WEBVTT - Halftime Report: A Roundtable Discussion 0:00:05.760 --> 0:00:08.000 Welken to trillions. I'm Joel Weber and I am Eric 0:00:08.000 --> 0:00:16.680 bel Tunis. Eric. I realized recently that, um, you know, 0:00:16.680 --> 0:00:19.799 I've lost sense of time. No no sense of time anymore. 0:00:19.920 --> 0:00:22.960 But we're basically halfway through the year and it's been 0:00:22.960 --> 0:00:25.759 a weird year. It felt appropriate that we should do 0:00:25.760 --> 0:00:29.040 a halftime report. Yeah, I mean, so much has happened. 0:00:29.080 --> 0:00:33.120 I I almost feel like time has slowed down, like 0:00:33.120 --> 0:00:35.760 like two or three years has been stuffed into six months. 0:00:36.240 --> 0:00:38.800 Even the sell off people were saying that it was 0:00:38.840 --> 0:00:41.680 like two thousand eight squeezed into six weeks. And I 0:00:41.720 --> 0:00:44.199 think the recovery was, like, you know, the same deal. 0:00:44.280 --> 0:00:46.879 Everything just seems to be so condensed, and with the 0:00:46.920 --> 0:00:50.600 lockdown throw on top of that, I think everybody's very disoriented. 0:00:50.680 --> 0:00:54.480 But um, certainly this first half was a lot of 0:00:54.560 --> 0:00:57.960 et F storylines have have developed a lot to chew on, 0:00:58.800 --> 0:01:01.520 so helpe less make sense of what's been going on. 0:01:01.680 --> 0:01:05.880 We figured we'd lean into Bloomberg Intelligence and your analysts, Eric, 0:01:06.160 --> 0:01:09.920 So we've got your team who's basically had some observations 0:01:10.000 --> 0:01:12.679 both for the first half and then kind of looking 0:01:12.680 --> 0:01:14.680 ahead for the second half. So who's all joining us? 0:01:15.720 --> 0:01:18.600 So we have from London or I think he might 0:01:18.640 --> 0:01:22.880 be in Greece already, but uh, Athanacio, Sarah Fagus otherwise 0:01:22.920 --> 0:01:26.520 known as Tom Um, James Seffert, who is in Summit, 0:01:26.520 --> 0:01:29.080 New Jersey, and Morgan Barner who is in d C 0:01:29.360 --> 0:01:32.240 but was just in California. We're all over the place, 0:01:32.280 --> 0:01:35.080 but you know we are constantly in Twitter, d m 0:01:35.200 --> 0:01:36.960 s and I v s talking about these issues all 0:01:36.959 --> 0:01:39.800 the time. So basically I asked the Meats to bring 0:01:40.120 --> 0:01:43.000 the big issue they've thought was the big deal from 0:01:43.000 --> 0:01:44.880 the first half, and also maybe something to watching in 0:01:44.920 --> 0:01:46.840 the second half. So um, there's gonna be a lot 0:01:46.840 --> 0:01:49.120 to chew on today just for people listening. You know, 0:01:49.120 --> 0:01:51.080 we have all four of us, and there's some vacations 0:01:51.080 --> 0:01:53.440 and whatnots coming up. So we recorded this right in 0:01:53.480 --> 0:01:56.360 the middle of June, so we're gonna go over some numbers. 0:01:56.600 --> 0:01:59.840 They could be a touch stale, but I think directionally 0:02:00.080 --> 0:02:06.240 think it's going to be exactly the same this time. 0:02:06.240 --> 0:02:13.640 On Trillions the E t F halftime Report, Morgan, Tom James, 0:02:13.639 --> 0:02:17.120 welcome to Trillions again. Hey guys, good to see you 0:02:17.120 --> 0:02:22.400 guys in this zoom. Uh this is my closet, don't 0:02:22.440 --> 0:02:24.920 you guys think it has a blared witch vibe in there. 0:02:25.840 --> 0:02:28.280 I do, because all you see is the late kind 0:02:28.320 --> 0:02:30.000 of like kind of up in his face, and he's 0:02:30.080 --> 0:02:33.480 just looks like he is scared and like hiding from 0:02:33.520 --> 0:02:35.720 something Like it's just feel like a horror movie going on. 0:02:36.000 --> 0:02:39.120 If you see me looking into the corner, please please 0:02:39.160 --> 0:02:41.560 call for help. Um okay, James, I want to start 0:02:41.600 --> 0:02:44.360 with you first half. What do you want to talk about? 