WEBVTT - Tell Us Something We Don’t Know About QQQ 0:00:05.680 --> 0:00:08.080 Welcome to Trillions. I'm Joel Weber and I'm Marik Belchers. 0:00:11.560 --> 0:00:14.360 Eric Carolina Wilson's a reporter with Bloomberg News. She's on 0:00:14.360 --> 0:00:16.480 the show a lot. She did some great et F reporting, 0:00:16.520 --> 0:00:18.959 and she came with an idea for a podcast episode recently, 0:00:18.960 --> 0:00:21.799 which was q q Q, which just turned twenty and 0:00:21.800 --> 0:00:24.439 we're like, that's a really good idea. Yeah, it made 0:00:24.480 --> 0:00:26.640 us think of one of these in the field type 0:00:26.680 --> 0:00:28.960 episodes that Rachel Evans has done a couple of times, 0:00:29.000 --> 0:00:31.400 where you take the mic out and you just see 0:00:31.440 --> 0:00:33.360 what happens. And I thought, you know, the cues is 0:00:33.400 --> 0:00:36.120 a monster ETF. Most people focused on Spy, which I 0:00:36.200 --> 0:00:38.360 believe turned twenty five recently. That was a whole deal, 0:00:38.840 --> 0:00:40.600 but the cues is right up there. I mean I 0:00:40.680 --> 0:00:42.360 put it on the mount rushmore of E t F 0:00:42.440 --> 0:00:45.200 s and what is it? The cues is the NASTAC 0:00:45.240 --> 0:00:48.040 one hundred. So this is this is remember the nineties 0:00:48.080 --> 0:00:50.239 and the tech This is when the Nastac was a 0:00:50.240 --> 0:00:52.440 big deal. All these stocks were on there. But the 0:00:52.520 --> 0:00:55.920 cues has changed since then, although again it's still I 0:00:55.960 --> 0:00:59.400 think widely used for tech play growth, play um and 0:00:59.440 --> 0:01:02.960 it trades ton like multiple billions of dollars every day. 0:01:03.000 --> 0:01:06.120 It's a total stud but it's probably got some things 0:01:06.160 --> 0:01:08.120 about it that most people just don't know about or 0:01:08.160 --> 0:01:11.040 take for granted. One being that it used to be 0:01:11.160 --> 0:01:13.520 very big on tech and it's become less so over time. 0:01:13.959 --> 0:01:15.840 So we gave currently on a microphone and center out 0:01:15.840 --> 0:01:21.480 to the field, and here's what we meant this week 0:01:21.520 --> 0:01:27.039 on trying the cues at twenty. This is probably the 0:01:27.040 --> 0:01:31.640 most awkward thing I'm gonna have you just asking them 0:01:31.720 --> 0:01:34.199 to say the alphabet and stop when they get a QUE. 0:01:35.120 --> 0:01:42.800 So that's gracious. A B, C, D, E, F G, 0:01:43.760 --> 0:01:48.600 H I, J K, element O P Q. Over the 0:01:48.600 --> 0:01:51.160 course of history, the letter Q has taken on many 0:01:51.200 --> 0:01:54.960 different meanings. Perhaps the most obvious Q is the seventeenth 0:01:55.080 --> 0:01:58.720 letter of the modern English alphabet. Some say the form 0:01:58.760 --> 0:02:01.240 of the letter could have been bay on the island, needle, 0:02:01.760 --> 0:02:05.040 a not, or even a monkey with its tail hanging down. 0:02:05.720 --> 0:02:09.200 Others have suggested that the origin is even more ancient, 0:02:09.880 --> 0:02:14.400 maybe having been born from Egyptian hieroglyphics. But for the 0:02:14.440 --> 0:02:17.960 trillion dollar exchange traded fund industry, the letter Q takes 0:02:18.000 --> 0:02:21.200 on its own unique meaning. You see the Investo q 0:02:21.360 --> 0:02:24.720 Q Trust Series one e TF, known by its ticker 0:02:24.800 --> 0:02:27.400 q q Q, is without a doubt, one of the 0:02:27.440 --> 0:02:31.840 most recognizable tickers around and a bye word for technology investing. 0:02:32.720 --> 0:02:35.799 Weighing in at just over seventy two billion dollars, q 0:02:35.960 --> 0:02:38.639 q Q is the world's sixth largest e t F 0:02:38.760 --> 0:02:42.120 in terms of assets. It's also the second most traded 0:02:42.160 --> 0:02:45.760 ticker among the universe of more than t f s, 0:02:46.360 --> 0:02:50.880 and not too long ago, it's celebrated its twentieth birthday. 