Speaker 1: Welcome to Trilliance. I'm Joel Webber and I'm Eric Beljunas. Eric.
Speaker 1: Welcome to It's pretty good. It's gonna be It's gonna
Speaker 1: be a lot like or different. Some things the same,
Speaker 1: some things are different. I'm looking forward to it, though
Speaker 1: it's hard to believe. I'm old enough where I just
Speaker 1: would be like in a movie where they like the
Speaker 1: future really far in the future, we're Yeah, I think,
Speaker 1: um just hard to believe how how old we're getting.
Speaker 1: When you think of that, do you think like Blade
Speaker 1: Runner or do you think like ack me cartoons. I'm
Speaker 1: thinking like Escape from New York or Terminator. I think
Speaker 1: Escape from New York might have been or something. They're like,
Speaker 1: we'll wait wait past that. Okay, So we've got some
Speaker 1: tickers for the year ahead. Yeah. So we did our outlook,
Speaker 1: which is sort of the more traditional thing that analysts do,
Speaker 1: especially in Blueberg Intelligence. But one of the not so
Speaker 1: traditional thing we do is a little bit maybe buzz feedish.
Speaker 1: We make a listical which is their twenty three e
Speaker 1: t f s we're watching, And this was born out
Speaker 1: of we have all of the analysts occasionally do something
Speaker 1: called the Money Show, which is an event that is
Speaker 1: all of our different cities, and it's direct retail investors
Speaker 1: go to these hotels and just here from experts. There's
Speaker 1: no middle people, no advisors, no institutions, nothing at these shows.
Speaker 1: These people want to hear about tickers. They don't really
Speaker 1: care about your trends or you're you know, four thousand
Speaker 1: foot view. They they're just curious about all the new
Speaker 1: gadgets and tickers that they have access to. And E
Speaker 1: t F give you access to a lot. So we
Speaker 1: do this list not to say these e t F
Speaker 1: s are going to go up or down. We can't
Speaker 1: do that. We don't give investent advice. However, these are
Speaker 1: e t F s that we think about and have
Speaker 1: moved us or that we are watching because they sort
Speaker 1: of tap into something else going on or one of
Speaker 1: our big themes. And so these are just generally e
Speaker 1: t s on our mind that we will be checking
Speaker 1: in too regularly in the new year. So joining us
Speaker 1: for this episode James Safer and Athanasios Seraphagus with Bloomberg
Speaker 1: Intelligence as well as Scarlet Food with Bloomberg News. There's
Speaker 1: time on Trilliance for three. James, Athanasios, Scarlett thanks for
Speaker 1: joining us on Trillians. Thank you, Yeah, thanks for having me.
Speaker 1: Glad to be back. Okay, James, why don't you kick
Speaker 1: us off? What's your top pick for next year? Yeah?
Speaker 1: So in the intra, Eric said, it's sometimes it's a ticker.
Speaker 1: Sometimes it's something that's more emblematic if something we're watching. Um,
Speaker 1: so mine is VTV, which is a very boring pick.
Speaker 1: It's the Vanguard Value Fund. But the reason I'm picking
Speaker 1: it is because Vanguards has a patent in the way
Speaker 1: that they operate this fund. So VTV is actually a
Speaker 1: share class of the Vanguard Value Mutual Fund Index fund.
Speaker 1: That process has patents, so nobody else has been able
Speaker 1: to mimic that. Every et F has been a standalone fund.
Speaker 1: But in May of three that patent expires. Now, if
Speaker 1: this isn't mean yeah, I mean if this was eight
Speaker 1: years ago, I'd be like, we'd be jumping from the rooftops,
Speaker 1: like this could be a huge deal, right, I mean
Speaker 1: right now, because it's a lot of people already converting
Speaker 1: e t f s are way bigger than they were
Speaker 1: when this patent was a much bigger deal, So we
Speaker 1: don't know how big of a deal it's going to
Speaker 1: be but I'd be shocked if we don't see some
Speaker 1: sort of asset managers looking at VT things like VTV
Speaker 1: and saying, maybe we can do this rather than converting
Speaker 1: our entire fund, or at least talking about doing it now.
Speaker 1: I don't know if we'll see someone do it, Ine,
Speaker 1: that'd be very interesting to watch, um, but I think
Speaker 1: there'll be a lot of people looking at that, that
Speaker 1: actual structure and thinking about implementing it themselves. Yeah, um,
Speaker 1: this is well. Conversions are huge. There's UM sixty billion
Speaker 1: dollars worth of mutual funds that have converted into e
Speaker 1: t f s from big issuers and Fidelity just not
Speaker 1: it is a big deal. So this is another option
Speaker 1: for them potentially that's opened up. However, I ran into
Speaker 1: the woman who was the lawyer on m Guinness Atkinson
Speaker 1: the first conversion. She downplayed it. She says this, um A,
Speaker 1: there's several patents they have that are related to it,
Speaker 1: and Vanguard could probably prolong that. So there's some legal
Speaker 1: things that could happen. Also, a lot of these issuers
Speaker 1: have moved on already. They've launched their own ETFs that
Speaker 1: are clones. They're doing conversions. Um. The other thing is
Speaker 1: with e t F share class. It helps if you
Speaker 1: have inflows, but if you have outflows, then it can
Speaker 1: sometimes actually mean that the e t F gets capital
Speaker 1: gains from the mutual fund seeing outflows, and that that's
Speaker 1: like the opposite of what you want. So there's it's
Speaker 1: a little trickier than people think. I think it will
Speaker 1: be interesting for sure. Um, but I'm I'm a little
Speaker 1: I don't know, i uh skeptical that will see big
Speaker 1: money use this route. I think though, I'm I'm with
Speaker 1: Derek for the most part. I think, like I said
Speaker 1: eight years ago, this would be I think this would
Speaker 1: be a huge talking point. Um. Right now, I think
Speaker 1: it's more just like is somebody going to do this?
