Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 2: Tim Stenebek on Bloomberg Radio.
Speaker 3: It is International Women's Day and with us a recognized,
Speaker 3: much talked about and followed individual, well known investor who
Speaker 3: also happens to be a woman, and safe to say,
Speaker 3: the person who ignited the investment thesis around the innovative
Speaker 3: and disruptive theme and economy just about ten years ago.
Speaker 3: So let's get to our interview. Great to have back
Speaker 3: with us.
Speaker 1: Kathy Wood.
Speaker 3: She's the founder, CEO and CIO of ARC invest and
Speaker 3: she joins us once again from Petersburg, Florida. Hey Kathy,
Speaker 3: I'm so great to be talking with you again.
Speaker 1: How are you? I'm great? How are you doing? Carol?
Speaker 3: Doing well, trying to keep up as you know, of
Speaker 3: the newsflow kind of fast and furious. Let's talk about
Speaker 3: the economic backdrop, because your roots, right when you started out,
Speaker 3: you are an economist and you think about things the
Speaker 3: macro environment, the jobs report today some strength, maybe some
Speaker 3: concerns about things starting to slow down. What does the
Speaker 3: US economic environment look like to you, the business environment
Speaker 3: as well, and what it means for some of your investments.
Speaker 1: Sure, it looks like that corporations are losing pricing power,
Speaker 1: and we are now beginning to see the unemployment rate
Speaker 1: move up. It went up to three point nine percent
Speaker 1: in this latest report from a low of three point
Speaker 1: four percent, So undeniably it's on its way up now,
Speaker 1: and we do think it's because corporations are losing pricing power.
Speaker 1: Their margins are getting hit. It's going to it's going
Speaker 1: to cause a couple of things. One, the labor hoarding
Speaker 1: that we've seen since COVID is going to diminish, and
Speaker 1: that will increase the unemployment rate. But then the second
Speaker 1: thing is it will accelerate the adoption of technologies. Innovation
Speaker 1: solves problems, and one of the things that it does
Speaker 1: is increased productivity, increase efficiency, and create new products and services.
Speaker 1: So we're pretty optimistic about our strategy in this environment
Speaker 1: because interest rates should come down. I think that the FED,
Speaker 1: even the FED is going to be surprised at how
Speaker 1: low inflation goes. We think it could be negative this year.
Speaker 3: Well, so, Kathy, let me ask you. That's interesting. I mean,
Speaker 3: if the expectations, at least according to traders right now
Speaker 3: is that the first rate comes in June. Is that
Speaker 3: too late in your view for the Fed to start
Speaker 3: cutting rates?
Speaker 1: Well, I think the twenty fourfold increase in interest rates
Speaker 1: and little more than a year have shocked the system.
Speaker 1: We're beginning to see a reverberation of the regional bank issues.
Speaker 1: We don't think they are going away. Deposits are still
Speaker 1: outflowing broadly from the banking system, and there are increasing
Speaker 1: problems with commercial real estate. Most people know about the
Speaker 1: off problems, but multifamily units, multifamily apartments. We're beginning to
Speaker 1: see some distressed sales there as well. So I think
Speaker 1: that problem isn't as well understood I think, and it's
Speaker 1: going to cause the regional banks even more problems.
Speaker 2: Kathy, how quickly do you think unemployment can go up
Speaker 2: this year? What are you forecasting over at ARC?
Speaker 1: Well, I wouldn't be surprised to see the unemployed employment
Speaker 1: rate go above five percent.
Speaker 3: Now.
Speaker 1: I'm saying that knowing that this is an election year
Speaker 1: and that this administration probably will try and spend more
Speaker 1: than is currently in the budgets through executive order or
Speaker 1: what have you, But above five percent would not surprise us,
Speaker 1: all right, So, about five percent.
Speaker 3: Well that's interesting, all right, so we have a good
Speaker 3: idea of your economic and kind of macro backdrop. Having
Speaker 3: said that, so here we are sitting at a day
Speaker 3: where we're seeing a little bit of a pullback in stocks,
Speaker 3: but you're to date the S and P still up
Speaker 3: more than seven percent. We're looking at a Nasdaq one
Speaker 3: hundred that's also up more than seven percent. You look
Speaker 3: at something like the socks is up around twenty percent
Speaker 3: year today, picking an individual name like an Nvidia more
Speaker 3: than eighty percent, and I could go on and on
Speaker 3: and on. There are many who talk about a bubble,
Speaker 3: some like in it back to ninety nine, two thousand,
Speaker 3: anything in today's equity trade that says bubble to you,
Speaker 3: We do.