0:02:44.400 --> 0:02:47.639 What was your big takeaway? I mean, the big takeaway 0:02:47.720 --> 0:02:49.919 is the FED jumping into the e t F market 0:02:49.919 --> 0:02:53.079 and buying ets. So they basically stepped in and said 0:02:53.120 --> 0:02:55.519 they were going to be buying fixed income e T 0:02:55.840 --> 0:02:59.480 s UM. We call it kitchen sinc Day in Marche. Basically, 0:02:59.560 --> 0:03:01.360 jerol Al just said he was going to be buying 0:03:01.400 --> 0:03:04.000 things left and right. U and E T s were 0:03:04.000 --> 0:03:07.640 added to that description. As of June tenth, we know 0:03:07.840 --> 0:03:10.720 that they have somewhere around five point three billion in 0:03:10.760 --> 0:03:13.760 ETS and we are five point five billion in e 0:03:13.840 --> 0:03:17.520 t F s UM. They're all fixed income, mostly investment grade, 0:03:17.520 --> 0:03:20.959 but there's some high yield ets in there, and we're 0:03:21.000 --> 0:03:24.520 also obviously watching to see which ets are specifically buying 0:03:24.520 --> 0:03:26.840 and they're going to re release that report um on 0:03:26.880 --> 0:03:29.680 a monthly basis, so we have the most recent data 0:03:29.720 --> 0:03:32.919 as of May nine. We won't know exactly when the 0:03:33.000 --> 0:03:34.880 June report will come out, but that they tell us 0:03:34.880 --> 0:03:37.160 basically everything you could ever want to know with what 0:03:37.240 --> 0:03:38.840 the FED is doing in the e t F market. 0:03:39.200 --> 0:03:40.760 A lot of people when they hear the FITS buying 0:03:40.760 --> 0:03:42.680 e t F they think, oh, are we Japan now? 0:03:43.320 --> 0:03:46.160 The Bank of Japan of the e t F sets 0:03:46.160 --> 0:03:50.960 there just for perspective, that five billion would be point 0:03:51.040 --> 0:03:52.600 three percent of all e t f s, but it 0:03:52.680 --> 0:03:55.560 is two percent of corporate bondy tfs, and it's about 0:03:55.560 --> 0:03:58.520 ten percent of all the flows into corporate bondyts this year. 0:03:58.560 --> 0:04:01.440 So in that niche, the FED is becoming a bigger player. 0:04:01.440 --> 0:04:02.760 And I think if you looked at the top ten 0:04:02.800 --> 0:04:05.080 holdings of like an l q D or h y G, 0:04:05.560 --> 0:04:07.839 the FED would be on the cusp. It might be, 0:04:07.920 --> 0:04:09.960 you know, flirting with the top ten holder of these 0:04:09.960 --> 0:04:12.720 funds already and there's still you know, some time to go. 0:04:12.880 --> 0:04:15.760 So one of the observation I had about what James 0:04:15.840 --> 0:04:17.960 is talking about is the portfolio that the e t 0:04:18.120 --> 0:04:22.120 F s the FED uses was really advanced, in my opinion. Normally, 0:04:22.120 --> 0:04:24.479 when an institution like a Yale or a I don't know, 0:04:24.520 --> 0:04:27.120 New Jersey pension uses e t F, they use like 0:04:27.160 --> 0:04:30.279 one or two liquid ones, you know, for liquidity purposes. 0:04:30.279 --> 0:04:32.760 They're afraid to swim away from those big liquid ones. 0:04:32.839 --> 0:04:35.600 And the FED had what thirteen to fifteen e t 0:04:35.760 --> 0:04:38.240 F some most people would never heard of, probably half 0:04:38.240 --> 0:04:40.440 the list, And I think that really speaks to black 0:04:40.560 --> 0:04:42.920 Rock holding their hand. I mean, they are definitely working 0:04:42.920 --> 0:04:44.720 with someone who knows e t F and so their 0:04:44.760 --> 0:04:46.960 portfolio to me looks a lot more like an e 0:04:47.040 --> 0:04:50.240 t F strategist than it does like an institution. Yeah, 0:04:50.240 --> 0:04:52.240 and the other thing to highlight here is, as I mentioned, 0:04:52.279 --> 0:04:54.839 they're given there being very transparent here, Like we knew 0:04:54.880 --> 0:04:56.440 they were going to be so much transparent, but when 0:04:56.440 --> 0:04:58.119 they released this report at the end of the month 0:04:58.640 --> 0:05:02.039 of May, we're at that. Maybe they were vocal about this, 0:05:02.080 --> 0:05:03.360 but I didn't think they were going to be as 0:05:03.400 --> 0:05:05.640 transparent as they are. We can see the trade level data, 0:05:05.760 --> 0:05:07.560 