Speaker 1: And obviously, I mean the same thing was with mutual
Speaker 1: fund conversions. We were early in saying that we thought
Speaker 1: there was gonna be a mask conversions of mutual funds ETFs.
Speaker 1: A lot of people in the industry disagree with us.
Speaker 1: We're not as bullish on this this trend taking hold,
Speaker 1: but um, we'll definitely be watching. Especially give me an
Speaker 1: e t F that we're gonna we should know about
Speaker 1: next year. What are you watching? Sure? So one thing
Speaker 1: that's on my radar for next year is Russia. Remember
Speaker 1: this story for the Russia ets this year, one in
Speaker 1: particular rs X, which was the Vanneck Russia e t F.
Speaker 1: It was the biggest one. But I think this story
Speaker 1: has to come to a close next year. These are
Speaker 1: still halted, so a lot of investors are still stuck
Speaker 1: with this e t F. There's been some process beginning
Speaker 1: to unwind. Some of the other ones, like I Shares
Speaker 1: have said they're going to start liquidating it. There's a
Speaker 1: lot in Europe. Our van Neck hasn't said anything yet,
Speaker 1: but I think this is gonna be a big year
Speaker 1: where this starts to unwind and it impacts a lot
Speaker 1: of other ETF. A lot of emerging market BTF are
Speaker 1: still holding Russia. This is a roach motel. You you
Speaker 1: got in and you can't get out, and people have
Speaker 1: been up there for for months essentially. Yeah, in March
Speaker 1: will be like almost a year. So and it's not
Speaker 1: just RSX. People don't realize that there is still Russia
Speaker 1: stocks splattered all over these random ETFs. So i'd like,
Speaker 1: you know, I Share has already begun the process, so
Speaker 1: it's probably gonna look similar to like a bankruptcy proceeding.
Speaker 1: They're going to try to get what they can when
Speaker 1: they can and start to pay out investors. So I
Speaker 1: think that RSX is going to be a big story
Speaker 1: for next year. Is that how this thing gets unwound
Speaker 1: and investors at least get some of their money back.
Speaker 1: What happens if it's an emerging market et F and
Speaker 1: it has some Russia exposure? Yeah, I think they're gonna try.
Speaker 1: I think would be the same process. But what people
Speaker 1: don't realize is the emerging market ones hold way more
Speaker 1: than even RSX. Our access is just I think a
Speaker 1: really good indication of how this might work. But yeah,
Speaker 1: so if you hold like e M or im G,
Speaker 1: there's still Russia stocks stuck in there, even the big
Speaker 1: vanguard once. So I'd be really interesting to see how
Speaker 1: this all gets uh, you know, how will they try
Speaker 1: to get some money out of it? Or if there's
Speaker 1: some resolutions of the war next year to start seeing
Speaker 1: this onlinding process. If I'm in that fund, I just say,
Speaker 1: don't do anything. Let me just wait till some resolution
Speaker 1: or at least hope for that. This could be years,
Speaker 1: because I'd rather I'd rather wait than get nothing now.
Speaker 1: Not as well. I mean, I don't think RUSH is
Speaker 1: going to exclude itself from the global world, you know,
Speaker 1: capital markets forever. Yeah, I think at some point to
Speaker 1: be a resolution. Um, but maybe I'm wrong. But it
Speaker 1: doesn't matter. It's like a tire or win if you
Speaker 1: if you wait, you can't lose anymore. It's already nothing, Okay, okay, next, next,
Speaker 1: unless you need the cash eric next. Yeah, So you
Speaker 1: know how it used to be like all about growth
Speaker 1: and work from homestocks and ARC and everything. Well, obviously
Speaker 1: when the Fits started hiking, everything changed and fundamentals became
Speaker 1: cool again, right, became essential essential. Yes, as Bogel says
Speaker 1: in the End, reality rules, and so ARC is taken
Speaker 1: to quoting Jack Bogel, like spend it two years living
Speaker 1: book in his world. Yeah, so cows. And obviously this
Speaker 1: is one that had a big year this year. Curious
Speaker 1: to see if this maintains this year next year. This
Speaker 1: basically is NETF that looks at free cash flow and
Speaker 1: free cash flow rules. In this kind of environment, it matters. Now, Yeah,
Speaker 1: if you have cash, you have there's stuff you can do.