Speaker 1: Not believe we're in a bubble anything like we were
Speaker 1: in the late nineties. I was there, and the technologies
Speaker 1: weren't ready, the costs were too high, too much capital chase,
Speaker 1: too few opportunities, too soon. The seeds for what is
Speaker 1: happening now were planted during the twenty years that ended
Speaker 1: in the tech and telecom bubble, and they've been germinating
Speaker 1: for twenty five or thirty years. So we're we believe
Speaker 1: we're ready for primetime. The one play where we could
Speaker 1: see a correction and it's just a correction. We're not
Speaker 1: calling at the end of this at all is in
Speaker 1: the chip space. Whenever I hear the word shortage, and
Speaker 1: we started hearing about GPU shortages about this time last
Speaker 1: year as chat GPT was capturing the imagination of both
Speaker 1: businesses and consumers. So for about a year we've heard
Speaker 1: that word and now we're seeing lead times we believe
Speaker 1: come down for GPUs for nvidians in particular from the
Speaker 1: eight to eleven month range to the three to four
Speaker 1: month range. So that is suggesting that there was probably
Speaker 1: a lot of double and triple ordering as the word
Speaker 1: shortage was making the rounds, and that those inventories will
Speaker 1: have to be digestible.
Speaker 3: Is that also because of an increase in supply in
Speaker 3: terms of output or is it because you think demand
Speaker 3: is going which one is it? Oh?
Speaker 1: I don't think no, No, demand is not going down,
Speaker 1: though there is something we expect that I don't hear
Speaker 1: discussion very much. And it hearkens back to the early
Speaker 1: days of the Internet. There was a moment when the
Speaker 1: Internet was taking off, when Cisco was all the rage,
Speaker 1: and then enterprises started thinking seriously about the need to
Speaker 1: spend aggressively on this new thing called the Internet and
Speaker 1: the backbone, and they paused as a lot of competitions
Speaker 1: started to make the rounds and Cisco went down fifty
Speaker 1: percent plus as enterprises were pausing. Now, why are enterprises
Speaker 1: likely to pause or at least go through an assessment.
Speaker 1: They have to integrate all of their data first, proprietary
Speaker 1: data is the secret to AI's success. And they have
Speaker 1: to map out in excrew shading detail their workflows internally
Speaker 1: and with suppliers and customers and so forth. And this
Speaker 1: is going to take time. So we think this is
Speaker 1: this movement is real, is going to be massive, but
Speaker 1: we think there's been a little bit too much too soon.
Speaker 2: Well, it's interesting to hear you say that, Kathy, because
Speaker 2: you and at ARC were very early to acknowledge the
Speaker 2: impact of AI. Yet your flagship Our Innovation ETF has
Speaker 2: not held shares of Nvidia in about a year. You
Speaker 2: do own some of it in your other ETFs. Do
Speaker 2: you have any regrets about not having held onto the
Speaker 2: stock or actually increasing your exposure in the last couple
Speaker 2: of years After more than five hundred and thirty percent
Speaker 2: gains since twenty twenty two since the end of twenty
Speaker 2: twenty two.
Speaker 1: Yes, so you're right. We were very early into Nvidia
Speaker 1: ten years ago when it was five dollars. Now it's
Speaker 1: roughly eight hundred dollars, and I wrote it most of
Speaker 1: the way up. But I'll tell you what we did,
Speaker 1: and this is as a portfolio manager. It's not one
Speaker 1: action but what it causes in terms of another action.
Speaker 1: Last year we sold in the flagship in Vidia and
Speaker 1: put it into Coinbase. Coinbase, I believe is up as
Speaker 1: at least as much as in VideA, and it is
Speaker 1: much less well understood. The whole crypto movement, the crypto
Speaker 1: asset movement, Bitcoin as a new asset class and so forth,
Speaker 1: is not well understood or completely accepted out there. So
Speaker 1: we prefer to go where others are not traveling as much.
