WEBVTT - At The Money: How Big Can Active ETFS Get?

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>When we think about ETFs, we tend to think about large, cheap,

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<v Speaker 2>passive indexes. After all, those are the biggest ETFs from

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<v Speaker 2>places like Blackrock, Vanguard, and State Street. But when we

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<v Speaker 2>look at all the new ETF launches, they tend to

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<v Speaker 2>not be passive indexes, not be cheap, and not come

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<v Speaker 2>necessarily from those three big companies. They're active and they

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<v Speaker 2>are involved in all sorts of different areas that are

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<v Speaker 2>off the beaten path. To figure out what this means

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<v Speaker 2>for your portfolio, let's bring in Dave Nodig. He is

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<v Speaker 2>the president and director of research at ETF dot Com

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<v Speaker 2>and a ETF structural expert. Really, since the inception of

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<v Speaker 2>the entire sector, so Dave, we've seen an explosion in

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<v Speaker 2>the growth of not just new ETFs, but primarily active

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<v Speaker 2>ETFs in all sorts of niches. What are you seeing

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<v Speaker 2>in this space?

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<v Speaker 3>Well, you know, for a long time, ETF meant cheap index, right,

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<v Speaker 3>I mean to go back to Spy and then the

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<v Speaker 3>first ice shares products, and then even when we started

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<v Speaker 3>getting into the big expansion of the two thousands, it

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<v Speaker 3>was all just index index index. Then we got some

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<v Speaker 3>smart beta where we tried to be a little bit

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<v Speaker 3>more clever, and it wasn't really until the late twenty

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<v Speaker 3>ten cycle where Kathy would at ARC invest launched ARKK

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<v Speaker 3>and really put herself out there as the portfolio manager

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<v Speaker 3>in a way that I don't really, frankly remember seeing

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<v Speaker 3>since the dotcom boom. It's been a long time since

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<v Speaker 3>we'd had superstar managers on CNBC talking about, you know,

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<v Speaker 3>pounding the table for a single, and Kathy did that

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<v Speaker 3>and obviously had enormous amounts of success. Has had some

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<v Speaker 3>performance pickups along the way, but that sort of went

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<v Speaker 3>a little bit dormant during some of the pandemic when

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<v Speaker 3>people really discovered trading. What we've seen now is this resurgence,

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<v Speaker 3>particularly two folks I mentioned Dan Ives why Bush People

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<v Speaker 3>know him, and Tom Lee from Funstrat with his granny

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<v Speaker 3>shots at ETF, both of which have pulled in huge

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<v Speaker 3>money billions of dollars, billions and billions of dollars for

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<v Speaker 3>the reasons you would expect, because you've got smart people

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<v Speaker 3>talking on podcasts and TV and on their own air

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<v Speaker 3>and their own newsletters telling you why they own what's

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<v Speaker 3>in the fund. I know that sounds so dumb, but

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<v Speaker 3>that's why people love superstar managers because they look and

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<v Speaker 3>they can see Tom Lee on screen, and he can

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<v Speaker 3>sit there and say, yeah, this is why we like bitcoin. Here,

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<v Speaker 3>here are the three firms we have in our fund

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<v Speaker 3>because of it. We might be wrong, we might be right.

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<v Speaker 3>There's a level of authenticity to that that I think

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<v Speaker 3>is really a pretty I also think the fact that they've

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<v Speaker 3>doubled D, S and P this year doesn't hurt.

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<v Speaker 2>So to put some flesh on the bones here, Kathy

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<v Speaker 2>Woods during twenty twenty was a huge tesla and bitcoin

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<v Speaker 2>bull the fund arc put up giant numbers, triple digit gains.

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<v Speaker 2>Dan Ives has been an apple and an invidiable pretty

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<v Speaker 2>much for as long as I can remember. He's been

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<v Speaker 2>a whole lot more right than wrong. And Tom Lee

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<v Speaker 2>has been very constructive exactly when it paid to be

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<v Speaker 2>constructive and stay bullish. All three of those managers have

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<v Speaker 2>really big followings. What does the resurgence of brand name

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<v Speaker 2>active managers mean for the TF space?