0:02:54.720 --> 0:02:58.040 So I dived deeper into q q q's history and 0:02:58.120 --> 0:03:00.760 learned how an e t F that was poster child 0:03:00.800 --> 0:03:03.760 for the dot com boom is no longer really a 0:03:03.840 --> 0:03:07.000 tech ETF, and how this mammoth of a fund is 0:03:07.040 --> 0:03:11.400 a window into how presumably passive vehicles are actually living, 0:03:11.600 --> 0:03:16.200 breathing organisms that are actively changing and evolving with markets. 0:03:18.120 --> 0:03:20.720 To talk about the origin of q q Q, commonly 0:03:20.760 --> 0:03:23.160 known as the Queues, I'll have to take you back 0:03:23.200 --> 0:03:26.680 to the man who created its underlying index, the NASDAC one. 0:03:27.720 --> 0:03:31.480 Meet John Jacobs. He was running strategic planning at NASDAC 0:03:33.120 --> 0:03:35.320 and one of the things he realized was that the 0:03:35.400 --> 0:03:40.000 brand perception among retail investors was very low about the NASDAK, 0:03:40.480 --> 0:03:42.400 so we set about trying to figure out how to 0:03:43.640 --> 0:03:46.680 change their perception, raising awareness and as it can change 0:03:46.680 --> 0:03:48.560 their perception. One of the ideas we came up with 0:03:48.600 --> 0:03:50.920 and the strategic planning team that I was running in 0:03:51.040 --> 0:03:54.440 Nasdaq was um let's come up with a NASDAC branded 0:03:54.480 --> 0:03:58.560 financial product. And when we looked around there was something 0:03:58.600 --> 0:04:01.000 that had been lost a few years early, or the Spider, 0:04:01.240 --> 0:04:04.280 which was the first g t F on the on 0:04:04.320 --> 0:04:07.800 the sp so we started following the footsteps to create 0:04:07.840 --> 0:04:10.600 this one. So the original exercise that became q q 0:04:10.760 --> 0:04:14.160 Q was more of a branding exercise, much more than 0:04:14.200 --> 0:04:17.440 trying to build an index business. But along with branding 0:04:17.480 --> 0:04:21.360 power came a unique nuance with q q q's revenue model. 0:04:21.960 --> 0:04:23.960 The first e t f s that came out like 0:04:24.040 --> 0:04:28.400 the ques, were unit investment trusts. For the expense ratio, 0:04:28.600 --> 0:04:31.520 there's a chunk that went to the trustee, someone to 0:04:31.600 --> 0:04:34.520 the adaman, and some money went to marketing. But there's 0:04:34.600 --> 0:04:37.279 essentially no way to make money if you are the 0:04:37.279 --> 0:04:41.360 product sponsor. This made it difficult to sell q q 0:04:41.520 --> 0:04:44.760 Q over to Power Shares Capital Management, which was bought 0:04:44.760 --> 0:04:47.680 by Investco in late two thousand and six, the current 0:04:47.760 --> 0:04:51.479 home of q q Q. To learn about that hesitancy, 0:04:51.560 --> 0:04:54.960 I spoke to Bruce Bond, who helped start power Shares 0:04:55.000 --> 0:04:58.200 back in two thousand two the q q Q. It 0:04:58.279 --> 0:05:00.960 was very difficult to talk invest Goo into actually acquiring 0:05:01.000 --> 0:05:04.279 the q Q at the time, and the reason it 0:05:04.440 --> 0:05:10.400 was allowing me to buy at power Shares was that UM. 0:05:10.440 --> 0:05:14.039 You know, the the q q Q was not doesn't 0:05:14.080 --> 0:05:17.440 generate any revenue for the firm that owns it. What 0:05:17.560 --> 0:05:20.400 it does have those it had a ten basis point 0:05:20.480 --> 0:05:24.679 marketing fee that allows you to market the fund. And 0:05:25.000 --> 0:05:28.040 so what we did was when we acquired it, we 0:05:28.160 --> 0:05:31.320 struck a new agreement with NASAC for the licensing of 0:05:31.360 --> 0:05:35.559 the index from Nastac. We we acquired the fund and 0:05:35.960 --> 0:05:42.240 UM and use the remaining marketing fee to market what 0:05:42.360 --> 0:05:44.440 We changed the name of the fund from the nastac 0:05:44.640 --> 0:05:48.880 ONKU to the Power Shares k K and which gave 0:05:48.960 --> 0:05:52.000 power Shares a tremendous amount of visibility and marketing and 0:05:52.080 --> 0:05:56.559 advertising power and a built in resource to be able 0:05:56.640 --> 0:05:59.279 to elevate the name of power Shares in the industry. 