Speaker 1: And you know, as we were moving out of in Video,
Speaker 1: we were saying, okay, regulators are trying to crush coinbase here,
Speaker 1: and we were buying it on every dip in Video.
Speaker 1: Have to happen to be one of the sources for
Speaker 1: that purchase. So it's not just what we do on
Speaker 1: the cell side. It is what we do on the
Speaker 1: buy side that you have to look at. And yes
Speaker 1: we do hold it in the more specialized funds, but
Speaker 1: we've been taking profits there as well for reasons I
Speaker 1: just described.
Speaker 3: Yeah, and to be fair, you're right. Coinbase is up
Speaker 3: about six hundred and twenty percent since the end of
Speaker 3: twenty twenty two, so that compares with about five hundred
Speaker 3: and thirty percent gain in nvideo. Is there anything, though,
Speaker 3: Kathy in the end video story that would make you
Speaker 3: we think the name and want to become more aggressive
Speaker 3: on it.
Speaker 1: Yeah, if the price came down a lot, we would
Speaker 1: you know, the rate of return expectations or split? Would
Speaker 1: a split do it?
Speaker 3: Because I know we've been never.
Speaker 1: No, no, no, that wouldn't change. That wouldn't change anything. No, no,
Speaker 1: split adjusted than the price. So you know, if you
Speaker 1: look at our portfolio, is what we're trying to capitalize
Speaker 1: on with a Palenteer for example, are the next stages
Speaker 1: of this AI revolution? What we're seeing in the GPU
Speaker 1: side of things is Nvidia all praise to Jensen one,
Speaker 1: I mean, just unbelievable company execution, vision and so forth.
Speaker 1: And it's not over. It's going to last a long time,
Speaker 1: but there are going to be many other companies benefiting
Speaker 1: from AI. The productivity lift alone is going to be massive,
Speaker 1: the most massive productivity lift in history, we believe. And
Speaker 1: so this AI revolution is going to be broad based
Speaker 1: and is going to benefit a lot of companies. On
Speaker 1: the GPU side, of course, we have AMD as competition,
Speaker 1: but many people do not understand that there's a lot
Speaker 1: of other surreptitious competition evolving out there. Each of the
Speaker 1: hyperscalers is evolving its own chip strategy. You have a
Speaker 1: Tesla that has designed its own chip for AI, chip
Speaker 1: for the specialized, more specialized autonomous driving opportunity, and I
Speaker 1: think you're going to see a lot of companies developing
Speaker 1: more specialized chips. We know that Nvidia, of course, will
Speaker 1: segment the market as well. So we just think that
Speaker 1: a lot of the assumptions for Nvidia, you know that
Speaker 1: this is in Nvidia's market, and it's alone that those
Speaker 1: are changing.
Speaker 2: Well, we're speaking with Kathy Wood if you're just joining us.
Speaker 2: She's the founder and CEO and chief investment officer of
Speaker 2: ARC invest. She joins us from Saint Petersburg, Florida.
Speaker 3: So it's interesting Kathy two to you know, right everybody
Speaker 3: seems to be out there making chips, and it's funny.
Speaker 3: We had a conversation yesterday with Chris Miller, who wrote
Speaker 3: the book Chip Wars, and we talked about TSMC that
Speaker 3: everybody can kind of design what they want, but ultimately,
Speaker 3: right now they've got to come back to TSMC as
Speaker 3: the fabricator to make them. So as you say that,
Speaker 3: I mean you guys, and one of your funds, I
Speaker 3: think late last month was selling shares of TSMC. I
Speaker 3: am curious about then you're thinking around TSMC. There's a
Speaker 3: story today too about TSMC winning more than five billion
Speaker 3: in grants for their US chip plant, so money, you know,
Speaker 3: certainly being devoted to them. Why maybe pull back a
Speaker 3: little bit on TSMC or what is your case for
Speaker 3: TSMC in the long run.
Speaker 1: Well, the case for TSMC is, yes, it is the
Speaker 1: manufacturer of these merchant chips, so very big story there.