Speaker 1: Having cash gives you protection from these horrible markets. And
Speaker 1: so this is an ETF that wasn't up really, but
Speaker 1: it wasn't down, and so just to tread water, you
Speaker 1: outperform the market by a lot. This thing was in
Speaker 1: the top twenty of flows and it spawned a bunch
Speaker 1: of little sequels. Calf bull bull is half as a
Speaker 1: small cap version of cows, right, that's right, So what's
Speaker 1: bull bull is the cash cows? But growth like a
Speaker 1: growth version of the cash cow. Interesting, so you can
Speaker 1: find growth and cash flow yep, and the cow is
Speaker 1: the emerging market cash cow. So this, this firm Pacer
Speaker 1: locked in on is hit. And every time you have
Speaker 1: an indie blockbuster, they launched the sequels just like movies
Speaker 1: A sudden, it's your franchise Rocky seven. Yeah, like this
Speaker 1: is it. So it's interesting to see how this will
Speaker 1: keep up. But overall I am watching fundamentally driven e
Speaker 1: t F s. I think they're gonna have actor Now.
Speaker 1: By the way, is it is fundamental as a factor.
Speaker 1: You could like throw that in with momentum and value
Speaker 1: and both audmental factors are built on fundamentals. So but
Speaker 1: like momentum is not really fundamentals. Yeah, I mean, oh yeah,
Speaker 1: you're right, that's just on price movement alright, value though,
Speaker 1: is priced to earning different ways to define it. I
Speaker 1: would say that factors are within the larger world of
Speaker 1: fundamental ETFs. Factors are a slice of that big tent, James.
Speaker 1: So I'm going to go to one that I talked
Speaker 1: about every time I'm on trillions. I feel like, but
Speaker 1: this is warranted, for there's a lot of news around GBTC,
Speaker 1: which is the Great Scale Bitcoin truss Um. So this
Speaker 1: thing closed at a record discount. In your day, we
Speaker 1: see a trade and a fifty percent discount, which basically
Speaker 1: means the price of the shares of this trust are
Speaker 1: trading at a fifty percent discount to the underlying value
Speaker 1: of the bitcoin it holds. So yeah, So basically, if
Speaker 1: bitcoins at twenty, this thing is trading at ten. Yeah, roughly,
Speaker 1: So you basically get a gigantic hair cut off the
Speaker 1: price of bitcoin if you're investing in this. But but
Speaker 1: right now, there's no way to arbitrage that difference, right,
Speaker 1: But the benefit is if you buy this now, like
Speaker 1: you said, we'll use the twenty thousand number you used.
Speaker 1: If you go from ten to twenty, A lot of
Speaker 1: people think fifty percent discount. I'm going to get a
Speaker 1: fifty percent return, but that's a hundred percent return, ten thousand,
Speaker 1: hundred percent returns. So this is big money and we're
Speaker 1: seeing that come out in lawsuits. So part of what's
Speaker 1: happening is Grayscale wants to convert this to an ETF.
Speaker 1: They've been died by the SEC, as we've covered here
Speaker 1: many times. They have now sued the SEC after the
Speaker 1: last denial. We're expecting oral arguments. There's written arguments going
Speaker 1: on right now. Oral arguments like actual core cases going
Speaker 1: to happen in February and March. We'll get a decision,
Speaker 1: likely before likely at some point in in the second quarter,
Speaker 1: possibly in the third quarter. Then we can see a
Speaker 1: PELS but who knows. We're gonna be watching that very closely.
Speaker 1: The other thing is what happens when you sue the SEC.
Speaker 1: What kind of likelihood of success do you have? YEA.
Speaker 1: So we actually have litigation analysts here in Bloomberg Intelligence
Speaker 1: who are covering this from the litigation standpoint, and you'll
Speaker 1: see if you go on Twitter or social media, you'll
Speaker 1: see people talk about this like this is a frivolous
Speaker 1: lawsuit to sue the SEC a regulator but there's a
Speaker 1: process set up for this. It's called an AP a
Speaker 1: procedural act. Basically you're supposed to treat like situations alike.
Speaker 1: Elliot Stein is our litigation analyst, and he gives them
Speaker 1: an odds around probably closer to thirty than fifty in that.
Speaker 1: But it's not a frivolous situation. On the gp GBPC lawsuit,
Speaker 1: I mean, the option is you can. You can it
Speaker 1: would be buying GBDC in some way, right, I mean,
Speaker 1: there's this some way you can short bitcoined by GBDC,
Speaker 1: stuff like that. People have been doing that for a
Speaker 1: long time. It has not worked out in the last
Speaker 1: four years. Um, So that not only is that lawsuit
Speaker 1: going on, now we have an investor for Tree Capital,
Speaker 1: which is an activist they run hedge funds or an
Speaker 1: activist investor special situation, and now they've sued grace Al
Speaker 1: to get more information. So there's so many different things
Speaker 1: happened lawsuit. And then we just had a letter from
Speaker 1: Michael Snison I might be pronounced his last name wrong.