0:05:59.680 --> 0:06:01.880 Since you were some of those marketing dollars were going, 0:06:02.120 --> 0:06:05.720 I headed over to the Chicago area and Investco's headquarters 0:06:05.720 --> 0:06:09.160 in Downers Grove, Illinois. That's how I ended up at 0:06:09.160 --> 0:06:20.200 the Lincoln Park suit. His name is sounds like a name. Yes, 0:06:21.440 --> 0:06:24.240 her name is Molika and her name is is something 0:06:24.240 --> 0:06:28.040 that and the ques do seem to be infused in 0:06:28.080 --> 0:06:31.960 the Chicago culture. The fund sponsors the Zoo's annual Light 0:06:31.960 --> 0:06:36.320 Show Spectacular, the current headlining performance at the Lyric Opera 0:06:36.320 --> 0:06:42.839 of Chicago, golf tournaments, tennis tournaments. They've even sponsored the 0:06:42.880 --> 0:06:46.680 first race of the NASCAR Exfinity Series season, a three 0:06:46.760 --> 0:06:50.440 hundred mile long annual race held at the Daytona International 0:06:50.480 --> 0:06:54.000 Speedway called the Power Shares q q Q three hundreds. 0:06:58.400 --> 0:07:00.880 The letter Q even makes a special appearance in the 0:07:01.000 --> 0:07:04.800 name of Investco's current q q Q strategist. Listen to this. 0:07:05.279 --> 0:07:08.560 So I am John Frank. I enjoyed Investco in April, 0:07:09.520 --> 0:07:11.840 and I am the q q Q strategist. So you 0:07:11.880 --> 0:07:15.160 missed your middle initial there though I did. It's actually 0:07:16.240 --> 0:07:20.280 it's actually John Q Frank, which when I was interviewing 0:07:20.320 --> 0:07:22.800 for the role to become the QKQ strategist, I think 0:07:22.800 --> 0:07:25.360 my manager really enjoyed that. I think maybe that got 0:07:25.360 --> 0:07:27.480 you the job. Honestly, yeah, I think I wouldn't. I 0:07:27.480 --> 0:07:31.160 wouldn't disagree. While q q Q was a poster child 0:07:31.240 --> 0:07:34.520 for technology investing when it launched, the funds holdings have 0:07:34.640 --> 0:07:39.280 evolved significantly over time. How much tech there actually is 0:07:39.360 --> 0:07:42.320 in q q Q is one question that John has 0:07:42.360 --> 0:07:45.120 to tackle a lot. And the idea that the cues 0:07:45.160 --> 0:07:49.000 are pure tech play is almost like a widely believed myth. 0:07:49.320 --> 0:07:51.480 So a lot of my role is about spelling those 0:07:51.520 --> 0:07:54.520 myths or trying to maybe gravitate people to what maybe 0:07:54.560 --> 0:07:57.280 more truth is than what they think. And the idea 0:07:57.360 --> 0:07:59.680 that six Q is in technology, I think it is 0:07:59.880 --> 0:08:01.560 is quite a surprise for people. Now. Some of that 0:08:01.640 --> 0:08:04.240 is due to the gifts classification change, but that's still 0:08:04.280 --> 0:08:06.480 only a part of the story. There's a consumer, discretionary, 0:08:06.480 --> 0:08:09.720 consumer staples, healthcare, so there's a lot of things besides 0:08:09.720 --> 0:08:11.880 technology in there. And I just going through the second 0:08:11.880 --> 0:08:15.040 allocation over time. Now, in the height of the tech bubble, 0:08:15.280 --> 0:08:18.400 there was a greater allocation technology, call it close to 0:08:18.440 --> 0:08:22.080 pushing almost not quite, and again today we're closer to 0:08:22.360 --> 0:08:25.040 just about four percent technology. It's it's definitely change over time, 0:08:25.480 --> 0:08:28.800 but it's not a percent technology. And I asked John, 0:08:29.280 --> 0:08:31.840 here are the queues one of the largest e t 0:08:32.040 --> 0:08:36.200 f s a presumably passive trading vehicle, even though it's 0:08:36.200 --> 0:08:39.840 been the go to strategy for technology investing and still 0:08:39.960 --> 0:08:43.080 is today. The makeup of the fund has changed so 0:08:43.160 --> 0:08:46.439 much over time. Can we really say that q q 0:08:46.640 --> 0:08:50.000 Q is truly passive? The debate ten years ago was 0:08:50.040 --> 0:08:51.920 active for passive and I think today it's much more 0:08:52.000 --> 0:08:55.200 complicated than that because as a as a fund that 0:08:55.280 --> 0:08:58.319 uses market KIP, market capitalization is one of its primary 0:08:58.360 --> 0:09:01.080 determinants of what the weight is in the portfolio. In reality, 0:09:01.200 --> 0:09:03.800 it could be quite active compared to the market portfolio. 