Speaker 1: But this is simply a cyclical call and it has
Speaker 1: to do with that word shortage and TSMC. For example,
Speaker 1: Broadcamcom reported last night I listened to that call. In
Speaker 1: the semiconductor solutions part of their business, they were up
Speaker 1: only four percent, AI up thirty five percent, but everything
Speaker 1: else down. So there are are some cyclical phenomenon out there,
Speaker 1: phenomena out there that we think are not they're not
Speaker 1: being integrated into the short term expectations for a number
Speaker 1: of stocks, hey counting including Yeah.
Speaker 2: So, Kathy, I want to move on to Tesla because
Speaker 2: you brought it up a moment ago. You've been a
Speaker 2: long time bull on Tesla. You have been buying shares
Speaker 2: recently after selling them for most of twenty twenty three.
Speaker 2: The stock down about thirty percent so far this year.
Speaker 2: We covered the news this week that ship beens from
Speaker 2: Tesla shang High Factory sank to the lowest and over
Speaker 2: a year in February. The challenges facing the EV industry
Speaker 2: have been well documented. We've talked about those a lot.
Speaker 2: Why do you still like Tesla considering all of the
Speaker 2: challenges in the EV space and also what many critics
Speaker 2: would say are disappointing fundamentals.
Speaker 1: So, yes, you're right. We were selling last year as
Speaker 1: it was in the three hundred to four hundred dollar range.
Speaker 1: It's back to one seventy five. And this is what
Speaker 1: portfolio managers do. We have a five year investment time
Speaker 1: horizon for Tesla and our price expectations from here. I
Speaker 1: mean we see roughly a seven to tenfold increase. I
Speaker 1: know we're in the process of revising our model, so
Speaker 1: I'm not at liberty to give you the new number.
Speaker 2: But would that new number be higher or lower than
Speaker 2: two thousand?
Speaker 1: Well, we're pushing it out a year, and therefore it
Speaker 1: will be higher because the autonomous taxi platform opportunity will
Speaker 1: be in full force. We think and we believe that
Speaker 1: Tesla will get the lion's share of that market here
Speaker 1: in the US, if not elsewhere. Autonomous taxi platforms are
Speaker 1: SaaS models. Tesla's current gross margin is well, it's in
Speaker 1: the teens right now because it's been cutting prices, but
Speaker 1: we think normalzed the ev margin is in the thirty
Speaker 1: percent range. SAS margins are in the eighty percent range.
Speaker 1: Most analysts focusing on the stock have nothing in their
Speaker 1: models or very little for autonomous. Our confidence that autonomous
Speaker 1: is going to happen has increased because it has happened.
Speaker 1: We see way most successful. We see a lot of
Speaker 1: success and commercial success. That is in China. It can
Speaker 1: be done. We think Tesla will launch a national service
Speaker 1: and Tesla this is where AI comes in. Tesla has
Speaker 1: orders of magnitude more data than all of the other
Speaker 1: auto and tech company companies going after this market combined.
Speaker 1: And what's important about that is that it has corner
Speaker 1: cases that nobody else has, rare, rare occurrences on the
Speaker 1: roads that it has recorded, and it is prepared for it,
Speaker 1: but others aren't.
Speaker 2: Kathy, just don't happen. I just want to jump in.
Speaker 2: It's kind of like a running joke with the Tesla
Speaker 2: community because Elon Musk says every year we're going to
Speaker 2: have this autonomous driving technology, and every year since he
Speaker 2: started saying it, what twenty seventeen, twenty eighteen, it has
Speaker 2: failed to materialize. Why are you so confident it's going
Speaker 2: to happen in the near future.
Speaker 1: Well, because it has happened, as I just said, and
Speaker 1: so it's not. It's not if it is when. That's
Speaker 1: the most important reason. Interestingly, in his last conference call,
Speaker 1: Tesla's last conference call, Elon said, yeah, I know I've
Speaker 1: been wrong about it, so I'm not even going to
Speaker 1: make a projection. I actually thought that was good and
Speaker 1: maybe he has a better shot now. And we're looking
Speaker 1: at some of their hiring and their job postings and
Speaker 1: seeing rumblings in different cities that they're starting to get ready.
Speaker 3: Hey, Kathy's something I know I've brought up this with
Speaker 3: you before, but I think back to are you and
Speaker 3: my first interview back in May of twenty fourteen, so almost.
Speaker 1: Ten years ago.