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<v Speaker 3>Well, I think, first of all, I think it's great

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<v Speaker 3>for the ETF space because I think the ecotomy that

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<v Speaker 3>we'd had where people thought of active as being a

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<v Speaker 3>thing that happened somewhere else and ETFs were only passive

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<v Speaker 3>wasn't helpful. I think we are moving towards the world

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<v Speaker 3>where all of your exposures, for the most part, are

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<v Speaker 3>going to be in an ETF rapper. So by all

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<v Speaker 3>means we should get active managers as part of this mix.

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<v Speaker 3>And now we've got lots of them. You know, we've

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<v Speaker 3>got a bunch of active funds from Pimco was early.

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<v Speaker 3>We've got lots in the bond space, you know, everything

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<v Speaker 3>from Cumberland Advisors to State Street with the Double Line

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<v Speaker 3>and Jeff Gunlock. Lots of active managers and lots of

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<v Speaker 3>different areas. I think that's very healthy for the industry.

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<v Speaker 3>For the individual investor, it doesn't necessarily make your life

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<v Speaker 3>easier because as much as I happen to like all

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<v Speaker 3>the people we have talked about, Dan, tom Lee and

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<v Speaker 3>Kathy Like personally as people I would have dinner with,

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<v Speaker 3>the math is not on their sides as an industry. Right,

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<v Speaker 3>as an industry, we have to point out active managers

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<v Speaker 3>categorically underperform over time. Doesn't mean they all do, but

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<v Speaker 3>it means that you've got to be the special person

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<v Speaker 3>who managed to pick the right active manager at the

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<v Speaker 3>right time. That is a tough business. And even active

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<v Speaker 3>managers running these fund will tell you trying to time

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<v Speaker 3>when to get in and out of their own funds

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<v Speaker 3>is going to be tough. So that's the problem, is

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<v Speaker 3>that active management is tough to evaluate.

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<v Speaker 2>Yeah, and to put some numbers there, half of all

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<v Speaker 2>active managers underperform in any given year. You go out

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<v Speaker 2>to ten five years, it's eighty percent under form. Ten

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<v Speaker 2>years it's ninety percent. So it's a tough road to hoe.

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<v Speaker 2>But let's talk about what makes active ETFs somewhat different

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<v Speaker 2>than active mutual funds and that data reference. We're all

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<v Speaker 2>mutual fund data. Mutual funds have to do a regular

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<v Speaker 2>filing each quarter about their largest holdings. There has been

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<v Speaker 2>a lot of back and forth about how transparent active

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<v Speaker 2>ETFs have to be versus other active funds. What's the

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<v Speaker 2>state of the art today, what is the regulatory environment?

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<v Speaker 3>So there are solutions. If you're an active manager and

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<v Speaker 3>you don't want to tell everybody what you're doing every day,

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<v Speaker 3>there are solutions, and there's plenty of funds that have

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<v Speaker 3>been launched on them. Fidelity has their versions, trou Price

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<v Speaker 3>has been one of the more successful funds out there.

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<v Speaker 3>They have a pretty popular blue chip strategy called t chip,

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<v Speaker 3>which is semi transparent, meaning they're not telling you the

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<v Speaker 3>whole portfolio every day. They're telling you once in a while,

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<v Speaker 3>and they're giving the street just enough information to make

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<v Speaker 3>a good market not knowing all the information. So it's

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<v Speaker 3>sort of a clue, a bit of a hack to

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<v Speaker 3>be semi transparent. This solves a problem for some asset managers.

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<v Speaker 3>It doesn't solve a single problem for an individual investor, right, So,

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<v Speaker 3>like I've never heard an individual investor say, golly, I

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<v Speaker 3>wish I knew less about what I owned.

