Speaker 1: Walkrom Chillions.
Speaker 2: I'm Joe Webber and I'm Eric Balchuna's.
Speaker 1: Eric. We've had a couple of guests on lately, but
Speaker 1: we have not been talking about what's happening in the markets,
Speaker 1: which seems like we should do.
Speaker 2: Yeah, I mean, in a way, it's because nothing traumatic
Speaker 2: has happened, but there's always something going on, and that's
Speaker 2: something is all time highs. Like it's almost like so
Speaker 2: peaceful and nice and all time high out there, you
Speaker 2: forget about it. But that's a story in itself because
Speaker 2: just seems like also we're in a different place than normal.
Speaker 2: Always felt like last time we were in this bull
Speaker 2: market and all time highs, there was this sort of
Speaker 2: quot wall of worry and it was all about how
Speaker 2: the market kind of would deal with that. Doesn't seem
Speaker 2: like there's a lot of things to worry about. So
Speaker 2: there's like, oh, come on.
Speaker 1: There's the threat of nuclear war. There's you know, inflation
Speaker 1: is popped back up a little bit. I mean there's
Speaker 1: like it's not like there isn't things.
Speaker 2: To worry about, yeah, but all those things I think
Speaker 2: have been compartmentalized, which brings up one of our big
Speaker 2: themes this year. Which we have athnocs on to talk about,
Speaker 2: which is investors being ready for it comfortably bullish. Other
Speaker 2: sell side shops quote Taylor Swift, we quote Pink Floyd.
Speaker 2: You know it's all good. But anyway, this idea of
Speaker 2: not just you're not euphoric bullish and you're not. It's
Speaker 2: not a hated bull market. It's a comfortable bullishness. You
Speaker 2: know I'm trying to say. But it feels right, and
Speaker 2: the numbness is part of it in that I don't
Speaker 2: think these things you just mentioned. They're out there, but
Speaker 2: they're not as up close and present I think for
Speaker 2: the investor psyche right now, I think they've written them
Speaker 2: all off. Obviously, the Fed raising rates would be a
Speaker 2: big deal, but that doesn't seem like it's going to happen.
Speaker 2: And I don't even think the market expects Feds the
Speaker 2: rates lower. I think they're okay even if it doesn't
Speaker 2: get lower. So it just seems like there's a comfort
Speaker 2: level here. That might be the story that the story
Speaker 2: or the feeling this year is and whether that obviously
Speaker 2: will get disrupted at some point, but it just feels
Speaker 2: pretty smooth right now.
Speaker 1: You guys at Bloomberg Intelligence also did an ETF survey.
Speaker 2: We did speaking of bullishness. We have a survey that
Speaker 2: first ever time we did it. We've had BBH on
Speaker 2: who did their own survey. We did one. Charles Bond
Speaker 2: from our data group let it completely. He deserves all
Speaker 2: the credit. Great job, and we basically got results from
Speaker 2: over fifty people different areas, and we'll go over some
Speaker 2: of those results. Some are what you'd expect, some surprises,
Speaker 2: but a lot of bullishness towards ETF's roll.
Speaker 1: And joining us on this episode Athamasio Sarah Feagas of
Speaker 1: Bloomberg Intelligence. He's an analyst with Eric to help walk
Speaker 1: us through this moment and diservice.
Speaker 3: This time.
Speaker 1: I tryins let the good times roll, Athanasios.
Speaker 3: Welcome back, glad to be back.
Speaker 1: The good times are rolling.
Speaker 2: What's going on?
Speaker 3: Yeah, it's they are? You know the good thing about
Speaker 3: you You guys are talking about bushes of ETFs. I
Speaker 3: we've gotten so large, right, and there's so many different
Speaker 3: strategies that we can actually like you know, use them
Speaker 3: as indicators, right, sort of form market strength and market sentiment.
Speaker 3: And you know, the market hit all time highs and
Speaker 3: twenty twenty one where at all time highs again, but
Speaker 3: I think the dynamics are very different. And Eric had
Speaker 3: mentioned that earlier about like being euphoric, like we're feeling good,
Speaker 3: but we're not overly euphoric, which I think is actually
Speaker 3: a good thing, right, And this is where we came
Speaker 3: up with the term like comfortably bullish. If you remember
Speaker 3: in twenty one, it was all like the meme stocks.