Speaker 1: I'm sorry. He's the he's the CEO of Gray Scale
Speaker 1: and he basically says, if we failed to convert this
Speaker 1: to an e t F. We're going to do a
Speaker 1: tender offering of the shares Virtue wants to owe them
Speaker 1: to open redemption program. I mean, there are so many things.
Speaker 1: We could do a whole show on this. There's a
Speaker 1: whole so it's it's gonna be a lot happening in
Speaker 1: this product. Yeah. No, GBTC is endlessly FAST's funny. It's
Speaker 1: not even an ETF, but it's like, yeah, but it
Speaker 1: attracted money because it seemed like an e t F
Speaker 1: too many people and it was just the convenient way
Speaker 1: to get exposure. That said. What I'm also watching with
Speaker 1: crypto is how many filings are we going to see?
Speaker 1: Did the SPF drama scare away the market? But we've
Speaker 1: seen already one filing here in the US to actually
Speaker 1: for crypto products that are going to come out, And
Speaker 1: in Hong Kong they launched their first two and they've
Speaker 1: gotten decent money. So there's been a couple rays of
Speaker 1: light that this is going to carry on after SPF
Speaker 1: and the thrill of watching him go to jail is gone.
Speaker 1: What do you got next? Deeric? One of the ones
Speaker 1: I'm watching next year is s t r V, which
Speaker 1: a lot of people don't know, but it's the Strive
Speaker 1: five ETF. And this is part of a theme that
Speaker 1: I've been writing about, which is the cultural wars bleeding
Speaker 1: into the E t F world. Strive basically came out
Speaker 1: and said, you know, basically in a reaction to black Rock, Look,
Speaker 1: we're going to track the market like Beta, just like
Speaker 1: a regular index fune. We're gonna track all different areas
Speaker 1: of the market like black Rock does, except we're just
Speaker 1: going to vote for companies to make profits. We're not
Speaker 1: gonna do anything that's E s G. That's what I
Speaker 1: guess the name comes from, like, we want with them
Speaker 1: to strive for excellence, not for these E s G programs.
Speaker 1: So for the anti e s G crab, it's supposed
Speaker 1: to appeal to them. They have some big backers. This
Speaker 1: thing already has a decent amount of assets. The company
Speaker 1: itself has half a billion in assets. Pretty good start.
Speaker 1: This is also just interesting in that black Rock and
Speaker 1: Vanguard have started to look at programs where they're going
Speaker 1: to let their own their investors have a say and
Speaker 1: how their shares are voted. Be interesting to see if
Speaker 1: that sort of steal some of the thunder of this
Speaker 1: idea because if black Rock and Vanguard are going to
Speaker 1: sort of just turn over the voting, do you need
Speaker 1: to Strive. Um, I'm sure Strive would make a case
Speaker 1: while they're still important. But that is a big thing
Speaker 1: that this is a big issue because black Rock and
Speaker 1: Vanguard owns so much of the stock market and how
Speaker 1: they vote has a powerful position, and so this decentralization
Speaker 1: of that voting is going to be interesting. Strives in
Speaker 1: here basically saying we'll do it this one way, and
Speaker 1: then E s G concerns Are they legit? Are they not?
Speaker 1: So there's this whole area of the E t F
Speaker 1: world that sort of become a political football, and so
Speaker 1: it would be interesting to see if any big real
Speaker 1: money moves over there or if this just becomes something
Speaker 1: that we spend ten percent of our time talking about
Speaker 1: but makes up like point five percent of the assets um,
Speaker 1: which is generally what E s G is like. And
Speaker 1: also interesting to launch with Drill, the first E t
Speaker 1: F that they had, and then follow up with something
Speaker 1: that's much more mainstream. So be curious to see where
Speaker 1: they go. Okay, James, next, Yeah, so I'm gonna go
Speaker 1: with one that a lot of people probably aren't talking
Speaker 1: about or don't even know of. It's gonna be the
Speaker 1: Matthews China Active E t F m H and they
Speaker 1: are just a hard traditional active manager. They tend to
Speaker 1: be relatively concentrated in their picks. They have a bunch
Speaker 1: of mutual funds. So m c h f X is
Speaker 1: the mutual fund that this is basically UM a clone of,
Speaker 1: and they put in the E t F rapper. But
Speaker 1: why I'm watching it has to do with a similar
Speaker 1: thing of what we talked about vanguards UH fund structure.
Speaker 1: M c h f X pays out massive capital gains
Speaker 1: every year because they're very active. The mutual fund structure
Speaker 1: is not great because you often end up having to
Speaker 1: pay capital gains. The E t F structure is efficient
Speaker 1: because you can wash those gains out. So this thing
Speaker 1: launched in April of last year, I believe UM, and
Speaker 1: it we're watching see one if it's gonna have any
Speaker 1: capital gains this year, which it doesn't look like it's
Speaker 1: going to. But also it's gonna have a full year
Speaker 1: the following year. So this could be literally the poster
Speaker 1: child for why you should have an E T F rapper,
Speaker 1: especially for something side by side, like, this is why
Speaker 1: you want this one and not the other one exactly.