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<v Speaker 2>Right, But let's talk about why it's a problem for

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<v Speaker 2>fund managers. Fund managers don't buy a stock on a

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<v Speaker 2>Monday and then they're done. If they say, hey, we

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<v Speaker 2>like XYZ, they're buying that stock trying to take advantage

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<v Speaker 2>of draw downs, buying it over days, weeks, even months.

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<v Speaker 2>So there is a price advantage to the Yes, if

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<v Speaker 2>the fund manager can be a little less transparent.

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<v Speaker 3>Fair description, that's that's that's certainly the argument that the

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<v Speaker 3>active management industry, who does not want to disclose what

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<v Speaker 3>they're doing, would give you so you have articulated that

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<v Speaker 3>side of the argument. Well, my counter to that would

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<v Speaker 3>be if your strategy requires you buying securities where your

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<v Speaker 3>action is going to move the market absent disclosure or

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<v Speaker 3>absent obfuscation, then that strategy probably doesn't belong in an

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<v Speaker 3>ETF because you've got bigger problems, right. That means that

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<v Speaker 3>you're in something small or a liquid or microcap, at

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<v Speaker 3>which point, already my question would be, how do you

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<v Speaker 3>plan on running a ten billion dollar ETF with that strategy,

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<v Speaker 3>because you can't really close an ETF. So if you

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<v Speaker 3>are a special situations manager, if you're a really sort

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<v Speaker 3>of obscure niche finding those stocks nobody else knows about, manager,

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<v Speaker 3>you do not belong in the ETF. And I'll just

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<v Speaker 3>flat out and say it at this as simple as that,

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<v Speaker 3>the mutual fund structure, or even better, a liquidity cap

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<v Speaker 3>structure like a CEF or old interval fund is actually

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<v Speaker 3>a better structure for those kinds of investments everybody else. Honestly,

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<v Speaker 3>there's so much liquidity. I think it's tough to argue

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<v Speaker 3>that somebody like Tom Lee is being particularly hurt by

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<v Speaker 3>being transparent. He's double, he's at thirty percent for the year.

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<v Speaker 3>The SP's at fifteen.

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<v Speaker 2>Right, and CEF stands for closed end funds as opposed

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<v Speaker 2>to ETFs. Yes, so let's talk about some other varieties

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<v Speaker 2>of active funds that are a little bit out there.

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<v Speaker 2>We see funds with options, futures, derivatives, inverse leveraged, along

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<v Speaker 2>with some wild income promises in an ETF rapper tell

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<v Speaker 2>us about some of those products. Yeah.

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<v Speaker 3>The the interesting thing about those is most of them

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<v Speaker 3>are very mechanical, Right, So if you're running a leverage strategy,

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<v Speaker 3>you're not making any decisions. Right, I've got Apple, I

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<v Speaker 3>need two x Apple. I'm going to go to my

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<v Speaker 3>swap counterparty overnight. They're just going to settle up my

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<v Speaker 3>two x swap. That's the whole management process. But technically

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<v Speaker 3>that's going to be an actively managed fund because you

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<v Speaker 3>can't just automate that whole process. Somebody still has to

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<v Speaker 3>make a call about whether or not you're teeing up

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<v Speaker 3>the swap at this rate or that rate. Same thing

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<v Speaker 3>with almost anything in the option space. Because the options

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<v Speaker 3>are constantly changing and constantly repricing and constantly rolling off.

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<v Speaker 3>It's very difficult to create solid index product around actively

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<v Speaker 3>or high frequency moving positions in the options market, so

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<v Speaker 3>for convenience as much as anything. Almost all of those

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<v Speaker 3>type products you mentioned are listed as active products. I

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<v Speaker 3>refer to them as inos like active and name only

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<v Speaker 3>because they're really There's no Tom Lee saying I really

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<v Speaker 3>want Apple options today. There's some guy generally j PASTTLI title,

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<v Speaker 3>sitting on a desk somewhere pushing a button to say, yes,

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<v Speaker 3>we want those options because the model says we need

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<v Speaker 3>to roll and that becomes active management. And I mean

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<v Speaker 3>it is active management. It has higher costs associated with

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<v Speaker 3>it for a reason. Some of that is the profit

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<v Speaker 3>that the issuer wants, but some of it is legitimately

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<v Speaker 3>you need a trading desk with a bunch of people

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<v Speaker 3>doing work.