what time they bought, these e t F s, who 0:05:07.600 --> 0:05:09.960 bought it, all these different things, so they're telling you 0:05:10.040 --> 0:05:12.719 everything that happened, and it's you're looking back and it's 0:05:12.760 --> 0:05:15.320 not live, but you can see exactly what they're doing 0:05:15.360 --> 0:05:18.640 in the marketplace when it's happened, after it's happened. Okay, Eric, 0:05:18.920 --> 0:05:22.640 You've got a couple of topics from first half that 0:05:22.880 --> 0:05:25.000 I think we we've talked about a couple of times, 0:05:25.520 --> 0:05:27.839 but I just feel like it is the zeitgeist of 0:05:27.880 --> 0:05:29.360 the of the year so far. Do you want to 0:05:29.360 --> 0:05:32.960 talk about them? Yeah, I think I'm becoming associated with 0:05:33.000 --> 0:05:36.080 the E t F jets at this point. Um, I've 0:05:36.360 --> 0:05:39.600 been obsessed, even addicted, but I admitted, so at least 0:05:39.640 --> 0:05:42.760 there's that, um that you have a problem. Yeah, I 0:05:42.800 --> 0:05:45.400 do have a problem. Um, this E t F Jets. 0:05:45.480 --> 0:05:48.159 It's just really I don't know if it's lack of sports, 0:05:48.160 --> 0:05:51.479 but it's really just captured my attention at big time 0:05:51.520 --> 0:05:55.000 because you know, when we look at flows into Vanguard 0:05:55.000 --> 0:05:56.919 and black Rock, it's you know, they take the hoover 0:05:57.000 --> 0:05:59.960 and money like giant vacuum cleaners. So anytime a small 0:06:00.080 --> 0:06:02.520 E t F is able to just sort of go 0:06:02.640 --> 0:06:05.200 from obscurity into the big time within a couple of 0:06:05.200 --> 0:06:09.599 weeks or months, it's fascinating. It's it's a rare and 0:06:09.640 --> 0:06:12.760 in Jets's case. Let me give you the numbers here. Um. 0:06:12.760 --> 0:06:15.280 What stuck out to me was the flow streak. It 0:06:15.400 --> 0:06:18.880 took in money seventy straight days before finally seeing an outflow. 0:06:19.480 --> 0:06:23.080 Seventy days of straight inflows is absurd, especially for an 0:06:23.080 --> 0:06:24.520 e t F that had thirty million dollars at the 0:06:24.520 --> 0:06:27.880 beginning of it. I looked at the longest streaks of 0:06:27.920 --> 0:06:30.520 inflows of all e t f s, and Jets would 0:06:30.560 --> 0:06:33.480 write number three at seventy days to Vanguard B and 0:06:33.520 --> 0:06:35.000 d X and v W. Oh, we're number one and 0:06:35.080 --> 0:06:37.560 two with eighty five and eighty three days. But the 0:06:37.600 --> 0:06:41.200 whole top ten was Vanguard except for Jets. That is 0:06:41.240 --> 0:06:45.279 how unusual it is. UM. I also think it's interesting 0:06:45.320 --> 0:06:49.400 that Jets was so bought up after being so bad. Normally, 0:06:49.440 --> 0:06:51.960 when you see retail sort of pile into a theme 0:06:51.960 --> 0:06:54.840 et F, it's because it's having its shiny object moment, 0:06:54.839 --> 0:06:57.400 it's having a good performance run. This was the opposite. 0:06:57.480 --> 0:06:59.400 This was people buying something beat up. I mean, the 0:07:00.240 --> 0:07:04.080 evaluation on the airline stocks was really low. It also 0:07:04.160 --> 0:07:08.080 speaks to this whole robin Hood situation that everybody's obsessed 0:07:08.120 --> 0:07:11.520 with robin Hood being like the face of the day 0:07:11.520 --> 0:07:14.760 trading retail investor who's board at home with no sports, 0:07:15.280 --> 0:07:17.440 and I think there's a case we made. Although you know, 0:07:17.480 --> 0:07:20.760 Morgan ran the numbers and they don't have a lot 0:07:20.800 --> 0:07:23.320 of assets. If you look at Jets, we would estimate 0:07:23.360 --> 0:07:26.600 maybe five to seven percent of Jets is robin Hood, 0:07:26.960 --> 0:07:30.200 but they represent other people on other platforms, so you 0:07:30.320 --> 0:07:33.640 have a bigger robin Hood effect. And that's definitely bigger 0:07:33.640 --> 0:07:36.360 than that seven percent, so they're definitely buying it. You know, 0:07:36.440 --> 0:07:38.480 it's