Speaker 1: I mean in a taxed advantage account, capital gains really
Speaker 1: don't make that much of a difference. But if you're
Speaker 1: in a taxable account, and E t F can really
Speaker 1: be a vastly more efficient vehicle than a mutual fund. Okay, Athanasios,
Speaker 1: what do you got? Yeah? So on the team, you know,
Speaker 1: we all follow basketball ericsivic basketball fans. So one theme
Speaker 1: we had for next year was just sort of back
Speaker 1: to basics, right, and you know one was you know,
Speaker 1: half court shots and Ali you sent a lot of
Speaker 1: like fanfare. I think we're gonna go back to basics,
Speaker 1: more focused on fundamentals, focused on quality companies. So the
Speaker 1: one I'm picking is the dimensional US High Profitability Company,
Speaker 1: do you e t F? Which is d u HP.
Speaker 1: Now this is gonna sound crazy, but you know, member
Speaker 1: companies that would like make stuff and make money Like
Speaker 1: I like these companies, and this is what this focus
Speaker 1: is on, Like companies that make stuff and are highly
Speaker 1: profitable and have good cash flow. Uh, and it's a
Speaker 1: it's been a really good performers. This is outrageous. Yeah,
Speaker 1: it sounds people would imagine being like, Okay, yeah, let's
Speaker 1: just pick companies that have money and make stuff, and
Speaker 1: so I probably put this onto like a quality factor.
Speaker 1: So it's just trying to pick out these So when
Speaker 1: you look at it at the surface, you're like, no,
Speaker 1: this is just the S and P five, But it
Speaker 1: only hast overlap with the index. It's twenty two basis points.
Speaker 1: D f A is really specialized in this, so I
Speaker 1: think they found a really good spot where it's just
Speaker 1: different enough. But it's got a lot of names in
Speaker 1: there that I think people will recognize, but they really
Speaker 1: seem to excel in their overweights and underweights. But I
Speaker 1: think this really big theme for next year is just
Speaker 1: going to be focused, go back to fundamentals, just focus
Speaker 1: on high quality companies. Yeah, by the way, that is
Speaker 1: a companies that have money and make stuff. E t
Speaker 1: breaking news, breaking news. So Eric, how do you follow
Speaker 1: that up? Yeah, I mean I have one that's similar
Speaker 1: to that, Athanasios, And that's the advantis E t F
Speaker 1: Really all of their E t F. So I'm watching
Speaker 1: this company. A lot of people don't know who they are,
Speaker 1: but they're an active manager and the main person used
Speaker 1: to work at d f A. So I believe they've
Speaker 1: come out and said, hey, we're like d f avorite,
Speaker 1: we're cheaper and it's definitely worked. Um people should be
Speaker 1: looking at. So the one I really pointed out was
Speaker 1: a vu V, which is the small cap value e
Speaker 1: t F. This is an interesting product because in the
Speaker 1: small cap value category there are e t s from
Speaker 1: black Rock and Vanguard multiple but this e t F
Speaker 1: a v u V took in four times more flows
Speaker 1: than any of the other ones. That's hard to believe.
Speaker 1: You rarely see a category with Vanguard and black Rock
Speaker 1: where someone else wins, and you look into this, their
Speaker 1: whole product line is taken in flows in like one month,
Speaker 1: one year, year to date, like just Green look like
Speaker 1: ARC maybe three years ago. And the reason these are
Speaker 1: interesting is a that they do focus on fundamentals, which
Speaker 1: is back in vogue, and be their low cost uh
Speaker 1: these are funds that are priced that the one I
Speaker 1: just mentioned was basis points. Their U S fund is
Speaker 1: fifteen UH e M is thirty three, and they're all
Speaker 1: within that range. So this is what I would call,
Speaker 1: you know, I frequently say dirt cheap or shiny objects
Speaker 1: or where most of the flows go. This would be
Speaker 1: dirt cheap. It happens to be active, So active I
Speaker 1: think can find a home either getting very active or
Speaker 1: maybe lowering their fee and being much more moderately priced
Speaker 1: and advantas I feel has has shown that. And this
Speaker 1: company UM again it's probably one of the fastest growing
Speaker 1: on a percentage basis. But these kind of winds in
Speaker 1: these categories like beating black Rock and Vanguard is no
Speaker 1: easy feat. So uh, this is um an E T
Speaker 1: F Small Cat Value. I also just wonder is that
Speaker 1: gonna rain for a while and you're in the two
Speaker 1: thousands Small Cat Value. You had a great run when
Speaker 1: the SMP was flat, and I wonder if Small Cat
Speaker 1: Value will have that decade long run again. I don't know,
Speaker 1: we'll see. That's another reason I pick that specific. One
Speaker 1: of the event is lineup. Okay, interesting, Athanasia, what do
Speaker 1: you got for us? Okay? One word? Bonds? So the
Speaker 1: year of the bond, right, so this is a rough year, kidding,
Speaker 1: bonds are great. Um This is where I think most
Speaker 1: you know, it's it's fun to talk about a lot
Speaker 1: of the other products have been coming up, but I
Speaker 1: think where there's a lot of room for innovation isn't
Speaker 1: bond ETFs. I think they've already they proved themselves that
Speaker 1: last year, what year is this? Now? What year? This
Speaker 1: like three years running? Like hear me out bonds? So
Speaker 1: you ten is the ticker. It's got a pretty generic name,
Speaker 1: just the US Treasury Tenure nod TF. But well, I
Speaker 1: this one, this one's a single bond ETF. So I
Speaker 1: think we saw the single stock ETFs come out this
Speaker 1: year where I think this makes more senses with single bonds,
Speaker 1: so it's it's basically like you're holding a ten year bond.