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<v Speaker 2>So let's talk about another niche ill liquid alts, things

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<v Speaker 2>like private equity, private credit, private debt, real estate. Are

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<v Speaker 2>we going to see those asset classes that really don't

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<v Speaker 2>trade on their own because they're not public. Are we

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<v Speaker 2>going to see those in an etf rapper.

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<v Speaker 3>We're starting to. We're starting to the canary in the

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<v Speaker 3>coal mine here with some products from State Street, the

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<v Speaker 3>big ones priv pr IV for private which has a

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<v Speaker 3>bunch of Apollo private credit in it generally pretty short

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<v Speaker 3>maturity stuff two three year kind of things, and fairly

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<v Speaker 3>straightforward understandable private credit. Intel needs to build a fab

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<v Speaker 3>in Ireland, they go get a loan, Apollo gives them

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<v Speaker 3>the loan. You get a slice of it. Nothing super complicated,

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<v Speaker 3>nothing super interesting either. I mean it's not you're not

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<v Speaker 3>getting twenty percent yields out of or anything like that.

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<v Speaker 3>You're getting some marginal increase in the yield you would

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<v Speaker 3>get if you were simply investing in, say junk or

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<v Speaker 3>short term co corporates. So those products are starting to

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<v Speaker 3>come to market. The concerns I have about them is

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<v Speaker 3>they're just going to be untested. We're not going to

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<v Speaker 3>really know how they're going to perform when the markets

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<v Speaker 3>go hinky, right, And also what does that even mean,

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<v Speaker 3>Like if we had a corporate bond blowout and we

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<v Speaker 3>saw a bunch of triple C stuff start, you know,

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<v Speaker 3>get you defaulting. I have no idea what the impact

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<v Speaker 3>on Apollo private credit issued in Ireland to Intel is

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<v Speaker 3>going to be when that happens. I also have no

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<v Speaker 3>idea how they're going to respond if half the fund

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<v Speaker 3>decides they want out on that Tuesday and now you've

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<v Speaker 3>got a bunch of liquid stuff which can be up

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<v Speaker 3>to thirty five percent of the portfolio. That literally the

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<v Speaker 3>only buyer is Apollo. Technically, they've got answers to all

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<v Speaker 3>those questions. I'm and I've read all the answers to

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<v Speaker 3>those questions, and I'm sort of not gonvinced. But it's

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<v Speaker 3>one of those things that if you want to be,

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<v Speaker 3>if you want to be out there on the edge,

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<v Speaker 3>by all means, go ahead. But I think the private

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<v Speaker 3>securities in the daily liquid vehicle has not really been

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<v Speaker 3>through the ring aer yet, so I remain very skeptical.

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<v Speaker 2>So let's talk a little bit about crypto and how

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<v Speaker 2>that's going to impact both investor behavior and portfolio construction.

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<v Speaker 2>Last year Blackrock, was it last year? This year Blackrock

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<v Speaker 2>introduced twenty a bit.

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<v Speaker 1>Yeah.

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<v Speaker 2>Yeah, so it's a year ago coming up on one

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<v Speaker 2>hundred billion dollars in assets, probably the fastest etf ever

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<v Speaker 2>to do that. What does this mean and explain the

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<v Speaker 2>concept of tokenization.