Speaker 3: It was Portnoy's saying stocks only go up, like it
Speaker 3: was craziness. Right, You're not having any of that this year,
Speaker 3: even the world all time highs. I feel like we're
Speaker 3: just in a good spot now. It was just Nvidia, Nvidia, Vidia,
Speaker 3: and I feel like every time something happens, some company
Speaker 3: bails out the cues. It's like Nvidia or Microsoft, like
Speaker 3: someone is always sort of carrying the market on.
Speaker 2: Does it remind you of like a basketball team where
Speaker 2: like take the Sixers. I live in Philly. Sometimes in
Speaker 2: be just isn't feeling it or is injured, and MAXI
Speaker 2: steps up. The Magnificent seven to me is like a
Speaker 2: team and like Tesla, Navidia kind of balanced out Tesla
Speaker 2: and they are real players, but they are really kind
Speaker 2: of lifting this market up, although there's some people who
Speaker 2: point out its actually more depth than those seven. But certainly,
Speaker 2: I know when Navidia's earnings came out, it did people
Speaker 2: were saying, like the whole world they had memes of
Speaker 2: like Navidia holding up the globe. The video seems to
Speaker 2: be like the new Apple in a way in terms
Speaker 2: of holding the market up, but it delivered.
Speaker 3: Yeah, I agree, every like every time if every time
Speaker 3: I log in every morning with the cueser at a
Speaker 3: new time like all time high. But I think it
Speaker 3: kind of makes sense when you look around the world
Speaker 3: or look at other investments. I think it's all about
Speaker 3: like relative right, So like if the FED is gonna
Speaker 3: cut for this year, like for money market funds, we
Speaker 3: already know that the best of that is probably behind us.
Speaker 3: So imagine like you already know that that's only going
Speaker 3: to go down. It's like, okay, where am I going
Speaker 3: to look? China's a little rough right now, you know,
Speaker 3: Like performance wise, Europe is a story so that you know,
Speaker 3: seems like it wants to work every year, but it doesn't.
Speaker 3: It just feels like all the roads come back to
Speaker 3: us stocks. It's just still sort of the best option
Speaker 3: out there.
Speaker 2: And if you could, let's talk a little bit about
Speaker 2: the BI ETF greed Fear Indicator, which you created with
Speaker 2: Charles Bond. It's obviously up, but what goes into that?
Speaker 2: What ETF data are you able to use for that?
Speaker 3: Yeah? Yeah, big prop To Trials, we sort of were
Speaker 3: hashing out ideas, so we look at a couple of things.
Speaker 3: One is leverage long to short ETF like leverage tradings.
Speaker 3: We look at moving average stuff, so we got some
Speaker 3: technical indicators. We look at short interest how much people
Speaker 3: are shorting ETFs, and we sort of put that together
Speaker 3: and we look at it historically to itself, and we
Speaker 3: look back in twenty one it got overly bullish, right,
Speaker 3: and then the market corrected a little bit, and then
Speaker 3: this year we're very bullish, but we're not at this
Speaker 3: like U four range, So I actually even think it
Speaker 3: could probably go up a little bit more, Like I
Speaker 3: think we have room to get even more bullish. But
Speaker 3: and when I was talking with Trials, that's how we
Speaker 3: came up with the the word comfortably bullish, Like I
Speaker 3: like pink Floyd and whatnot. But we're like, how do
Speaker 3: you feel, right? I'm like, that's how I feel like.
Speaker 3: I feel good, not too good, but like in a
Speaker 3: good spot. Market keeps going on, people are I remember
Speaker 3: last year when the market was going up, flows weren't biting.
Speaker 3: People were still very pessimistic about the market going up.
Speaker 3: I feel like this year, finally it's all aligned. The
Speaker 3: market's going up, the flows are aligning. You know, sentiment
Speaker 3: feels good.
Speaker 1: Can you quantify comfortably bullish?
Speaker 3: Uh? Well, we attempted to, right, But I think the
Speaker 3: way we always we look at it is just relative
Speaker 3: to itself. So even now we're at all time highs,
Speaker 3: flows weren't as good as they were in twenty one,
Speaker 3: even though we're at a higher level than we were.
Speaker 3: And I feel like when you look at it at
Speaker 3: that flows or leverage, trading spreads, or even what kind
Speaker 3: of ets people are allocating to, you know, we are bullish,
Speaker 3: but not how we were in twenty one. So that's
Speaker 3: kind of the way we try to quantify it. I
Speaker 3: can give you an arbitrary number, say, oh, it's a four, right,
Speaker 3: but I think when you compare it to itself, that's
Speaker 3: how we sort of approach this sentiment indicator.