0:09:03.920 --> 0:09:07.640 Someone might consider at all World Equity portfolio or the 0:09:07.720 --> 0:09:10.959 SPF A hundred to be the market. Q q Q 0:09:11.160 --> 0:09:14.040 as a quote unquote passive product is actually quite different 0:09:14.400 --> 0:09:16.839 than the market portfolio. And I think that has to 0:09:16.880 --> 0:09:18.760 do with what's not in the portfolio is what what's 0:09:18.800 --> 0:09:21.640 in the portfolio. So you see overweight certain names that 0:09:21.679 --> 0:09:24.360 the portfolio holds but also doesn't hurt hold certain sectors. 0:09:24.679 --> 0:09:27.560 There's no financials, there's not a lot of energy, not 0:09:27.600 --> 0:09:29.360 a lot of utilities. So the end of the day, 0:09:29.360 --> 0:09:31.640 you have a portfolio that we can behave quite differently 0:09:31.679 --> 0:09:35.439 than the standard equity markets, and it's still passive and 0:09:35.520 --> 0:09:38.439 how it's managed, but in reality the exposures you're getting 0:09:38.440 --> 0:09:41.680 are not or anything but passive. Another myth that John 0:09:41.720 --> 0:09:44.480 has to dispel surrounding the queues is whether or not 0:09:44.600 --> 0:09:47.040 the market is ramping up to hit a tech bubble 0:09:47.120 --> 0:09:51.319 two point oh, especially as the likes of Apple, Microsoft, 0:09:51.440 --> 0:09:55.440 and Google have seen prices skyrocket. And to John, the 0:09:55.480 --> 0:09:58.640 concerns makes sense, but he thinks it helps to look 0:09:58.679 --> 0:10:01.360 at q q Q today and compare it to the 0:10:01.360 --> 0:10:05.120 fund back then. So he compares today's market to the 0:10:05.160 --> 0:10:08.199 actual tech bubble. Let's call it March two thousand. The 0:10:08.200 --> 0:10:13.200 evaluations are completely different. And one of the things we 0:10:13.240 --> 0:10:15.960 looked at was just look at the five largest companies 0:10:16.280 --> 0:10:18.720 in QQQ at that time compared to the five largest 0:10:18.760 --> 0:10:20.800 companies today. So one of the things we did was, 0:10:21.040 --> 0:10:23.200 instead of getting pe ratio for the whole fund, if 0:10:23.240 --> 0:10:26.040 we just look at those five largest companies in the 0:10:26.120 --> 0:10:30.120 height of the tech bubble, so call it Microsoft, Cisco, Intel, Oracle, IBM. 0:10:30.520 --> 0:10:33.760 As a group, they actually traded at about close to 0:10:33.840 --> 0:10:36.160 eighty times their market cap over net income a proxy 0:10:36.240 --> 0:10:41.000 for a P ratio, where today we look at app, Apple, Amazon, Alphabet, 0:10:41.120 --> 0:10:44.360 Microsoft on Facebook and go back to the end of September, 0:10:44.520 --> 0:10:46.360 which was really the height of this year, and that 0:10:46.480 --> 0:10:48.439 group was trading at thirty eight and a half times. 0:10:48.960 --> 0:10:51.839 So those stocks could have gone up a pent in 0:10:52.000 --> 0:10:54.280 one day and still would have been trading cheaper from 0:10:54.320 --> 0:10:56.920 a perspective of mac market captain net income and the 0:10:57.000 --> 0:10:58.680 tech bubble. So it's not to say that they are 0:10:59.760 --> 0:11:02.679 it's screaming value, but they're not anywhere near the tech bubble. 