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<v Speaker 3>Yeah, So what it means is all of these assets

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<v Speaker 3>are going to be more and more available to the

0:12:52.480 --> 0:12:54.800
<v Speaker 3>average joe like us who's just trading in their Schwab

0:12:54.800 --> 0:12:58.000
<v Speaker 3>account or something. Like that, and because the SEC has

0:12:58.040 --> 0:13:00.840
<v Speaker 3>said they're going to make it very easy. Very soon,

0:13:00.920 --> 0:13:04.160
<v Speaker 3>we're going to have every major coin that people know about,

0:13:04.200 --> 0:13:07.040
<v Speaker 3>a Solana and ave whatever, they'll be a sleeve of

0:13:07.040 --> 0:13:09.160
<v Speaker 3>that in an ETF that you'll be able to trade.

0:13:09.800 --> 0:13:14.079
<v Speaker 3>That's all great. Having those building blocks is awesome also

0:13:14.120 --> 0:13:17.920
<v Speaker 3>because it will now allow portfolio managers to create portfolios

0:13:17.960 --> 0:13:20.520
<v Speaker 3>of those individual securities, which right now you can't even do.

0:13:20.600 --> 0:13:23.440
<v Speaker 3>You can't even buy an index the top ten coins

0:13:23.520 --> 0:13:26.040
<v Speaker 3>because there isn't a target for the top ten coins

0:13:26.080 --> 0:13:28.760
<v Speaker 3>to invest in. So that will be fun when we

0:13:28.840 --> 0:13:31.880
<v Speaker 3>get that, and I suspect you'll see firms like Bitwise

0:13:32.520 --> 0:13:35.199
<v Speaker 3>and black Rock, who've got some real bona fides in

0:13:35.880 --> 0:13:40.040
<v Speaker 3>the crypto management space start bringing pretty institutional active management

0:13:40.040 --> 0:13:44.360
<v Speaker 3>products there. That's probably a twenty twenty six side. Long term, though,

0:13:44.400 --> 0:13:47.280
<v Speaker 3>if we want to talk ten years from now, that's

0:13:47.320 --> 0:13:51.120
<v Speaker 3>when crypto starts becoming an interesting competitor to the ETF space.

0:13:51.559 --> 0:13:54.319
<v Speaker 3>I think we will eventually end up in a world

0:13:54.760 --> 0:13:59.200
<v Speaker 3>where how you move your ownership of Apple around is

0:13:59.200 --> 0:14:01.480
<v Speaker 3>going to happen, not by going to the New York

0:14:01.480 --> 0:14:06.600
<v Speaker 3>Stock Exchange and exchanging ledger entries to move around your

0:14:06.640 --> 0:14:09.240
<v Speaker 3>Schwab account. Instead, you're going to have an actual token.

0:14:09.280 --> 0:14:10.800
<v Speaker 3>You'll be able to look at the serial number of it.

0:14:10.800 --> 0:14:13.160
<v Speaker 3>You'll be able to put it in a wallet and say, oh, no,

0:14:13.320 --> 0:14:16.160
<v Speaker 3>this is worth one hundred shares of Apple, and that

0:14:16.360 --> 0:14:19.480
<v Speaker 3>wallet will be able to directly move that security to

0:14:19.640 --> 0:14:22.600
<v Speaker 3>your wallet without any exchange being part of the process.

0:14:23.160 --> 0:14:25.480
<v Speaker 3>Most of it will happen like crypto happens now on

0:14:25.680 --> 0:14:29.840
<v Speaker 3>giant exchanges because price discovery. But just like with bitcoin,

0:14:29.960 --> 0:14:32.160
<v Speaker 3>I could walk up to you when we could engage

0:14:32.160 --> 0:14:35.320
<v Speaker 3>in a direct transaction. You're going to start seeing that

0:14:35.440 --> 0:14:38.640
<v Speaker 3>with other securities. It's happening more in bonds and real estate.

0:14:38.720 --> 0:14:41.320
<v Speaker 3>Now to do it in equities is going to require

0:14:41.360 --> 0:14:44.120
<v Speaker 3>some actual legislation, and we don't make so many laws

0:14:44.160 --> 0:14:47.200
<v Speaker 3>these days, so that may take some time. Instead, what

0:14:47.240 --> 0:14:48.840
<v Speaker 3>we'll do is will wrap a lot of stuff. So

0:14:49.360 --> 0:14:53.320
<v Speaker 3>you'll probably hear about things like wrapped Apple and wrapped Cisco.