Speaker 2: And you know, it's interesting. I look at the weekly
Speaker 2: flow chart every week on ETFIQ and ivvvu qs VTI
Speaker 2: all at the top right comfortably bullish everybody, But there's
Speaker 2: every like fourth week, someone tries to get small caps going,
Speaker 2: like you see IWM there or like bb EU Europe.
Speaker 2: Someone tries to be like early on the shift or
Speaker 2: the regime change, and they just get rolled over. And
Speaker 2: I've seen it happen over and over, and I think
Speaker 2: everybody out there knows that at some point the regime
Speaker 2: will change. But how many times can you get run
Speaker 2: over before you just stop trying? And I think I've
Speaker 2: seen in the flows there's less and less of that
Speaker 2: those attempts. And maybe when there are no tempts at all, ever,
Speaker 2: you know, we're just like weeks and weeks where nobody's trying.
Speaker 2: Maybe that's when it turns, and that's when it's like
Speaker 2: a bubble where even a little pin can pop it.
Speaker 2: But small caps. You know, we had a not Doubt
Speaker 2: that talked about this, and in this case we reference
Speaker 2: mean girls droll the market to ETF investors stopped trying
Speaker 2: to make small caps happen, you know, because they tried
Speaker 2: over and over and over. And I talk with Gena
Speaker 2: Martin Adams are macro stentagist my boss about this, and
Speaker 2: she brought up a good point. A if a company
Speaker 2: gets really good and they're small, they get like drafted up,
Speaker 2: like all of a sudden, they're a mid or a
Speaker 2: large and they're gone. So you lose them like a
Speaker 2: college to the NBA, and then more companies when the
Speaker 2: IPO now are going right to the large, they're already big,
Speaker 2: so that the pool of hotness in the small cap
Speaker 2: area is also down. And so I think this idea
Speaker 2: that it has to change. There are reasons where it
Speaker 2: could be a little more secular than cyclical.
Speaker 1: I'm just thinking about how different now is compared to
Speaker 1: twenty twenty one, when the last time that there was
Speaker 1: this fever. I guess, and boy, there's a world of
Speaker 1: difference between those two markets. How is that reflected and
Speaker 1: how is it showing up not only in the flows,
Speaker 1: but you know what sectors theos are going into.
Speaker 3: Yeah, so I'd say the first thing that's stuck out
Speaker 3: we observed and I know this is it sounds a
Speaker 3: little obvious, but more allocations towards the US. I feel
Speaker 3: like in the twenty twenty one money was getting allocated
Speaker 3: all over the world, like Europe was taking some flows China.
Speaker 3: This year it's just all US, and it's US from
Speaker 3: other regions. There was even this issue in China. And
Speaker 3: the thing is the Chinese investors were trying to buy
Speaker 3: the queue so fast that they had to close the
Speaker 3: fund in China, right, So they weren't buying Chinese stocks
Speaker 3: or buying US stocks. So if you actually look globally,
Speaker 3: I think a big difference is everything's going even more
Speaker 3: so into the US. The other thing is we have
Speaker 3: higher rates, right, So now I think what the important
Speaker 3: thing was for this year is that we showed that
Speaker 3: we could live in this like five percent rate world, right.
Speaker 1: Which I would have assumed looked like a gold shower almost,
Speaker 1: But here we.
Speaker 3: Are, yeah, for sure. And I don't know if people
Speaker 3: maybe expected it or I think they've kind of expected
Speaker 3: the market to go down, and you know, it was
Speaker 3: pretty violle on twenty twenty two, but now it's like,
Speaker 3: you know what we've we went through that we're fine,
Speaker 3: we can handle it, right, and now we sort of
Speaker 3: know that the Fed's already made it clear that at
Speaker 3: some point they're gonna cut right, so you know, so
Speaker 3: I think we have a lot of those uncertainties behind us.
Speaker 3: I know there's an election coming up this year and
Speaker 3: whatnot that at all No could maybe you know, derail
Speaker 3: this a little bit. But I think it's just we've
Speaker 3: learned to live in this higher rate environment.
Speaker 2: Yeah, it was interesting those big growthy sort of Magnificent
Speaker 2: seven companies. One thing that impressed me was they went
Speaker 2: up last year and rates were up, like there were
Speaker 2: supposed to be companies that didn't work in higher rate environments.
Speaker 2: But then you look at some of these companies, unlike
Speaker 2: maybe some of the arcstocks, these companies have a lot
Speaker 2: of cash on hand, like they can absorb a lot.