0:11:02.840 --> 0:11:05.160 So the idea that we're anywhere near the tech bubble 0:11:05.240 --> 0:11:08.640 hysteria heights is far off. We could get there, but 0:11:08.679 --> 0:11:11.439 we need a couple hundred percent days or weeks to 0:11:11.559 --> 0:11:14.120 get to that type of level. But for some investors, 0:11:14.200 --> 0:11:17.000 the recent run up in technology stocks does bring about 0:11:17.080 --> 0:11:20.160 deja vu, even if the bubble hasn't quite reached its 0:11:20.240 --> 0:11:25.160 popping point. Someone you heard from earlier, NAZDAC founder John Jacobs, 0:11:25.480 --> 0:11:28.520 says he knows what to look out for. He recalls 0:11:28.600 --> 0:11:31.040 one morning when his mother called him about a trade 0:11:31.160 --> 0:11:35.760 she wanted to execute on the fund. Her son Johnny started. Look, 0:11:35.840 --> 0:11:39.280 my mom in her seventies became a day trader in 0:11:39.360 --> 0:11:42.120 the queues. So I'm sitting in my office in d C. 0:11:42.520 --> 0:11:43.920 And my phone lights up and I had this new 0:11:44.000 --> 0:11:46.120 feature caller. I d again, it's that a long time 0:11:46.160 --> 0:11:48.160 ago two thousand and that was my parents home number 0:11:48.200 --> 0:11:49.760 and my mom, I said, Mom, I was just getting 0:11:49.760 --> 0:11:52.240 ready to call you. You know, seventy two year old 0:11:52.320 --> 0:11:54.320 one brokerage account. I said, Mom, I was just getting 0:11:54.320 --> 0:11:55.880 ready to call you about something. And she goes, never 0:11:55.920 --> 0:11:57.280 mind that now, Johnny, I want to let you know 0:11:57.280 --> 0:11:59.319 what I did this morning. I caught up swab and 0:11:59.360 --> 0:12:01.400 it put her pre market open limit order in on 0:12:01.520 --> 0:12:03.360 the cues. Because I think it's gonna pop at the 0:12:03.400 --> 0:12:07.000 open I want to flip it. I'm like, oh my god, 0:12:07.160 --> 0:12:09.000 I should have known it was the boom. I should 0:12:09.000 --> 0:12:10.520 have known it was the bus right then. So here 0:12:10.600 --> 0:12:12.319 my mom is seven two years old. She become a 0:12:12.400 --> 0:12:14.520 day trader on margin the pre market in the queues 0:12:14.559 --> 0:12:17.080 because it's gonna pop, but she wants to flip it again. 0:12:17.440 --> 0:12:19.800 This is like the same thing when this hueshine boys 0:12:19.840 --> 0:12:21.719 giving you stock tips, or you know, the kid in 0:12:21.760 --> 0:12:24.800 the corners telling you about cryptocurrencies. I can recognize the 0:12:24.840 --> 0:12:36.880 bubble Caroly and Happy Birthday cues. Welcome back to the show. 0:12:36.960 --> 0:12:39.480 I guess thank you. Uh. First of all, I just 0:12:39.520 --> 0:12:42.000 gotta say I love the background on the letter Q. 0:12:42.880 --> 0:12:44.839 I first I didn't know all that. What is it? 0:12:44.920 --> 0:12:48.800 The monkey dangling from a tree hanging down. Yeah, it's amazing. 0:12:48.880 --> 0:12:50.240 But here's the thing I wanted to know, which is 0:12:50.720 --> 0:12:55.359 why did he have threeques? So originally, actually John Jacobs, 0:12:55.400 --> 0:12:57.199 who you heard from at the beginning and at the 0:12:57.280 --> 0:13:00.280 end of the podcast, he wanted a single character ticker. 0:13:00.360 --> 0:13:02.480 He just wanted it to be Q. There was the 0:13:02.559 --> 0:13:04.880 sort of unspoken rule that they couldn't do that, so 0:13:05.040 --> 0:13:06.640 he was like, you know what. He even printed out 0:13:06.679 --> 0:13:10.359 like fifty perspectuses with just Q and then fifty perspectuses 0:13:10.400 --> 0:13:12.480 with Q q Q, and they ended up going with 0:13:12.559 --> 0:13:16.760 the triple q's. But then, um, it actually went to 0:13:16.880 --> 0:13:18.920 four ques at one point, so it was q q 0:13:19.200 --> 0:13:21.520 q Q and then it went back to three ques. 0:13:21.559 --> 0:13:23.800 And it's funny people say that you can tell when 0:13:23.840 --> 0:13:26.320 they invested in the queues depending on how they refer 0:13:26.400 --> 0:13:27.760 to it. So if they refer to it as the 0:13:27.840 --> 0:13:31.160 cubes or the quad cues UM. That's because it was 0:13:31.200 --> 0:13:34.040 when it was the four letter ticker. A lot of 0:13:34.080 --> 0:13:36.040 people just call it the cues or q q q Y. 0:13:36.200 --> 0:13:37.800 If you see some of these old heads at the 0:13:37.840 --> 0:13:42.000 E T F conferences, they will drop a cube's diamonds, cubes, vipers. 