retail because of how small the trades and the 0:07:38.480 --> 0:07:42.120 flows are UM. And then this retail thing is interesting 0:07:42.160 --> 0:07:45.720 because it basically puts all these small investors on the 0:07:45.760 --> 0:07:48.920 opposite side of a Buffet trade. You know, Buffet sold 0:07:49.040 --> 0:07:53.200 his airline stocks on early May. Since then Jets is 0:07:53.320 --> 0:07:56.720 up up big. As of today, it's about thirty since 0:07:56.720 --> 0:07:59.760 he sold UM, but it had a rough week last week, 0:07:59.800 --> 0:08:02.040 so we'll see where this goes. I also think this 0:08:02.080 --> 0:08:05.720 brings into the fact that Dave Portnoy from Barstool Sports 0:08:06.360 --> 0:08:09.560 has been really into the airlines, and we looked he 0:08:09.640 --> 0:08:11.720 put out this sort of hype video that was to 0:08:11.760 --> 0:08:14.480 an a C d C song. Since that video came 0:08:14.520 --> 0:08:18.360 out Jets. His volume quadrupled and hasn't looked back. So 0:08:18.400 --> 0:08:21.400 I do think with Robin Hood Dave Portnoy, there's there's Jets, 0:08:21.440 --> 0:08:24.640 sits in the middle of a bunch of major trends 0:08:24.720 --> 0:08:26.880 right now. So it's it's bigger than just this little 0:08:27.120 --> 0:08:29.800 engine that could them E t F. It's really to 0:08:29.880 --> 0:08:33.680 me a huge story and as well a proxy for 0:08:33.720 --> 0:08:36.160 how fast the economy opens up. A lot of these 0:08:36.160 --> 0:08:39.720 smaller traders are betting against the expert class and saying no, 0:08:39.840 --> 0:08:42.080 people are going to start flying and moving around faster 0:08:42.160 --> 0:08:44.679 than you're telling us. And so again there's so much 0:08:44.720 --> 0:08:49.559 at stake here and it's just totterally fascinating. Okay, Morgan, 0:08:50.040 --> 0:08:53.160 you're next on my list. First half big story, what 0:08:53.280 --> 0:08:55.800 was yours? Yeah, not to be confused with jets, but 0:08:56.440 --> 0:08:58.079 we cover the launch of a new E t F 0:08:58.200 --> 0:09:00.679 bets b e t Z, which is a round hill 0:09:00.720 --> 0:09:03.840 sports betting and I gaming e t F. This actually 0:09:04.080 --> 0:09:07.439 was a launch that we predicted on trillions back in 0:09:07.720 --> 0:09:17.040 I think last not we congratulations. I was hoping that 0:09:17.080 --> 0:09:19.000 we would see a sports betting et F, in part 0:09:19.040 --> 0:09:22.360 because a lot of these companies haven't been public. We 0:09:22.440 --> 0:09:27.640 just saw DraftKings enter the public markets, Flutter Entertainment owned 0:09:28.000 --> 0:09:31.520 fan duels. So there's now finally enough sort of global 0:09:31.559 --> 0:09:34.360 exposure in the public market public markets to see and 0:09:34.400 --> 0:09:37.959 benefit from UM the legalization of sports betting in the US. 0:09:38.120 --> 0:09:40.280 A lot of this is going to be mobile driven, 0:09:40.640 --> 0:09:43.600 tech forward. But launched the et F was really historic 0:09:43.640 --> 0:09:45.800 in and of itself, just given the volume that it 0:09:45.840 --> 0:09:47.800 traded in the first couple of days after launching, I mean, 0:09:47.800 --> 0:09:51.120 it was pre remarkable. Seventeen million trading, seventeen million the 0:09:51.120 --> 0:09:53.000 first day, I think, fifty million second day. I mean, 0:09:53.280 --> 0:09:56.000 just kind of a huge launch. And you know, hearkening 0:09:56.040 --> 0:09:58.280 to what Eric just said, a lot of that breadth 0:09:58.640 --> 0:10:02.000 in traded volume think came from, you know, the fact 0:10:02.000 --> 0:10:04.240 that the fund you know, in in around a week 0:10:04.280 --> 0:10:07.240 of training, has over eighteen thousand holders on robin hood, 0:10:07.280 --> 0:10:10.400 which is just pretty remarkable but not shocking when you 0:10:10.440 --> 0:10:13.439 look at UM. The highest held names in robin hood 0:10:13.840 --> 0:10:16.520 include you know, some of bets is top holdings like 0:10:16.600 --> 0:10:19.800 DraftKings and pen So this is