Speaker 2: They're not like high growth, no profit kind of companies.
Speaker 2: The other thing about the Magnificent Seven that Sam Rowe
Speaker 2: pointed out on Twitter. He was talking about how if
Speaker 2: you take one of them, there's actually three or four
Speaker 2: even five companies in there that could be like smaller
Speaker 2: mid caps or even large caps like YouTube to me,
Speaker 2: could be its own company, a large cap probably. I
Speaker 2: mean it's taken over TV and it's just one part
Speaker 2: of Google. Right. So you go down the list and
Speaker 2: you see these companies are made up of many, many companies,
Speaker 2: So maybe it's the magnificent fifty honestly, and not just
Speaker 2: the seven. What do you think of that? Droll?
Speaker 1: Lena conn would have it that way for sure if
Speaker 1: she got to do some due overs. And look, I
Speaker 1: mean it does speak to why the cues are the cues,
Speaker 1: Like I think if you knock those companies out, like
Speaker 1: they're just more que candidates.
Speaker 2: Really right, And then when you look at the rest
Speaker 2: of the world, and this sounds so US centric, but
Speaker 2: you know, where are these companies in other countries? I
Speaker 2: know sometimes people like, well there might be one or two,
Speaker 2: but we have like a dozen. You know, we have
Speaker 2: many of these and it's hard to capture that. And
Speaker 2: it's tough the people coming over from China and Europe, drole.
Speaker 2: What I worry about in China particular is their market
Speaker 2: just went down two years in a row, and they're
Speaker 2: like at the bottom, that's when you should actually buy in,
Speaker 2: but they're leaving to come here to buy at the top. Yeah,
Speaker 2: that's this is like has pain written all over in
Speaker 2: my opinion, But I just feel like this could end
Speaker 2: in tears stroll. You know that that movement usually doesn't
Speaker 2: work out well and It's a shame too, because those
Speaker 2: investors are you know, they're just the fomo is that bad?
Speaker 2: You know, it's like they've lost their minds.
Speaker 1: Well they're uncomfortably well no, well.
Speaker 2: Yeah, they want to be comfort They're coming over here
Speaker 2: to have that good feeling.
Speaker 3: Yeah, I agree. I think fifty four percent of the
Speaker 3: cues last year was not expected. I think that messed
Speaker 3: with people's minds, right, Like every strategist was not bullish
Speaker 3: last year, right, everyone missed. Now all of a sudden,
Speaker 3: everyone's bringing up their targets, like fomo is a real thing, right,
Speaker 3: and it was working when a time was not supposed
Speaker 3: to work, and now it is supposed to work, and
Speaker 3: you know, and I think that is keeping people coming
Speaker 3: back into the equity market.
Speaker 2: And I think if if someone's out there listening, it's like,
Speaker 2: what do you do? Go into more US equities? You know,
Speaker 2: most advisors were probably advise you to rebalance actually, which
Speaker 2: is to you know, rebalance into what has not done well.
Speaker 2: And we see some of that. It's not like the
Speaker 2: places we're saying have no flows, but generally speaking, people
Speaker 2: are leaning into US equities and this is opposite. Last
Speaker 2: year Athan was on this time last year, and what
Speaker 2: we were talking about was the US market was up,
Speaker 2: but nobody's buying in there were no flows. We called
Speaker 2: the fomo drought. So comfort bullish is the new fomo drought.
Speaker 2: M what will be next year? God, please help us
Speaker 2: because everything's gone to Yeah, that's a little long. I've
Speaker 2: the toile tightened that up on. That is just.
Speaker 3: To go through some albums and come up with a
Speaker 3: good title for next year.
Speaker 1: Okay, so you guys had this Bloomberg Intelligence survey of
Speaker 1: whom and what was the what were you trying to
Speaker 1: figure out?