0:13:42.120 --> 0:13:44.560 It's it's evolved a lot since then, but that's how 0:13:44.640 --> 0:13:47.160 you kind of know. And they may also put the 0:13:47.400 --> 0:13:50.679 before ticker like the E E M. That's that's sort 0:13:50.720 --> 0:13:52.440 of how you know, the sort of old school folks, 0:13:52.640 --> 0:13:55.040 uh that maybe we're in industry in the nineties, before 0:13:55.120 --> 0:13:58.079 we started recording, we were joking around about personifying some 0:13:58.280 --> 0:14:01.199 et F s and for me, a challenge with this 0:14:01.440 --> 0:14:03.600 podcast and with this project was like, Okay, I'm going 0:14:03.640 --> 0:14:05.960 to take this fund that's a mammoth in the industry. 0:14:06.240 --> 0:14:09.920 Everyone knows about it, sixties six billion and a U 0:14:10.120 --> 0:14:15.440 m about um second most traded after Spy, so everyone 0:14:15.520 --> 0:14:17.720 knows about it. How am I going to surprise people 0:14:17.760 --> 0:14:19.320 about this? Like? How am I going to go out 0:14:19.360 --> 0:14:21.680 and report on this and find things that people don't 0:14:21.720 --> 0:14:24.440 know but you did, which was the surprise is that 0:14:24.520 --> 0:14:27.080 it doesn't have as much tech as people think exactly. Yeah, 0:14:27.120 --> 0:14:28.880 that that was a huge surprise, and and the way 0:14:28.960 --> 0:14:30.400 to go about it was that I had to treat 0:14:30.440 --> 0:14:32.280 it like a person. I was like, I'm going to 0:14:32.400 --> 0:14:36.080 go out and like just report of this, like biographical 0:14:36.240 --> 0:14:40.160 feature on this, hold on, hold on. So personifying e 0:14:40.280 --> 0:14:42.200 t S is when you cross the line into where 0:14:42.240 --> 0:14:45.760 I live, which is scary. You don't want to start 0:14:45.800 --> 0:14:48.240 looking at them as people. I just just giving you 0:14:48.360 --> 0:14:50.600 a fair warning sort of more like a ghost, I 0:14:50.680 --> 0:14:54.040 would say, which is even creepier probably, But okay, So 0:14:54.320 --> 0:14:56.960 if it's not in tech, what is it in now? Basically, 0:14:57.080 --> 0:14:58.440 so you have to remember that now is like one 0:14:58.480 --> 0:15:02.480 hundred is just tracking the one hundred largest non financial companies. 0:15:02.640 --> 0:15:04.600 So that's and that's really the only thing that's been 0:15:04.720 --> 0:15:07.280 completely consistent with the funds since the beginning of time. 0:15:07.360 --> 0:15:09.880 It's it's just not tracking any financials. But yeah, it 0:15:09.960 --> 0:15:12.520 was about at the height of the tech bubble. It's 0:15:12.600 --> 0:15:15.880 now around that was dropped in there, right the gigs 0:15:16.040 --> 0:15:19.000 what is that? The gigs re classification was something that 0:15:19.120 --> 0:15:23.000 happened that basically reclassified some of the just traditionally known 0:15:23.200 --> 0:15:27.560 tech names as being in the communication services like Facebook 0:15:27.680 --> 0:15:30.800 exactly like some of those mat myths, but but still, 0:15:30.840 --> 0:15:32.880 I mean the cues really are a poster child for 0:15:32.960 --> 0:15:35.760 tech investing. They still are. Yeah, And when I was 0:15:35.800 --> 0:15:38.360 in data, we grappled with whether to call the cues 0:15:38.520 --> 0:15:41.200 a sector tech or not. That's a big difference because 0:15:41.200 --> 0:15:42.680 then you look at tech flows, if the cues are 0:15:42.720 --> 0:15:44.880 in there or not, it changes the whole number by 0:15:44.920 --> 0:15:48.080 a lot. And uh, ultimately, I do we do have 0:15:48.200 --> 0:15:49.960 them in tech for now because we do feel like 0:15:50.240 --> 0:15:52.120 what are people using them for? And I think most 0:15:52.160 --> 0:15:54.960 people still connotatively are using them for tech. But you 0:15:55.000 --> 0:15:57.360 could debate this for a while because right now I 0:15:57.400 --> 0:16:00.600 think it's tech so shockingly low tech to be in 0:16:00.640 --> 0:16:03.320 the