Speaker 3: But you brought up Elon Musk when he wasn't a
Speaker 3: household name or what his company was doing, and you
Speaker 3: likened him to Thomas Edison. And I guess what I
Speaker 3: want to ask you. You know this individual, you talk
Speaker 3: with him, you followed him obviously for a long time.
Speaker 3: Do you ever feel, you know, do you feel that
Speaker 3: way still about him in terms of likening to someone
Speaker 3: like Thomas Edison? And how do you find clarity and
Speaker 3: feel comfort in some of the questionable and controversial things
Speaker 3: that that Elon comments on or that he says.
Speaker 1: Yes, well, we we're focused on the technology and we're
Speaker 1: as is he. He is the inventor of our age.
Speaker 1: And this age is a very special age because the
Speaker 1: five major innovation platforms around which we have centered our
Speaker 1: research are converging, and three of them he is helping
Speaker 1: to converge. This autonomous tech see platform Opportunity is the
Speaker 1: convergence of robotics. Autonomous vehicles are robots, energy storage, they
Speaker 1: will be electric and artificial intelligence, where those are three
Speaker 1: separate s curves feeding each other and should lead to
Speaker 1: super exponential growth. He has understood this idea that technologies
Speaker 1: are going to converge with one another, and that is
Speaker 1: the way he's been thinking his first principles research. Just
Speaker 1: because something's been done one way for a very long time,
Speaker 1: think autos, doesn't mean it's going to remain that way,
Speaker 1: and that's why he's going to win.
Speaker 3: Do you ever feel though that he gets distracted or or.
Speaker 1: Candidate to it. Yeah, he is so laser focused on technology,
Speaker 1: and in the case of Tesla, the electric vehicle side
Speaker 1: that is on automatic pilot. They are just scaling and
Speaker 1: what he is doing is becoming, you know, the manufacturer
Speaker 1: of factories. He's trying to figure out how to automate
Speaker 1: and continue to drive down the costs there. His focus
Speaker 1: is on autonomous now certainly, and of course you can
Speaker 1: say on X he's distracted, but he's really more focused
Speaker 1: on the innovation. How can I go back to the
Speaker 1: future where I started, which was in the payments app
Speaker 1: Space sold to PayPal. How can I turn this into
Speaker 1: not only a payments app, but an everything app? And
Speaker 1: I think he's hard at work doing that in ways
Speaker 1: that we don't know yet.
Speaker 3: We are, of course talking with Kathy Woods. She's the
Speaker 3: ceocio and of course founder of arc invest joining us
Speaker 3: from Florida.
Speaker 2: Hey, Kathy, you're talking about the future of transportation. We
Speaker 2: got to talk about Archer Aviation. One of the most
Speaker 2: read stories today is about the company that you've been
Speaker 2: buying up. It's a developer of air taxis, Archer Aviation.
Speaker 2: Your stake around ten percent across several of your ETFs.
Speaker 2: You're the third largest investor in the name. We should
Speaker 2: note shares down roughly thirty percent so far this year.
Speaker 2: As our own Sam Potter writes today, you are once
Speaker 2: again on the other side of a short call made
Speaker 2: by Grizzly Research. Last time you were in a similar
Speaker 2: spot regarding a different name, Too Simple. You lost a
Speaker 2: lot and eventually sold most of your position. So talk
Speaker 2: to us about why you believe in Archer and does
Speaker 2: it ever worry you to go against the short sellers.
Speaker 1: So our investment process is centered around research and original research.
Speaker 1: I'll start with Too Simple. We sold too simple after
Speaker 1: the CEO who was the technology visionary left and so
Speaker 1: Grizzly got that right. I don't think for the right reasons.