Speaker 2: Yeah, look, well we got a little fomo because other
Speaker 2: people were doing these surveys and Charles Bond on our team,
Speaker 2: who works in data in Europe, said we should do
Speaker 2: our own and I said, yeah, I've always want to
Speaker 2: do it, but I've never had the resources. Now we do,
Speaker 2: we have, you know, the teams bigger. So he basically
Speaker 2: went through all the hurdles and there are a lot
Speaker 2: to get a survey downe a bi Normally, Joel, when
Speaker 2: I surveyed people, I just go to Twitter to a
Speaker 2: poll and I know in like eight minutes what the
Speaker 2: people think. But that's not as official and I can't
Speaker 2: really put that into a nice formal note. So we
Speaker 2: polled about I think it was over fifty people, financial advisors,
Speaker 2: individuals and institutions, and they were all over the world,
Speaker 2: and we basically largely in North American and Europe. But
Speaker 2: we basically asked some a bunch of questions and then
Speaker 2: we put those in the notes, and there were a
Speaker 2: couple big takeaways. Do you want to go over the
Speaker 2: takeaways or do you want to hone in on a
Speaker 2: couple notes, Let's do the takeaway, okay? Effect me the
Speaker 2: big takeaways Active is back. I've seen these surveys for
Speaker 2: years and years, and one thing that was clear was
Speaker 2: that there's much more openness to Active. And I think
Speaker 2: this is because active's gotten cheaper. And I think it's
Speaker 2: because twenty twenty one was rough and people sixteen the
Speaker 2: forty went down and people were like a little more
Speaker 2: open to Active. So I think it's good for Active.
Speaker 2: Sometimes these surveys are a little bit recncy bias. You know,
Speaker 2: actors had a good year, but clear that's good news
Speaker 2: for Active. That was one of our takeaways. Thematic Equity
Speaker 2: ranked number one in what would you like to see
Speaker 2: more of discretionary active was two. But thematic and we've
Speaker 2: always been bullish on thematics because it's a great compliment
Speaker 2: to cheap beta. It's not competing with it. You can
Speaker 2: just add a little theme on top of your cheap beta.
Speaker 2: You don't disturb all the serious thoughts. You can have
Speaker 2: a little fun. So thematic equity did better than I
Speaker 2: thought in terms of what people want to see more
Speaker 2: of and what really did not do well. No surprises, ESG.
Speaker 2: That's fallen down. It ranked below money market funds in
Speaker 2: terms of what you want to see, and nobody wants
Speaker 2: to see much from money market funds, right, that's pretty boring.
Speaker 2: It was like number seventh eighth in the list, So
Speaker 2: there's a shifting going on in some of the you know,
Speaker 2: sort of more non beta areas. So that would be
Speaker 2: probably the biggest takeaway. But there was a couple other
Speaker 2: little ones in here that we can go over.
Speaker 1: Ethan, what jumped out at you in this survey.
Speaker 3: One thing that was interesting was how investors are picking
Speaker 3: ETFs and some of the criteria that they're looking at.
Speaker 3: So one thing I thought was really interesting. We had
Speaker 3: asked what is the minimum asset threshold? You want before
Speaker 3: you buy an ETF, and like more than half was
Speaker 3: less than thirty million. Some had no minimum threshold at all.
Speaker 2: A lot.
Speaker 3: So I thought that it shows a lot of progress
Speaker 3: in the investor right, and that they're not just looking
Speaker 3: at the big products with the big assets. They're looking
Speaker 3: at a lot of interesting ideas, right, and products a
Speaker 3: lot of some of the more interesting ones are small,
Speaker 3: they're new, they're coming from smaller issuers. So I'd like
Speaker 3: to see that the investors were looking at smaller ETFs,
Speaker 3: and I think it shows that they understand the products
Speaker 3: more and all they work. Right.
Speaker 2: Yeah, that was a chakra for me because over the
Speaker 2: years we come up with a field implied liquidity which
Speaker 2: is based on Dave Abner's formula from his book The
Speaker 2: ETF Handbook, and that just tells you how liquid the
Speaker 2: basket is. Because if you're out there listening and you're
Speaker 2: looking at ETFs and you look at the volume, it's
Speaker 2: good to have volume. That's really great. You can trade
Speaker 2: those all day. But there's new ets for example, they
Speaker 2: don't have a lot of volume. But if the if
Speaker 2: market makers in the market, when they see orders come
Speaker 2: in for an ETF, they don't look at the actual ETF.
Speaker 2: They look at the basket because if they're going to
Speaker 2: sell you the ETF, I'm just going to give you
Speaker 2: shares of, say ARC, since it's come up a bunch
Speaker 2: of times, Well I'm now short ARC. Well I'm going
Speaker 2: to go and buy the basket of the of the
Speaker 2: stocks because later I've got to go hand in the
Speaker 2: basket to the issuer and get the shares back. So
Speaker 2: I'm flat again. So in order to sell you ARC,
Speaker 2: I've got to go get the basket of stocks. So
Speaker 2: if the basket of stocks is a liquid I should
Speaker 2: be able to give you a good deal, even if
Speaker 2: ARC doesn't trade a lot. And that's generally why imply
Speaker 2: liquidity works most in a stock you don't have that.