already an audience on 0:10:19.880 --> 0:10:24.120 robin Hood that is interested and familiar with UH sports 0:10:24.120 --> 0:10:27.800 betting companies and names. They may even some some may 0:10:27.840 --> 0:10:30.560 even say they're betting on stocks as well. So this 0:10:30.640 --> 0:10:32.920 is a really good audience for the for the e 0:10:33.000 --> 0:10:35.840 t F BETS and the way the ETF is designed, 0:10:35.840 --> 0:10:39.199 I mean we're seeing give you know, it's harder to 0:10:39.280 --> 0:10:41.280 bet on individual names. The way the e t F 0:10:41.360 --> 0:10:44.920 is set up, it's sort of dynamically rebounces, got more 0:10:44.960 --> 0:10:47.920 global names that some US investors may not be familiar with. 0:10:48.880 --> 0:10:50.160 So the fact the fact that the e t F 0:10:50.200 --> 0:10:54.000 has already taken in seventy million also connects with just 0:10:54.040 --> 0:10:57.000 the up tips we've seen in thematic fund flows, i 0:10:57.000 --> 0:11:01.320 mean eight percent over last year. So thematic products overall 0:11:01.320 --> 0:11:06.600 our seeing traction and BETS echoes back and to bring 0:11:06.600 --> 0:11:09.360 this to a bigger perspective here also the distribution. You know, 0:11:09.400 --> 0:11:11.040 if you're going to launch an e t F right now, 0:11:11.240 --> 0:11:13.640 you kind of have to peel to this. Like older 0:11:13.640 --> 0:11:16.800 advisor with who has a lot of rich clients, you know, 0:11:16.840 --> 0:11:18.079 they're not going to buy an e t F on 0:11:18.160 --> 0:11:21.160 day one. They tend to stay away from theme ETFs 0:11:21.200 --> 0:11:23.480 for the most part. They don't like new ones with 0:11:23.559 --> 0:11:27.320 low volume. It's interesting how BETS was able to bypass 0:11:27.360 --> 0:11:29.800 that advisor and go right to the do it yourself 0:11:30.000 --> 0:11:34.439 smaller retail investor, and that might be a growing channel 0:11:35.240 --> 0:11:38.760 of for issuers to just go right there. Um. We also, 0:11:38.880 --> 0:11:43.080 I Morgan sent me on a TikTok rabbit hole and 0:11:43.120 --> 0:11:45.679 I looked up E t F and bets. Even though 0:11:45.679 --> 0:11:47.640 it just came out, there was two TikTok videos from 0:11:47.679 --> 0:11:50.600 people on there. So I think it's also this interesting 0:11:51.520 --> 0:11:55.000 look at younger investors who's seemingly doing their own research 0:11:55.600 --> 0:11:57.679 and you know, are willing to buy an e t 0:11:57.800 --> 0:12:00.520 F that's new and from an unknown, relatively unknown issue 0:12:00.520 --> 0:12:03.000 where it's interesting. Well, that speaks to the moment just 0:12:03.240 --> 0:12:06.280 going direct to consumer during the middle of the pandemic. 0:12:06.320 --> 0:12:07.880 I mean, that's sort of cut out, cut out all 0:12:07.880 --> 0:12:09.960 the middleman, and just go straight to your people. I 0:12:10.000 --> 0:12:12.160 also think there's a bigger story of play here as well, 0:12:12.200 --> 0:12:13.559 because I have a lot of friends I'm in my 0:12:13.640 --> 0:12:15.679 late twenties who like to bet on sports and stuff 0:12:15.720 --> 0:12:16.719 like that, and they have a lot of them have 0:12:16.800 --> 0:12:18.960 picked up trading on robin Hood. As we kind of 0:12:19.000 --> 0:12:20.880 talked about, there's a lot of people in robin Hood 0:12:21.120 --> 0:12:23.240 and I've had friends who've never talked to about investing 0:12:23.280 --> 0:12:25.040 who reached out to me about this specific e t 0:12:25.240 --> 0:12:29.119 F or gaming e t F video gaming ets specifically 0:12:29.120 --> 0:12:31.200 and things like that. So there's definitely a lot of 0:12:31.200 --> 0:12:33.800 interest coming from as you mentioned, possibly the Barstool Sports 0:12:33.800 --> 0:12:37.120 founder Portnoy, a few different things, um, where people are 0:12:37.200 --> 0:12:39.520 very interested in this specific et F and getting more 0:12:39.559 --> 0:12:43.679 into trading. Sarah Fagus, You're in You're in London still, 0:12:43.800 --> 0:12:47.280 