0:14:53.600 --> 0:14:56.080
<v Speaker 3>And what that's going to be is a token that

0:14:56.200 --> 0:15:00.480
<v Speaker 3>owns the security in some sort of trust pool. That's

0:15:00.480 --> 0:15:02.720
<v Speaker 3>a baby step, but that's what we'll start hearing first.

0:15:02.720 --> 0:15:05.440
<v Speaker 3>So be skeptical when people say we're tokenizing everything because

0:15:05.440 --> 0:15:06.840
<v Speaker 3>it's going to be a decade.

0:15:07.280 --> 0:15:10.040
<v Speaker 2>I had a conversation with Jose Manyana, who is the

0:15:10.040 --> 0:15:14.480
<v Speaker 2>head of wealth Strategies at Investment Giant BNY Bank of

0:15:14.600 --> 0:15:17.360
<v Speaker 2>New York, and he was saying, Hey, we went from

0:15:17.440 --> 0:15:20.240
<v Speaker 2>T plus three to T plus one, meaning it used

0:15:20.240 --> 0:15:22.880
<v Speaker 2>to take three days to settle a trade. Today it's

0:15:22.880 --> 0:15:25.080
<v Speaker 2>going to take one day. If we want to get

0:15:25.080 --> 0:15:27.920
<v Speaker 2>to T plus zero, we have to really have confidence

0:15:28.400 --> 0:15:32.720
<v Speaker 2>in both sides of the transaction, and theoretically tokenization solves

0:15:32.720 --> 0:15:33.440
<v Speaker 2>that problem.

0:15:33.840 --> 0:15:37.440
<v Speaker 3>It does. Although think about how many big transactions in

0:15:37.480 --> 0:15:40.960
<v Speaker 3>the world that we could be doing easier we deliberately

0:15:41.000 --> 0:15:43.840
<v Speaker 3>put brakes on. Think about buying a house wiring right,

0:15:44.200 --> 0:15:49.960
<v Speaker 3>so there's you know, there's escrow, there's secondary inspection processes,

0:15:50.000 --> 0:15:53.720
<v Speaker 3>there's separate contracts around just the intention to buy and sell.

0:15:54.160 --> 0:15:57.600
<v Speaker 3>So the bigger and more interesting a transaction gets, the

0:15:57.680 --> 0:16:01.320
<v Speaker 3>less T zero is actually a good right. I Mean,

0:16:01.760 --> 0:16:04.480
<v Speaker 3>the thing I always say about T zero is did

0:16:04.520 --> 0:16:07.080
<v Speaker 3>you really want T zero during the flash crash in

0:16:07.120 --> 0:16:10.720
<v Speaker 3>twenty ten, Like, did you really want no recourse for

0:16:10.800 --> 0:16:15.160
<v Speaker 3>that that fat fingered billion dollar pennies on the dollar trade? No,

0:16:15.480 --> 0:16:19.280
<v Speaker 3>you wanted this ecosystem that protects you from a bad

0:16:19.320 --> 0:16:23.440
<v Speaker 3>actor spoofing something into the system. So we're gonna have

0:16:23.440 --> 0:16:26.240
<v Speaker 3>a lot to evaluate as a as a as a

0:16:26.280 --> 0:16:30.080
<v Speaker 3>market what we actually want. The idea of slowing down

0:16:30.200 --> 0:16:32.480
<v Speaker 3>markets has actually gotten a lot of traction, like speed

0:16:32.560 --> 0:16:36.280
<v Speaker 3>bump markets, things like that that are actually pushing against

0:16:36.280 --> 0:16:39.480
<v Speaker 3>this idea of instantaneous settlement for anything. I don't even

0:16:39.480 --> 0:16:42.320
<v Speaker 3>want instantaneous settlement for my bank account. I like knowing

0:16:42.320 --> 0:16:44.320
<v Speaker 3>that I've got somebody I can call when something goes wrong.