Speaker 2: The liquidity on the screen is all there is. But
Speaker 2: with an ETF, because you can do creations of redemptions
Speaker 2: by handing in the basket for more shares of the ETF,
Speaker 2: the basket liquidity is just as usable. And so in
Speaker 2: the first book I wrote, which you know, that's how
Speaker 2: we met, you know, implied liquidity to me is the
Speaker 2: key to unlocking the toolbox and using more ETFs beyond
Speaker 2: the most popular ones you can go deep. There are
Speaker 2: like a handful of ETFs that have neither high volume,
Speaker 2: they have low volume and low implied liquidity. Like for example,
Speaker 2: I shares Columbia local Columbia stocks. It doesn't trade a lot,
Speaker 2: the stocks don't trade a lot. That's a case where
Speaker 2: you're going to have to pay up in a big spread.
Speaker 2: But if you have one or the other, you should
Speaker 2: demand tight spreads in your trading. And I think that's
Speaker 2: the takeaway here that people are getting, Okay.
Speaker 1: What else helped out you?
Speaker 3: The one about would always say, Okay, when you're on
Speaker 3: this selection criteria, what are some of the things you're
Speaker 3: looking at, like size, expense ratio, performance, And I think
Speaker 3: the one that came up first was past performance, which
Speaker 3: is really interesting and I think.
Speaker 1: Yeah, that was weird to me because it's like, obviously
Speaker 1: past performance not indicative of future performance.
Speaker 3: Yeah, exactly. And expensaraition I think was second. So I
Speaker 3: don't know again if there's some regency bias because of
Speaker 3: the market has been up, but I think as expensory
Speaker 3: show goes down, that's probably ultimately a good thing, right.
Speaker 3: It means that the market is very it's at a
Speaker 3: low point cost wise, right, So we're starting to look
Speaker 3: at other things besides just expense rics. We're looking at branding,
Speaker 3: we're looking at performance, looking at liquidity. So that was
Speaker 3: really interesting that perform I don't know if I agree
Speaker 3: that Performers should be the top one, but I thought
Speaker 3: it was interesting that expense ratio had moved down on
Speaker 3: the list.
Speaker 2: Well, that's one what I jumped on for Active. I
Speaker 2: thought that was a sign that Active was getting more
Speaker 2: looks at the point because you would look at past
Speaker 2: performance if you're picking an Active manager. But to your point,
Speaker 2: you know, when you came out with that chart that
Speaker 2: showed that over half of the ETFs now DROLL are
Speaker 2: in funds that are less than ten basis points. And
Speaker 2: if you look at smart Beta you see the same
Speaker 2: cost migration. Even ESG before it kind of went and
Speaker 2: the gutter had this cost migration. Everything goes through this
Speaker 2: crucible and Active just went through it. And there's three
Speaker 2: or four issuers that are leading this low cost Active charge.
Speaker 2: So I think once expense ratio gets below a point
Speaker 2: where they're not going to care if it's five to
Speaker 2: six bass points different, but they just give me a
Speaker 2: good deal. And then after that I can just start
Speaker 2: looking at other things. So Active was the last thing
Speaker 2: to go through this, but now that it's gone through,
Speaker 2: I think to your point, expense ratios can probably gonna
Speaker 2: fall down because it's gonna be given that it's cheap.
Speaker 2: And I think that's what we're seeing. And one more
Speaker 2: chart to riff off of the active is have you
Speaker 2: increased your exposure to actively manage gtfs? In the last
Speaker 2: twelve months, thirty five percent said yes to equity ETFs
Speaker 2: and thirty percent to bond ETFs. Normally, bond active had
Speaker 2: been the main place to go active in ETFs. I
Speaker 2: mean it had like probably ten to one assets for
Speaker 2: a while, but equity has finally caught up. So the
Speaker 2: fact that equity active beat bond active is big deal,
Speaker 2: good sign for the industry, but again it's also part
Speaker 2: of it's a mixed blessing. It's good they want it,
Speaker 2: but I think a lot of managers are going to
Speaker 2: have to go through the crew ucible of you know,
Speaker 2: adjusting their fees to this new sort of lower fee era,
Speaker 2: but over time the flows should make up for it.
Speaker 2: So I think that's what we're going to continue to
Speaker 2: see how much of.