Speaker 1: Although we were in the teeth of a massive bear
Speaker 1: market as well. If that CEO had not left, I
Speaker 1: don't think we would have sold that stock. In the
Speaker 1: case of Archer, we have a high degree of confidence
Speaker 1: in Archer. One thing to understand about ARC is we
Speaker 1: are the closest ARC is the closest you'll find to
Speaker 1: a venture capital company in the public equity markets, and
Speaker 1: we tread where others in the traditional asset management world
Speaker 1: will not go, at least on the public side, when
Speaker 1: we see a real opportunity. As we're doing our work
Speaker 1: on autonomous vehicles, we concluded that the cost is going
Speaker 1: to drop so much that roads are going to become
Speaker 1: very congested in the future, much more congested if you
Speaker 1: can imagine New York City. And so we then started
Speaker 1: doing work about transportation in the skies. Is it possible, Yes,
Speaker 1: it is possible. The FAA is the gating factor from
Speaker 1: a regulatory point of view. There are two companies the
Speaker 1: FAA is working very closely with, and I think because
Speaker 1: of successes elsewhere in the world. Other companies are having
Speaker 1: success where regulators have not been as strict. I think
Speaker 1: there's been a little more pressure on the FAA to
Speaker 1: pay close attention here, and the two are Archer and Jobi.
Speaker 1: Our confidence went up when Boeing, which was suing it
Speaker 1: for patent infringement, settled the case and actually took an
Speaker 1: ownership position in Archers, as has Stilantis and United Airlines.
Speaker 1: So three very deep pocketed partners who are also trying
Speaker 1: to figure out the future of transportation. And we know
Speaker 1: that they're on their way. Both Joby and Archer two
Speaker 1: FAA certification. Seems like the process is in motion and
Speaker 1: we haven't had a hiccup. And it has an MoU
Speaker 1: with Abu Dhabi to launch an air taxi service in
Speaker 1: twenty six and pending regulation, it has an MoU with
Speaker 1: inter Globe to launch an air taxi service in India.
Speaker 1: Both of those have been much better from a regulatory
Speaker 1: point of view.
Speaker 2: But how big of a concern is it to you
Speaker 2: that regulators here in the US could drag their feet.
Speaker 2: We did speak with an airline executive recently who is
Speaker 2: concerned that the FA is moving slower than other regulatory
Speaker 2: bodies when it comes to this type of technology.
Speaker 1: Yes, and that is why we pay a lot of
Speaker 1: attention to regulatory arbitrage. We've seen innovation move abroad to
Speaker 1: other countries, even Amazon. You know, the FAA wouldn't let
Speaker 1: Amazon fly its drones ninth generation nearly ten years ago
Speaker 1: on its own property outside, so it went to India
Speaker 1: and elsewhere. I think the pressures on the FAA now.
Speaker 1: And I also think that the bear market of twenty
Speaker 1: one and twenty two eliminate a lot of other competition
Speaker 1: that was brewing just the funding markets were closed, and
Speaker 1: so I think this market is much more is that
Speaker 1: both Jobie and Archer are going to have much more
Speaker 1: share than otherwise would have been the case. So we're
Speaker 1: pretty excited about the possibilities here.
Speaker 3: Hey, Kathy, as you said, you know, one of the
Speaker 3: things about ARC it certainly and it's the DNA, is
Speaker 3: that you go places and take positions that other people
Speaker 3: maybe don't do. And one of the things though that
Speaker 3: increasingly I feel like the financial establishment again is interested
Speaker 3: very much so is in crypto and I want to
Speaker 3: talk about your spot bitcoin ETF if I may the
Speaker 3: RC twenty one shares Bitcoin ETF.
Speaker 1: What can you tell us.
Speaker 3: About institutional interest in it? Is there or is it
Speaker 3: mostly the funds that are going into it are mostly
Speaker 3: from the retail side.
Speaker 1: Well, we are. We know there's institutional interest because we're
Speaker 1: talking to a lot of institutions, state treasurers and public
Speaker 1: pension funds. And why is this Because they're trying to
Speaker 1: figure out if this truly is a new asset class,
Speaker 1: and if it is, they must have a point of
Speaker 1: view as a fiduciary if there's a new asset class
Speaker 1: which is uncorrelated or shows very low correlation in terms
Speaker 1: of returns relative to other asset classes, than what an
Speaker 1: asset allocator does is it will take a position to
Speaker 1: increase returns per unit of risk. That's what happens with
Speaker 1: low correlation of returns. So definitely, now are they moving
Speaker 1: whole hog? Not yet. Nor are the big wirehouses like
Speaker 1: the Morgan, Stanleys and Ubs as wells Fargo, marri Lynch
Speaker 1: b of A. They are all waiting to see who
Speaker 1: are the winners in terms of the ETFs because they
Speaker 1: do not want to commit to an ETF that will
Speaker 1: close down and makes sense and right so, and they
Speaker 1: they're going to give it from what we're hearing three
Speaker 1: to six to nine months, so everything the net inflows
Speaker 1: that we've seen and are away from those two spaces.
