently call b y O

444
00:23:43,280 --> 00:23:45,520
Speaker 1: A bring your own assets? So far it looks like

445
00:23:45,680 --> 00:23:48,680
Speaker 1: they're out there looking for organic growth. But do you

446
00:23:48,720 --> 00:23:51,800
Speaker 1: think we'll see any any migration from the mutual funds

447
00:23:51,880 --> 00:23:55,960
Speaker 1: to the these new e t F s. Sure, so

448
00:23:56,560 --> 00:23:58,760
Speaker 1: I think Todd's right to be bullish. I think Eric,

449
00:23:58,800 --> 00:24:00,359
Speaker 1: You've got a pretty good timeline us to say it

450
00:24:00,440 --> 00:24:03,120
Speaker 1: with that though, Uh, it was a pretty smart that again,

451
00:24:03,200 --> 00:24:05,240
Speaker 1: early very early dings, I would say, first inning. So

452
00:24:05,320 --> 00:24:07,399
Speaker 1: this is over a decade into making. We're just you know,

453
00:24:07,480 --> 00:24:11,560
Speaker 1: from a trow perspective, and since August UM, I think

454
00:24:11,600 --> 00:24:14,720
Speaker 1: you will start to see managers use the structure more

455
00:24:14,880 --> 00:24:17,520
Speaker 1: and potentially bring some assets over um. For us, this

456
00:24:17,640 --> 00:24:20,040
Speaker 1: was an accountabilization place, so I don't think we were

457
00:24:20,080 --> 00:24:22,920
Speaker 1: expecting to see a tremendous amount of um, you know,

458
00:24:23,320 --> 00:24:25,720
Speaker 1: from one vehicle into the e t F. You've got

459
00:24:25,800 --> 00:24:28,280
Speaker 1: to remember that these are very successful strategies that in

460
00:24:28,359 --> 00:24:30,600
Speaker 1: many cases have large embedded games for the end client,

461
00:24:30,680 --> 00:24:32,080
Speaker 1: and it doesn't make a whole lot of sense to

462
00:24:32,440 --> 00:24:35,119
Speaker 1: take that out of if it's a mutual fund for example,

463
00:24:35,200 --> 00:24:37,320
Speaker 1: and put it into an e t F. So longer term,

464
00:24:37,400 --> 00:24:39,159
Speaker 1: we think this is a really attractive place to be

465
00:24:39,320 --> 00:24:42,240
Speaker 1: and we're going to see tremendous growth in active ets.

466
00:24:43,080 --> 00:24:45,440
Speaker 1: What's your favorite E t F ticker that is not

467
00:24:45,560 --> 00:24:50,240
Speaker 1: your own? Throw out? There was My initials are GAFF

468
00:24:51,040 --> 00:24:55,960
Speaker 1: and uh, some individual I won't use his name, UM left.

469
00:24:56,920 --> 00:24:59,159
Speaker 1: I shared when I was I shares and launched a

470
00:24:59,200 --> 00:25:03,520
Speaker 1: fun with my the Spider SNP Emerging Middle East and

471
00:25:03,640 --> 00:25:06,119
Speaker 1: Africa e t F, which I used to use as

472
00:25:06,119 --> 00:25:08,360
Speaker 1: an example of why you should never trust the name

473
00:25:08,400 --> 00:25:11,800
Speaker 1: because this thing was seventy percent South Africa where's the

474
00:25:11,840 --> 00:25:15,399
Speaker 1: Middle East? Right? And the name is not anyway, gaff?

475
00:25:15,960 --> 00:25:19,200
Speaker 1: Did you have bigger aspirations for an E t F

476
00:25:19,359 --> 00:25:23,520
Speaker 1: with your initials? I did, I did, and I was

477
00:25:23,520 --> 00:25:27,560
Speaker 1: taken away from me now all right, Greg Scott, thanks

478
00:25:27,600 --> 00:25:29,720
Speaker 1: so much for joining us on Trillion, Thanks for having

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00:25:30,119 --> 00:25:37,240
Speaker 1: thanks for listening to Trillia until next time. You can

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00:25:37,280 --> 00:25:42,119
Speaker 1: find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcast, Spotify,

481
00:25:42,720 --> 00:25:45,720
Speaker 1: and wherever else you like to listen to podcasts. We'd

482
00:25:45,720 --> 00:25:48,439
Speaker 1: love to hear from you. We're on Twitter, I'm at

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00:25:48,600 --> 00:25:51,920
Speaker 1: Joel Webber Show, He's at Eric Call Tunas, and you

484
00:25:51,960 --> 00:25:56,520
Speaker 1: can find Morgan Barnett at him Barna Sex. This episode

485
00:25:56,520 --> 00:26:00,080
Speaker 1: of Trillions was produced by Magnus Hendrickson. Francesca Leady is

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00:26:00,119 --> 00:26:02,359
Speaker 1: the head of Bloomberg Podcast. Bye.