although it looks like Greece. Tell us about your big 0:12:47.280 --> 0:12:50.600 story from the first half. Yeah, sure, um, And if 0:12:50.600 --> 0:12:52.840 I could just add something really quick from the European 0:12:52.880 --> 0:12:55.160 perspective on the thematic stuff, I promise I won't say 0:12:55.200 --> 0:12:59.120 you SIT's, but um, if the thematic stuff is really 0:12:59.120 --> 0:13:01.440 interesting in Europe because it's attracting a lot of retail 0:13:01.480 --> 0:13:04.679 investors too. It's very much an institutional market here and 0:13:04.760 --> 0:13:07.280 actually you're seeing a lot of buying on some of 0:13:07.320 --> 0:13:10.320 these thematic ets, so you're actually seeing a new sort 0:13:10.320 --> 0:13:13.000 of class of investors coming into the market through thematics. 0:13:13.040 --> 0:13:15.439 But that's not what I wanted to talk about, and 0:13:15.520 --> 0:13:18.040 what I want to look at is active, non transparent ets. 0:13:18.120 --> 0:13:20.640 And normally this probably would have been like one of 0:13:20.679 --> 0:13:23.160 the biggest stories of the year, like leading up in 0:13:23.160 --> 0:13:25.360 the beginning of the year, but just given what happened 0:13:25.360 --> 0:13:27.320 in the market, this sort of kind of got put 0:13:27.480 --> 0:13:29.840 to the to the back burner. But there was a 0:13:29.840 --> 0:13:33.400 couple of ets that launched UH right after the sell 0:13:33.440 --> 0:13:36.319 off in March, and now we're that was by American Century. 0:13:36.440 --> 0:13:39.319 Now we're seeing more firm sort of joined in fidelity, 0:13:39.440 --> 0:13:42.719 like Mason Um. And so I think there's two things 0:13:42.800 --> 0:13:45.080 that's interesting about this is one of the timing of 0:13:45.080 --> 0:13:47.080 it UM. They sort of avoided some of the big 0:13:47.080 --> 0:13:49.880 down draft in March, so their performance out of the 0:13:49.880 --> 0:13:53.400 gate is really good. The the American Century Growth Fund 0:13:53.559 --> 0:13:56.400 is already up thirty percent UM since it launched, so 0:13:56.880 --> 0:13:59.320 it's really imperative for them to have good performance out 0:13:59.320 --> 0:14:01.760 of the gate. UH. And because I think there's gonna 0:14:01.760 --> 0:14:03.680 be a lot of scrutiny on these products. They really 0:14:03.679 --> 0:14:05.960 have to show that, Okay, you went through all this 0:14:06.040 --> 0:14:08.640 effort to hide your holdings and do all this. Now 0:14:08.679 --> 0:14:11.640 you actually have to show that there's value to the structure, right. 0:14:11.640 --> 0:14:13.200 So I think there's gonna be a lot of pressure 0:14:13.240 --> 0:14:15.800 on these products to perform really well, and they're off 0:14:16.080 --> 0:14:18.840 actually to a pretty good start. But I actually think 0:14:18.920 --> 0:14:21.640 what's happening. So not only against the going up against 0:14:21.640 --> 0:14:25.400 regular ETFs, they're going against active ETFs that are fully transparent, 0:14:25.440 --> 0:14:28.840 like cathy Woods funds right here, and they're actually doing 0:14:28.880 --> 0:14:30.680 really well. Little Kathy at one point had the best 0:14:30.680 --> 0:14:34.160 performing ETF out there. And so now I actually think 0:14:34.200 --> 0:14:37.440 that presents a problem for these active, non transparent funds 0:14:37.480 --> 0:14:40.200 because they're you're looking at a fully transparent ETF out 0:14:40.200 --> 0:14:42.880 there that's doing really well. It's almost like, well, why 0:14:42.880 --> 0:14:44.800 do I need to hide my holdings. You're having one 0:14:44.840 --> 0:14:47.200 that's that's doing really well. So I think that if 0:14:47.320 --> 0:14:50.520 Cathy's funds continue to do really well, so I think 0:14:50.520 --> 0:14:52.480 it's gonna provide it's gonna be a headwind for some 0:14:52.520 --> 0:14:54.280 of these funds. But um, I think we're going to 0:14:54.320 --> 0:14:56.320 see more and more now with the market sort of 0:14:56.320 --> 0:14:59.000 stable coming into the market. So it's definitely gonna be 0:14:59.000 --> 0:15:02.840 something that we've watch and I'll continue to watch. And 0:15:03.480 --> 0:15:05.400 you know, I think they're stuck in the dead zone. 0:15:05.480 --> 0:15:07.360 I think you've seen them come out between forty five 0:15:07.400 --> 0:15:10.360 and sixty five basis points as a fee, and I 0:15:10.400 --> 0:15:12.960 don't doesn't look like any of them are taking big swings. 