Speaker 1: That do you think is rooted in the transparency that
Speaker 1: an ETF provides, like the fact that you can actually
Speaker 1: see what the product holds and the prices come down. That,
Speaker 1: to me, together is perhaps why the numbers are what
Speaker 1: they are.
Speaker 2: Transparency I would put as maybe the third advantage, But
Speaker 2: I think it matters. I think, you know, I think
Speaker 2: ARC showed this ARC put it's all its holdings out.
Speaker 2: It tells you what it trades every day. I mean,
Speaker 2: it's like out loud and proud. I'm like, here's what
Speaker 2: I do. And a lot of managers look at that
Speaker 2: as showing their hand or their IP, and Kathy really
Speaker 2: made all that look a little silly. And I think,
Speaker 2: unless you're a gigantic one hundred billion dollar fund front
Speaker 2: running shouldn't be too big of a fear. So what
Speaker 2: we found is the active non transparent ETFs came out
Speaker 2: and they flopped. The active transparent came out they did well,
Speaker 2: But there is you can't just correlate that. The reason
Speaker 2: is if you look at the act of not transparent,
Speaker 2: they were also more expensive. My thesis on this is
Speaker 2: that if you're the kind of person who thinks your
Speaker 2: IP is so special that like your percent weight in
Speaker 2: Amazon is so much, it's like so valuable. Because you're
Speaker 2: a genius, you're more likely to charge more, Whereas if
Speaker 2: you're somebody who has a little more of a perspective,
Speaker 2: you're one of like a thousand active managers and we're
Speaker 2: all trying our best. Here, I'll show you what I hold,
Speaker 2: You're more likely to charge a lower fee. So I
Speaker 2: found that the transparency usually is linked more with people
Speaker 2: who are willing to charge less, And that's why I
Speaker 2: think we can't totally untangle it being a transparent versus
Speaker 2: non but certainly I think it helps.
Speaker 3: Yeah. Agree, I think people like to see it. Like
Speaker 3: I think in video is a perfect case, the stock's
Speaker 3: been running up. I bet you everyon would go in
Speaker 3: and say, is this manager holding a via? Okay, they're
Speaker 3: holding it, and if they're not, I feel like, like
Speaker 3: why they not? Video?
Speaker 1: Right?
Speaker 3: So I think whether or not people want to use
Speaker 3: a transparency is a different question. But I think people
Speaker 3: like to see it, especially when it comes like a
Speaker 3: hot stock like that.
Speaker 1: All right, let's close it out. I heard you might
Speaker 1: have some humor for me.
Speaker 2: Yeah, So we asked two questions at the end that
Speaker 2: just were just a little off, open ended, kind of
Speaker 2: like creative, and so one of them was describe the
Speaker 2: ETF market in two words or less you got Why
Speaker 2: don't you guys guess? Can you guess? Like, just give
Speaker 2: me a word you think is in here? A lot?
Speaker 2: Or how would you describe it growing? Wow? Dude, that's
Speaker 2: like the number one answer. This is family feud. You're
Speaker 2: going right back. Don't even need to hear anybody else.
Speaker 1: How fast is it growing? I guess I guess you
Speaker 1: could have an adjective in front of it.
Speaker 2: Yeah, but I mean, honestly, growth or growing was like
Speaker 2: twenty percent of the answers, by far the most popular.
Speaker 2: Why don't you guess? Now?
Speaker 3: I mean I saw could I maybe say the one
Speaker 3: I like?
Speaker 2: Oh yeah, oh say the one you like?
Speaker 3: It was the investor Nirvana.
Speaker 2: Yeah.
Speaker 3: That that's a little that's very specific, and it's true, right,
Speaker 3: there's three thousand plus products. There's literally anything Eric mentioned
Speaker 3: Colombia where you want, you know, access to oil or
Speaker 3: bitcoin now whatever, it's literally it's just it's paradise from
Speaker 3: an investor perspective.
Speaker 2: And if we go with like synonyms for growing or
Speaker 2: the spirit of growing, we've got booming uh, fantastic, fast, great,
Speaker 2: get getting saturated, holy cow with a question mark. That
Speaker 2: was interesting, irreversible trend just the beginning, mature and growing.
Speaker 2: Here's a couple that were interesting. Narrow, oversaturated, transparent, cheap
Speaker 2: wild without alternatives. So yeah, a lot of optimism, a
Speaker 2: couple of little digs in there, like narrow. I think
Speaker 2: some people do worry it's getting too crazy and niche
Speaker 2: and gimmick me.