Speaker 1: So what I like about this this issue where and
Speaker 1: the products they come out with they're very precise, and
Speaker 1: they're focusing on the most liquid parts of the of
Speaker 1: the bond market. So this is just treasuries that tend
Speaker 1: to be liquid anyways. But I think this is gonna
Speaker 1: open the door for a lot of innovation next year
Speaker 1: on target on slicing up the bond market, having more precision,
Speaker 1: more efficientially, more liquidity. Uh So that's something that I'm
Speaker 1: definitely keeping an eye on for next year. We'll see
Speaker 1: if you try and sneak this one past this next
Speaker 1: year again too, making making a note to self here,
Speaker 1: what I actually wanted to use another one from this
Speaker 1: same company, FM Acceleration, You too, um so at Eighthan
Speaker 1: claimed it for his twenty three one of the ts,
Speaker 1: so I couldn't use it, But I'm also fascinated to
Speaker 1: watch these. They're launching a whole suite of these things
Speaker 1: that only invest in on the run treasury securities, so
Speaker 1: it's going to be interesting to see how many how
Speaker 1: advisors take to this. And they're they're basically trading vehicles
Speaker 1: for for treasury e t s, which sounds like it's
Speaker 1: not needed, but it really is niche because of the
Speaker 1: way that on the run treasuries trade more than um
Speaker 1: the basket of treasuries that aren't necessarily just the on
Speaker 1: the run versions, Eric, what else you go for us? Yeah,
Speaker 1: I have one from fixed income. I can do a
Speaker 1: little bonds. UM. The one I am looking at is
Speaker 1: the bond blocks triple C rated high yield corporate bond
Speaker 1: e TF, which interesting x C c c UM for
Speaker 1: triple C obviously, um, this is interesting because uh, you know,
Speaker 1: junk bond ETFs first of all had always been like
Speaker 1: the canary in the coal mine for like liquidity mismatch concerns,
Speaker 1: and so here comes one that goes really far in
Speaker 1: terms of uh poorly rated junk. Right, So triple C
Speaker 1: would be like bad, right, And this has almost allocated
Speaker 1: to it. For context, the next E t F with
Speaker 1: the most triple C is thirty, so it's triple the
Speaker 1: biggest one to the point, and H, Y, G and
Speaker 1: J and K only have about nine two triple C.
Speaker 1: So this really is interesting in a couple of ways. A,
Speaker 1: this thing is gonna yield a lot, and so will
Speaker 1: people be attracted to that yield? At some point you're
Speaker 1: going to get people looking at that indicated yield. It's
Speaker 1: going to be pretty high, easily double digits, I'm guessing. Then.
Speaker 1: The other question is junk bond ETFs have survived many
Speaker 1: tests for sure, and I've been a defender of them.
Speaker 1: They work fine, they see some discounts, but they trade
Speaker 1: on and largely it's because the bonds themselves haven't been
Speaker 1: updated to the N A V s a little stale.
Speaker 1: But we haven't seen defaults. Like if we have a
Speaker 1: wave of defaults, this thing could could have some issues. Right,
Speaker 1: If some of these junk companies here with these junk
Speaker 1: bonds have default problems, this could have some structural issues.
Speaker 1: I hope it doesn't, but it's one to watch Goodwood
Speaker 1: if they're okay, okay, James. Next, Yeah, So I'm gonna
Speaker 1: go with T s l Q, which is one of it.
Speaker 1: We just talked about single single bond ETFs. Now I'm
Speaker 1: gonna talk about single single stock and it's happen with Yeah.
Speaker 1: I mean, this thing is. I mean it has sixty
Speaker 1: five million dollars an assis. It trades more than that
Speaker 1: perfect year for this two So you know though, Yeah,
Speaker 1: T s l Q is. It's an inverse tesla et
Speaker 1: F It's the it was. It was one of the
Speaker 1: first ones launched that too. It's an e t F.
Speaker 1: It's kind of an oxy moron to call on et
Speaker 1: F and invest in a single equity. Some are like
Speaker 1: one point to five levered long summer one to two
Speaker 1: leverage short. There's about twenty five of them on the
Speaker 1: on the exchange right now. Um, there's been like eighty
Speaker 1: to nine file. There's a couple now that are filing
Speaker 1: that are basically uh leverage versions of e t f s.