0:15:13.000 --> 0:15:15.680 So unless you're dirt cheap or going to create a 0:15:15.680 --> 0:15:18.840 shiny object moment by being like a Cathy would I 0:15:18.920 --> 0:15:21.960 just don't know. Uh, it's it's it's gonna be a 0:15:21.960 --> 0:15:24.120 tough road in my opinion. Although it looked like American 0:15:24.160 --> 0:15:26.480 Century put its own money in there. They have like 0:15:26.520 --> 0:15:29.000 two million now in those So if they're able to 0:15:29.040 --> 0:15:32.520 move money from the mutual funds over, uh, they could 0:15:32.560 --> 0:15:36.880 save assets potentially for themselves. But I don't know about grassroots. Yeah, 0:15:36.880 --> 0:15:39.840 I agree, Um, I think I'd probably take the under 0:15:39.920 --> 0:15:42.080 on it. It It is actually seeing like real demand from 0:15:42.120 --> 0:15:45.240 clients outside of just money being moved from from the 0:15:45.280 --> 0:15:49.080 firms themselves in it. So Tom, when you think about 0:15:49.080 --> 0:15:51.560 this topic, what do you what are you most looking 0:15:51.640 --> 0:15:55.600 for in the second half. Um, for this, it's gonna 0:15:55.640 --> 0:15:58.080 be they have to really prove their value prop Like 0:15:58.240 --> 0:16:01.160 Eric said, they're more expense if they're going through all 0:16:01.200 --> 0:16:04.360 this to hide their holdings. Um, they really have to. 0:16:04.640 --> 0:16:06.520 I mean it's gonna it's gonna they're gonna really have 0:16:06.560 --> 0:16:09.120 to show that we are by doing this where we're 0:16:09.160 --> 0:16:11.280 adding more value than even the e T s that 0:16:11.280 --> 0:16:13.360 are out on the market. Because I think there there's 0:16:13.360 --> 0:16:15.240 just a lot of hurdles that need to get off 0:16:15.320 --> 0:16:17.680 of them, and I'd be interesting to see who else 0:16:18.080 --> 0:16:20.240 comes into the market. So you have American Century, They're 0:16:20.240 --> 0:16:23.280 obviously a big name. Fidelity is a huge name. Um, 0:16:23.440 --> 0:16:26.480 so I'd be willing to see who else gets gets 0:16:26.560 --> 0:16:28.480 brought into the market here. And I think they're gonna 0:16:28.480 --> 0:16:31.520 be looking obviously what these first entrants are doing. I 0:16:31.600 --> 0:16:33.560 sort of engauge if some of these other bigger firms 0:16:33.600 --> 0:16:35.400 are gonna you know, some a lot have been filed. 0:16:35.440 --> 0:16:39.280 But I think also market timing plays a role here too. 0:16:39.280 --> 0:16:41.280 There was like three e t F launched in March, 0:16:41.680 --> 0:16:44.560 then in April all these new ETF started launching, including 0:16:44.560 --> 0:16:47.880 these active ones. So um, it's also probably interesting like 0:16:47.920 --> 0:16:51.000 a sentiment gauge too to see, Hey, do they maybe 0:16:51.040 --> 0:16:53.040 think that the market has stabilized here and that's why 0:16:53.040 --> 0:17:01.000 they're they're starting to roll out some of these products. Okay, 0:17:01.040 --> 0:17:06.440 let's use this opportunity to transition into a second half preview. So, uh, 0:17:06.480 --> 0:17:09.560 we're in the locker room. John plays Uh, James, I'm 0:17:09.600 --> 0:17:12.879 gonna start with you. What what's the second half look like? Yeah, 0:17:12.920 --> 0:17:15.639 so this is something that I've been tracking for the 0:17:15.640 --> 0:17:18.800 past couple of months. We obviously are constantly tracking where 0:17:18.800 --> 0:17:21.200 money is going in in the asset management industry, mutual 0:17:21.200 --> 0:17:23.879 funds ets, and the big thing