Speaker 1: The moment you wrap bitcoin and ATF it's like okay.
Speaker 2: Yeah, yeah, yeah, what happened to my street? Yeah?
Speaker 1: Uh so what was the last?
Speaker 2: Uh? I would say, what have they done to my son?
Speaker 3: My boy?
Speaker 2: They massacred my boy? Okay, ye'll only like on our team,
Speaker 2: like seven out of ten people will not get that,
Speaker 2: but they should.
Speaker 3: They should. Everyone needs to watch that movie.
Speaker 2: I know. There's a couple movies that you need when
Speaker 2: you enter the like work, just three or four. I'm
Speaker 2: will glad to listen to arras Taylor Swift albums as
Speaker 2: a trade off.
Speaker 1: Wow, Taylor Swift Down is pretty good. The Godfather is it?
Speaker 3: No?
Speaker 2: Yeah, there's a decent trade off. Okay, all right, and
Speaker 2: and your final moment is in okay because it leads
Speaker 2: to the final question in this podcast, which is what's
Speaker 2: favorite ticker? Okay, so we got everybody's favorite ticker? Okay, okay,
Speaker 2: so what do you what do you think the number
Speaker 2: one answer was, Remember this is across Europe too.
Speaker 1: I was gonna say, I mean, move comes up more
Speaker 1: than anything else. Did move make a showing move?
Speaker 2: Had two?
Speaker 1: Okay, that's pretty good.
Speaker 2: I mean that'd be like the fifth answer, so we
Speaker 2: would have if it were family feud, that would register.
Speaker 2: But like low hack in there. Hack was in there,
Speaker 2: but also a little low. You have to think a
Speaker 2: lot of people just aren't that creative. Yeah, I mean
Speaker 2: spy yeah number one, yes, that or people were like, look,
Speaker 2: I just filled out your nineteen questions. I'll just get
Speaker 2: the hell out of here.
Speaker 3: Yeah, it's like the last one, like nineteen out of nineteen.
Speaker 2: Yeah, dude, I'm not thinking. I'm not thinking anymore for you. Okay,
Speaker 2: spy out, Robo got an answer, Weed got one l
Speaker 2: e E L l e FP. I guess that's like
Speaker 2: the magazine li CEFS. I bet that's the person who
Speaker 2: that person might actually work there. Cow's got one c
Speaker 2: O w Z cars cath jep Q got one J
Speaker 2: and K. Somebody picked jps T. Come on, I.
Speaker 3: Guess about creative tickers like ones that they like.
Speaker 2: It's his favorite ETF ticker not managed by your firm.
Speaker 2: There is no way somebody picked JPST. What happened is
Speaker 2: they probably that was the last one they invested in
Speaker 2: or something, and again they were just like, my brain is,
Speaker 2: I'm just done.
Speaker 3: I mean, I still think direction kind of is the
Speaker 3: best in this. They got gush drip deposit withdrawal. Yeah,
Speaker 3: they have so many.
Speaker 2: The problem is most srmal people aren't dabbling with those
Speaker 2: sort of rated R products, but certainly they've got the
Speaker 2: best ones. My well, my Yin and Yang I think
Speaker 2: are legendary. It's a three x China inverse.
Speaker 1: Somebody put those in there.
Speaker 2: No but to me like that, I would pick something
Speaker 2: like that probably, but there was no levers in here
Speaker 2: at all. And J and K got a mention mx
Speaker 2: US power. That's pretty interesting, even though they're not.
Speaker 1: I think Cows is sort of like a like a
Speaker 1: cousin of Mu.
Speaker 3: Yeah.
Speaker 2: I agree. I think live Stock did well. Yeah, if
Speaker 2: you add all the live stock, I think it might
Speaker 2: tie Spy. So there you go. I think that's the
Speaker 2: takeaway people like cows.
Speaker 4: Joel Anthan, thanks for joining us on Trillion, Thanks for
Speaker 4: having me, Thanks for listening to Trillions until next time.
Speaker 4: You can find us on the Bloomberg Terminal, Bloomberg dot com,
Speaker 4: Apple Podcasts, Spotify, or wherever else you'd like to listen.
Speaker 4: We'd love to hear from you more on Twitter. I'm
Speaker 4: at Joel Webber Show. He's at Eric Baltuna's. This episode
Speaker 4: of Trillions was produced by Magnus and Rickson.
Speaker 3: Bye