Speaker 1: But I'm focused on the single security ones we were
Speaker 1: I was very bullish on this personally when we were
Speaker 1: talking if we talked about in Q one of twenty
Speaker 1: two Q two of twenty two. But basically the SEC
Speaker 1: we thought these were going to come out, but the
Speaker 1: SEC has vastly limited the amount of leverage that you
Speaker 1: can use. You can get way more leverage in these
Speaker 1: single security e t s in Europe than you can
Speaker 1: here in the States, and I think traders just aren't
Speaker 1: going to be that attractive. What the what do they
Speaker 1: happen to that? So it depends, it depends on the
Speaker 1: volatility of the underlying stock that you're investing in. So
Speaker 1: if you ever really volatile stock, you're not gonna go
Speaker 1: beyond one x inverse. Same so t SLQ you can
Speaker 1: only get one one x inverse. There's also another one
Speaker 1: that has some decent assets is the the the Apple
Speaker 1: inverse from direction A A p D, So that is
Speaker 1: twenty million assets, but it doesn't trade as nearly as much,
Speaker 1: and everything else like really doesn't trade much at all,
Speaker 1: has very minimal assets. We think they could be used
Speaker 1: maybe around earnings time, but we just they're just not
Speaker 1: gaining a lot of traction, partially because they don't have
Speaker 1: that extra leverage. And also I mean I think I
Speaker 1: think a lot of people thought these were gonna be
Speaker 1: very successful, like I said, Like I said, so did
Speaker 1: I UM, and it's just not turning out to be.
Speaker 1: So I'll be watching this whole space to see how
Speaker 1: many of them close or how many of them try
Speaker 1: to launch and then ultimately closed within a short time period.
Speaker 1: I will say, test test loa Q is unbelievable. I
Speaker 1: mean it's trading now regularly over a hundred million dollars
Speaker 1: a day. That's like big boy level, and it's got
Speaker 1: it's up eighty eight percent in the past three months.
Speaker 1: I mean that's gonna You're gonna find some buyers with
Speaker 1: that kind of performance, perfect perfect, perfect timing. Yeah, yeah,
Speaker 1: this is um. This is a legit hit and this
Speaker 1: will keep people coming and trying as long as you
Speaker 1: have one or two of these. But to James's point,
Speaker 1: I think they're gonna limit it to really high profile,
Speaker 1: controversial stocks and not just blanket every stock with a
Speaker 1: inverse and leverage version because who really needs to change
Speaker 1: like one point five x fisor I mean, who do
Speaker 1: we really need that? What do you got for us? Okay,
Speaker 1: K pop, which is the well this is I got
Speaker 1: bad news for you. Because I think this is gonna
Speaker 1: close and well, it's not K pop per se. I
Speaker 1: think this is indicative of how crazy and niche some
Speaker 1: of the launches have gotten over the last couple of years. Right.
Speaker 1: It was the byproduct of this really strong bull market.
Speaker 1: Launches were coming rapid place. Yeah, and they were getting
Speaker 1: really niche. It's not against K pop. I think it's
Speaker 1: just gonna be indicative of a theme that we are
Speaker 1: tracking for next year, and that's a lot more closures,
Speaker 1: and I think that these ones are going to be
Speaker 1: at higher risk, not a lot of the other ones
Speaker 1: for closures, because they're going to be they're smaller, they're
Speaker 1: more niche and focused. They're not gonna be able to
Speaker 1: appeal to like a bigger investor base. So, you know,
Speaker 1: any type of thematic or niche play like this, it's
Speaker 1: just been tough. A lot of them have been underwater.
Speaker 1: And then, like Eric had mentioned, one of our themes
Speaker 1: just you know, focus on fundamentals. Next year, I think
Speaker 1: there's gonna be a purging of some of these strategies.
Speaker 1: So K pop is just one I'm watching to unfortunately
Speaker 1: be added to the graveyard for next year. He wanted
Speaker 1: to do this headline, k pop is gonna k flop,
Speaker 1: That's why. Just but it was Catchy's New York post stuff.
Speaker 1: You know, we could do a TikTok off of that.
Speaker 1: We had the K pop guy on, and these are
Speaker 1: real people with you know, thoughts, hopes and dreams, and
Speaker 1: so I don't want to totally like crap on people's ideas.
Speaker 1: But this is pretty out there and it's seventy basis
Speaker 1: points and it's launched into a really rough market. I
Speaker 1: agree with Tom. It's just, you know, timing might have
Speaker 1: helped this thing, but the timing was not there. Announcers,
Speaker 1: you got another one I do. And it's maybe even
Speaker 1: like the whole reason we're here, right, And the ETF
Speaker 1: has always been there, but we never realized that. And
Speaker 1: it's just, well, how do we track the growth of
Speaker 1: the E t F industry? Right? There's podcasts and shows
Speaker 1: and now there's flows are still really strong, there's product
Speaker 1: that's coming, there's conversions. Yeah, you're you're you're totally trying
Speaker 1: to blow our mind for next year. So who you know?
Speaker 1: And it's this et F We sort of talk about
Speaker 1: it all. We know who who the big players are,
Speaker 1: all the issuers, the asset managers. But there's a whole
Speaker 1: ecosystem behind that, right, there's market makers, index providers, exchanges administrators.
Speaker 1: They're all benefiting from it. You're killing me, You're you're
Speaker 1: killing me. What are you talking about? So the ticker
Speaker 1: is k C, which is the spider SMP Capital Markets
Speaker 1: e t F. Now, there used to be an e
Speaker 1: t F that tracked It was called the ETF Industry
Speaker 1: e t F by Torosso, but they closed it unfortunately.