that jumps off the 0:17:23.920 --> 0:17:26.040 screen is the money that went into money market funds 0:17:26.040 --> 0:17:28.800 in the first half UM. So basically everyone likes to 0:17:28.800 --> 0:17:30.920 say cash on the sideline, I would I would argue 0:17:30.960 --> 0:17:33.080 the term is overused, but right now there's more cash 0:17:33.119 --> 0:17:36.000 on the sideline than UM. They're virtually ever has been 0:17:36.119 --> 0:17:38.880 in the well, not ever has been but since two 0:17:38.880 --> 0:17:41.159 thousand eight by different measures. So you look at this, 0:17:41.240 --> 0:17:43.680 we see we saw seven hundred seventeen billion when it'so 0:17:43.680 --> 0:17:46.600 money market funds in March. Four hundred and ten billion 0:17:46.640 --> 0:17:49.199 went into money markets in April. It's slowed down, but 0:17:49.240 --> 0:17:52.000 there was still inflows in May at forty two billion UM. 0:17:52.040 --> 0:17:53.880 And what this comes up to is there's over five 0:17:53.920 --> 0:17:56.760 there's five trillion dollars in money market securities, which to 0:17:56.840 --> 0:18:00.000 be what money market securities are there basically cash, commercial 0:18:00.080 --> 0:18:03.919 paper repurchase agreements, these short term overnight type vehicles, very 0:18:03.920 --> 0:18:06.719 short term vehicles. And if you look at it as 0:18:06.720 --> 0:18:10.240 a percentage of the SMP five market cap right now, 0:18:10.520 --> 0:18:13.920 it's at about it was at the end of April. 0:18:13.920 --> 0:18:16.159 It's now around nineteen because the equity market has come 0:18:16.200 --> 0:18:18.080 back a little bit, but that's the highest level we've 0:18:18.080 --> 0:18:20.600 seen since. And then if you look at as a 0:18:20.600 --> 0:18:23.720 percentage of mutual fund assets, it's at the highest level 0:18:23.720 --> 0:18:27.400 since two thousand eleven, so it was up at last 0:18:27.400 --> 0:18:30.240 we checked UM. So there's basically a lot of cash 0:18:30.240 --> 0:18:33.600 on the sidelines. Now I should also caveat this with 0:18:33.920 --> 0:18:35.880 what happened in March. The part of the reason why 0:18:35.880 --> 0:18:38.520 there were such big inflows as all these corporations have 0:18:38.720 --> 0:18:41.520 these bank loans revolvers are kind of like credit cards 0:18:41.640 --> 0:18:44.440 essentially for corporations with the bank, and they drew down 0:18:44.560 --> 0:18:47.040 that money and so they took in billions of dollars 0:18:47.160 --> 0:18:48.800 and rather than sit on cash, they put it into 0:18:48.800 --> 0:18:50.840 these money market funds. So that's big chunk of where 0:18:50.840 --> 0:18:53.040 this money is coming from. But still that's still money 0:18:53.040 --> 0:18:56.320 on the sidelines UM, and there there's money to be deployed. 0:18:56.359 --> 0:18:58.359 Also on e t F s alone, we there's a 0:18:58.400 --> 0:19:00.520 lot of UM. There's a few et F that's focused 0:19:00.520 --> 0:19:03.239 on treasuries, so one to three month treasuries less than 0:19:03.280 --> 0:19:05.879 one year treasuries that are basically similar to money market 0:19:05.920 --> 0:19:07.560 funds in a in a sense or the way they're 0:19:07.560 --> 0:19:10.920 being used. They've also seen significant inflows. So there has 0:19:10.960 --> 0:19:12.600 been a lot of money on the sidelines. And if 0:19:12.640 --> 0:19:16.600 you look at fixed income and equity flows, equity flows 0:19:16.600 --> 0:19:19.640 have been muted. I mean, the equity market is obviously 0:19:19.720 --> 0:19:23.320 up in April and May, and we haven't really seen 0:19:23.359 --> 0:19:26.040 anything significant on the equity side of e t F flows. 0:19:26.080 --> 0:19:28.919 The only area that's been significant has been sector bets. 0:19:29.200 --> 0:19:31.720 There's definitely a lot of money flowing into specific sector 0:19:31.720 --> 0:19:34.240 e t s, as Tom wrote about last month on 0:19:34.280 --> 0:19:37.320 a research side. But fixed income has taken in a 0:19:37.320 --> 0:19:39.160