0:16:44.440 --> 0:16:49.720
<v Speaker 2>Huh. So you've written about volatility and liquidity laundering. Explain

0:16:49.800 --> 0:16:53.160
<v Speaker 2>what this is and are these really going to be ETFs?

0:16:54.160 --> 0:16:57.720
<v Speaker 3>They already are. Man So, volatility laundering is simply moving

0:16:58.120 --> 0:17:01.320
<v Speaker 3>volatility from one bucket to another and charging something for

0:17:01.400 --> 0:17:04.359
<v Speaker 3>the privilege of doing that. Right now, you can buy

0:17:04.440 --> 0:17:09.000
<v Speaker 3>something like MSTY which will give you one hundred percent

0:17:09.160 --> 0:17:13.160
<v Speaker 3>income return on a micro strategy position through the magic

0:17:13.200 --> 0:17:16.240
<v Speaker 3>of options, right, and it creates a synthetic long position.

0:17:16.640 --> 0:17:19.440
<v Speaker 3>Then it does a synthetic covered call against the synthetic

0:17:19.560 --> 0:17:21.800
<v Speaker 3>long position, and then it does a whole lot of

0:17:21.800 --> 0:17:24.080
<v Speaker 3>return of capital to give you your money back and

0:17:24.240 --> 0:17:28.960
<v Speaker 3>promises you this endless stream of high distributions high percentage distributions.

0:17:29.400 --> 0:17:32.640
<v Speaker 3>That is volatility laundering because what you were actually doing

0:17:33.160 --> 0:17:36.359
<v Speaker 3>is you were trying to sell other people the volatility

0:17:36.400 --> 0:17:40.000
<v Speaker 3>of micro strategy, which is probably not a fantastic idea

0:17:40.119 --> 0:17:43.199
<v Speaker 3>because the wall of all is high in those cases.

0:17:43.320 --> 0:17:46.360
<v Speaker 3>So you're being the person picking up the in this

0:17:46.400 --> 0:17:49.120
<v Speaker 3>case quarters in front of the steamroll or not the pennies,

0:17:49.600 --> 0:17:53.639
<v Speaker 3>but you're still exposed to MicroStrategy collapsing and going to nothing.

0:17:53.680 --> 0:17:57.480
<v Speaker 3>That volatility laundering is what all of these options strategies

0:17:57.520 --> 0:17:58.200
<v Speaker 3>are really doing.

0:17:58.480 --> 0:18:02.000
<v Speaker 2>So really, to wrap this up, the bottom line is

0:18:02.800 --> 0:18:06.159
<v Speaker 2>bring the same level of common sense and scrutiny to

0:18:06.400 --> 0:18:10.880
<v Speaker 2>new ETFs that you would to any financial product. Make

0:18:10.920 --> 0:18:15.360
<v Speaker 2>sure you understand what the product is, how it generates gains,

0:18:15.480 --> 0:18:20.000
<v Speaker 2>the sort of risks you're incurring, especially with these exotic products,

0:18:20.520 --> 0:18:25.640
<v Speaker 2>and the costs. Are these products worth spending seventy five

0:18:25.680 --> 0:18:29.119
<v Speaker 2>one hundred, one hundred and twenty five bases points more

0:18:29.680 --> 0:18:32.880
<v Speaker 2>than what you would get for a plain vanilla passive

0:18:32.880 --> 0:18:37.479
<v Speaker 2>index that seems to be dominating the asset allocation space

0:18:37.640 --> 0:18:41.480
<v Speaker 2>and the space for ETFs. Be smart, be thoughtful, do

0:18:41.600 --> 0:18:46.000
<v Speaker 2>your homework. I'm Barry Ridults you've been listening to Bloomberg

0:18:46.640 --> 0:18:47.280
<v Speaker 2>at the Money