tech sector. Um, some of these decisions are tough 0:16:03.320 --> 0:16:06.120 when you're making the taxonomy in data and so who's 0:16:06.200 --> 0:16:09.840 been kind of noticed that as an opportunity because if 0:16:09.880 --> 0:16:12.160 it's like a tech fund that everyone associates with, the 0:16:12.240 --> 0:16:14.200 tech fund that doesn't have that much tech in it, 0:16:14.280 --> 0:16:16.160 that seems like a market opportunity for somebody else to 0:16:16.240 --> 0:16:19.200 come along and say, hey, I'm actually tech. And there 0:16:19.240 --> 0:16:21.040 are there are a lot of funds that have just 0:16:21.280 --> 0:16:23.400 pure tech exposure to them. But you have to remember 0:16:23.480 --> 0:16:26.080 sort of the liquidity that comes with the Cues, the 0:16:26.560 --> 0:16:29.320 branding power that it has a familiarity that people have. 0:16:29.600 --> 0:16:33.040 But again, like the largest it's still pretty fang heavy 0:16:33.080 --> 0:16:35.200 and fang driven, so people will turn to it for 0:16:35.480 --> 0:16:38.120 for exposure to those names. And we had Dan Draper 0:16:38.200 --> 0:16:39.720 on E T f i Q, which is on every 0:16:39.720 --> 0:16:43.880 Wednesday at one pm just um and this is last 0:16:43.880 --> 0:16:45.800 week actually, and we asked him about the Cues you 0:16:45.880 --> 0:16:48.040 were on with them actually um, and what he said 0:16:48.120 --> 0:16:49.960 something very interesting because he was trying to sort of 0:16:50.040 --> 0:16:52.480 give another reason why you'd use this fund besides just 0:16:52.600 --> 0:16:55.520 quick tech exposure. And he said that there's a lot 0:16:55.560 --> 0:16:58.160 of growth in this index and that the R and 0:16:58.280 --> 0:17:00.800 D as a whole spent on the companies and the 0:17:00.880 --> 0:17:03.880 Cues was double that of the companies in the SMP 0:17:04.000 --> 0:17:07.040 five hundred. That's a powerful statement and I think that 0:17:07.200 --> 0:17:11.320 leads to the the growthy aspect of the cues and ran. Yeah, 0:17:11.720 --> 0:17:14.359 that's right. That's also something that John Frank who is 0:17:14.440 --> 0:17:16.879 the current strategist of the Cues, which also when I 0:17:16.920 --> 0:17:18.560 want to interview him, I was like, how easy is 0:17:18.600 --> 0:17:20.920 this man's job? Like he this dude sits there and 0:17:21.000 --> 0:17:24.320 he manages the cues, which is a super well oiled, 0:17:24.560 --> 0:17:28.600 like huge, self like running machine. But actually he gets 0:17:28.600 --> 0:17:30.640 a ton of questions. It's like it's a lot of work. 0:17:30.680 --> 0:17:33.200 I mean, the research that this guy knows about this 0:17:33.280 --> 0:17:35.679 fund is incredible. R and D is something he totally 0:17:35.760 --> 0:17:37.440 talked about. He said. One of the things he does 0:17:37.560 --> 0:17:40.119 is he compares the NASTAC a hundred one hundred two 0:17:40.160 --> 0:17:43.119 other indexes whole look at the NASTAC one hundreds higher 0:17:43.560 --> 0:17:45.600 R and D spend relatives. So if we look at 0:17:46.520 --> 0:17:48.359 R and D spending as a percentage of sales for 0:17:48.400 --> 0:17:50.639 these companies, you're right, Eric, nine percent of sales went 0:17:50.680 --> 0:17:52.679 to R and D for the NASTACK a hundred constituents. 0:17:52.880 --> 0:17:55.159 That's more than twice of that for any other comparable index. 0:17:55.760 --> 0:17:57.760 And that's a big deal in this because everybody is 0:17:57.800 --> 0:18:02.080 talking about there's some controversy over buy backs, and some 0:18:02.240 --> 0:18:04.680 people are looking for companies that do more, you know, 0:18:05.000 --> 0:18:06.600 spending on R and D and that kind of thing 0:18:06.680 --> 0:18:08.840 and not just buying back shares. So that's a pretty 0:18:08.840 --> 0:18:10.880 good selling point, especially for those who are a little, 0:18:11.520 --> 0:18:14.920 uh not uneasy about buy backs being the source of return. 