Speaker 1: Really it's part of it is our client base switching
Speaker 1: from GPTC into and other client bases into the ETFs,
Speaker 1: which are much lower.
Speaker 3: Fee, all right, But I do want to also then
Speaker 3: go to the next level, and that is an ether
Speaker 3: ETF being approved maybe in May. Are you optimistic that
Speaker 3: it's going to happen by that made deadline or what
Speaker 3: obstacles might be still out there that it won't make
Speaker 3: that deadline.
Speaker 1: Yeah, So the biggest obstacle is staking, and I don't
Speaker 1: think the regulators will allow staking in this first round
Speaker 1: if they allow the first round at all. Now, we
Speaker 1: and one other firm are are we'll see our final
Speaker 1: deadline in May if they reject. If they reject our filings,
Speaker 1: then we'll have to refile. But my guess is my
Speaker 1: guess is they will move more now to a first come,
Speaker 1: first serve when this next round goes through. So if
Speaker 1: it's May, it'll be without staking. If it's later, there's
Speaker 1: a better chance for staking. If it's in I would
Speaker 1: say twenty twenty five because I think legislators and legislation
Speaker 1: is starting to get involved here and taking it away
Speaker 1: from simply the regulators.
Speaker 3: Hey, Kathy, I don't want to leave without asking you.
Speaker 3: It is International Women's Day, and I think about your path.
Speaker 3: We Tim and I have been talking a lot to
Speaker 3: many women who have made their way in male dominated fields,
Speaker 3: and I'm just curious and how you think about your
Speaker 3: trajectory from where you started and what you've achieved. You
Speaker 3: started two firms or have co found one and started
Speaker 3: your own firm, how you think about that path and
Speaker 3: what is top of mind in terms of those other
Speaker 3: individuals and other women that are out there that are
Speaker 3: maybe trying to do the same.
Speaker 1: Yes, well, I think the most important thing in early
Speaker 1: years is to make your own bosses look brilliant because
Speaker 1: younger people, younger people coming into the business know so
Speaker 1: much more about technology and where the world is going
Speaker 1: almost innately then shall I say, more seasoned investors. So
Speaker 1: just make your bosses look brilliant and educate them, and
Speaker 1: you know, generate enthusiasm, enthusiasm, excitement, energy around around ideas
Speaker 1: and make sure you have good mentors if they're not
Speaker 1: giving you a good shot after you've made them look brilliant,
Speaker 1: you know, time to So that's one thing as far
Speaker 1: as starting a business, I would say, make sure there's
Speaker 1: an unmet need. In our case. In the case of ARC,
Speaker 1: what we saw was the traditional world going more passive
Speaker 1: or benchmark sensitive, when we saw an explosion of innovation
Speaker 1: thanks to the five major innovation platforms around which we
Speaker 1: have centered our research and investing, and so I said
Speaker 1: to myself, you know, someone has to do this, and
Speaker 1: so we went off, and honestly, I think most people
Speaker 1: thought we would fail for a couple of reasons. One,
Speaker 1: we put a truly active, fully transparent equity portfolio inside
Speaker 1: an ETF wrapper, and that had not been done at
Speaker 1: scale at all, and no one it was a passive
Speaker 1: world that we had entered. And then the second was
Speaker 1: we're benchmark agnostic. You can put us against any benchmark,
Speaker 1: and you're going to have to give us some time
Speaker 1: after the massive interest rate shock that we went through
Speaker 1: and now we're on the other side and and you know,
Speaker 1: performing better as a result over the last year. But
Speaker 1: over time, these innovations are going to transform the world
Speaker 1: and create massive wealth with AI as back to back
Speaker 1: to that topic as the main catalyst, so we could
Speaker 1: be more optimistic about innovation.
Speaker 3: All right, kind of leave it there, Kathy, as always
Speaker 3: so appreciate all the time that you do give us.
Speaker 3: Have a great weekend, Kathy would of course the founder, CEO,
Speaker 3: and CIO of ARC Invest joining us from Florida. Kathy,
Speaker 3: thank you.