0:18:15.560 --> 0:18:17.800 That's actually really intericing um. And you know when a 0:18:17.880 --> 0:18:20.320 product is a smash hit. Just like the movie business, 0:18:20.359 --> 0:18:24.359 it spawns sequels and copycats. Right, So their cues, I like, 0:18:24.480 --> 0:18:26.320 for one, I'll think of as q q q E, 0:18:26.920 --> 0:18:29.080 which is the equal way to cuse because the cues 0:18:29.160 --> 0:18:30.840 does have a lot of allocation to a couple of 0:18:30.840 --> 0:18:34.920 companies I think Apple might be, So there's equal way 0:18:34.920 --> 0:18:37.240 to cuse. What are some other examples where they try 0:18:37.280 --> 0:18:40.680 to steal some of the cues? Um, you know audience 0:18:40.840 --> 0:18:44.040 with dropping a queue in the ticker to make people think, oh, 0:18:44.119 --> 0:18:45.720 this is like kind of a tech quli play on 0:18:45.760 --> 0:18:47.920 this other area. So e m q q is one 0:18:48.040 --> 0:18:53.560 that's emerging markets tech Um, there's t q q q 0:18:53.880 --> 0:18:56.640 I believe, which is a leveraged version of the que. 0:18:56.800 --> 0:18:59.080 So they do sort of try and piggyback off of 0:18:59.200 --> 0:19:01.560 this brand because it's such a monster. It's sort of 0:19:01.680 --> 0:19:04.720 like what other sticks can we come up with here? Exactly? 0:19:04.760 --> 0:19:08.480 It's like like the comic book Avengers, you know, all 0:19:08.520 --> 0:19:11.960 these spinoffs and so just taking a bigger step back, 0:19:12.000 --> 0:19:14.480 you traveled out to Chicago, right or in the suburbs 0:19:14.480 --> 0:19:18.119 of Chicago, just talk about being out there at an 0:19:18.160 --> 0:19:19.680 e t F is shu or what does an E. T. F. 0:19:19.720 --> 0:19:22.439 Fishuer's office look like and what's going on over there? 0:19:22.600 --> 0:19:25.280 So it's massive. It's in Downers Grove, Illinois, which is 0:19:25.760 --> 0:19:29.119 pretty a little ways way outside of downtown Chicago, but 0:19:29.200 --> 0:19:33.159 it's a huge, huge office oranges everywhere you can see it. 0:19:33.320 --> 0:19:37.000 In Dan Draper's office, he has even just like the 0:19:37.080 --> 0:19:40.600 front of a NASCAR car hood that's orange and I 0:19:40.640 --> 0:19:42.720 think it has the Cues on it because the Cues 0:19:42.840 --> 0:19:47.280 sponsored a NASA car race for a while. But it's 0:19:47.280 --> 0:19:48.480 sort of I mean, when when you go in you 0:19:48.520 --> 0:19:50.480 do a profile, either on a person or on a 0:19:50.560 --> 0:19:53.119 fund like this, you have to find like it's footprints everywhere, right, 0:19:53.160 --> 0:19:55.480 and so it is sort of scattered throughout and I 0:19:55.520 --> 0:19:57.840 had to sort of track it and follow it throughout Chicago. 0:19:57.960 --> 0:19:59.800 So I also went to the zoo, as you know, 0:20:00.000 --> 0:20:01.400 and you heard I spent a lot of time. They're 0:20:01.400 --> 0:20:04.879 trying to capture lion sounds and lion roars because they 0:20:04.960 --> 0:20:08.560 also have some um sort of marketing partnerships with the 0:20:08.640 --> 0:20:10.760 zoo there. But but it has made its way into 0:20:10.800 --> 0:20:13.280 all these different little aspects of the community and sort 0:20:13.320 --> 0:20:15.800 of social life in Chicago, and I think they also 0:20:15.880 --> 0:20:18.119 do uh tennis tournament because one time we did an 0:20:18.160 --> 0:20:22.080 event with power Shares where Bloomberg presented power Shares and 0:20:22.160 --> 0:20:24.239 at the end of the event they gave away they 0:20:24.640 --> 0:20:28.639 uh tennis rackets signed by I think Jim Courier, remember him. 0:20:28.680 --> 0:20:31.520 I think he won two majors. That's to make sure 0:20:31.560 --> 0:20:33.680 you stayed at the end of the event, of course, 0:20:34.680 --> 0:20:36.600 and I thought that was pretty high end. I was 0:20:36.680 --> 0:20:38.840 really excited. I was not allowed to enter it because 0:20:38.880 --> 0:20:44.600 I was a presenter. Tennis, Yeah, tennis, golf. Um, let's 0:20:44.640 --> 0:20:47.960