Speaker 1: I remember I was looking in the past and it's
Speaker 1: not well, it's not marketed like that. It's almost identical
Speaker 1: to the performance of the Tarrosto product. So this is
Speaker 1: sort of a backdoorway into play the growth of the industry,
Speaker 1: and you're getting exposure. It's a lot of the other
Speaker 1: firms that maybe you don't necessarily think about when everyone
Speaker 1: is moving over and converting into E t S. Thet
Speaker 1: F industry is like the media industry. They love talking
Speaker 1: about themselves. Oh yeah, Eric and Jack Bogel, I guess so,
Speaker 1: I mean, well, this is an e t F podcast.
Speaker 1: Should we talk about you know, eighties metal bands, I'm
Speaker 1: fine with it, Oh yeah, and nineties basketball, which I
Speaker 1: know you're also fine with Yeah, let's talk. Let's talk,
Speaker 1: Michael Jordan, come on, um, good good. Also, you basically
Speaker 1: made Eric fall silent. The other thing is ETFs are
Speaker 1: going to trade about fifty trillion dollars with the shares
Speaker 1: this year, and this has a lot of the firms
Speaker 1: that do the market making and exchanges and so ETFs
Speaker 1: may not make as much money as mutual funds and
Speaker 1: expense ratio, but they trade a ton and that's a
Speaker 1: revenue generator for You're gonna need to change the name
Speaker 1: of the podcast to tens of trillions, not just trillions.
Speaker 1: The beauty of trillions is that the accounts for tens
Speaker 1: of trillions. Yeah, and yeah, and you you were good. Yeah, well,
Speaker 1: no cruise control. Rebecca sin And who does our Asian research,
Speaker 1: we're trying to she's gonna start a podcast and we
Speaker 1: were thinking of what's the name, and I was like,
Speaker 1: you should probably go to the next step with gazillions. Eric,
Speaker 1: you got another. Yeah, this one is really This one
Speaker 1: is a very small ETF and I'm not sure to
Speaker 1: even last, but the top gun ETF. Wait, what's the
Speaker 1: ticker first t g n Okay, when did it launch?
Speaker 1: Like two months ago. It's called the A X S.
Speaker 1: Brendan Woods Top Gun Index CTF. And look, besides the
Speaker 1: whole top gun reference, which is you know, ets like
Speaker 1: to have fun for sure, what I what's interesting is
Speaker 1: it's only twenty seven stocks are I'll give you some example.
Speaker 1: MasterCard is in it, Bate and Switch, United Health, and
Speaker 1: a lot of stuff I don't recognize. There's somefing top
Speaker 1: gun be well, best in category exactly. This is a
Speaker 1: big thing I think. I think you're going to see
Speaker 1: a future where active managers come in with their best ideas.
Speaker 1: They're not going to launch, you know, three hundred stocks
Speaker 1: and moves a lot like okay, so they're playing off
Speaker 1: Tom Scarrett saying that you're the best of the best. Yeah,
Speaker 1: the best of the best exactly of you know, according
Speaker 1: to this manager. Think about it. If you have a
Speaker 1: cheap beta core like you use Vanguard and black Rock
Speaker 1: for like your vast majority of your core portfolio, and
Speaker 1: he'd spend three basis points on it, you know, you
Speaker 1: want something very convicted. Again, this is a little bit
Speaker 1: of the cathy would affect highly concentrated, but that's what
Speaker 1: people want because people now have of their portfolio available
Speaker 1: for hot sauce. How much is this fund? How much
Speaker 1: the expense ratio? Let me look, because it's active, right
Speaker 1: basis points that is a little price, even Cathy would
Speaker 1: The point of this is, I think we're going to
Speaker 1: see more of this. We're going to see even bigger
Speaker 1: managers come out with more concentrated active portfolios. And the
Speaker 1: reason for that again is because it can compliment jee
Speaker 1: Beta and not competing with it. Is there a mutual
Speaker 1: fund based on this or is this an offshoot of
Speaker 1: a mutual fund or not? It's a totally brand new
Speaker 1: totally what is the sequel called Maverick going to invest in?
Speaker 1: Maverick is going to hold the children, the children? Yeah,
Speaker 1: I don't know. It's gonna help the children, and the
Speaker 1: children will save him and everybody will have their art
Speaker 1: and there's gonna be a portion there that'll that will
Speaker 1: be enough fund you. But you got you gotta wait years. Yeah,
Speaker 1: in the middle of a pandemic again, right, Yeah, I
Speaker 1: like that. You were your aviators for that. He's got
Speaker 1: his leather bomber jackets. That's right. I am dangerous. No, no,
Speaker 1: but I agree on the concentration. Um, I think it's
Speaker 1: you know, top gun. But you probably see top ideas yep, yes,
Speaker 1: coming out next year. So I like it. That's that's
Speaker 1: a great pick. Who comes up with the ticker up?
Speaker 1: Who proposes tickers? Is that the marketing side or is
Speaker 1: it the fun manager? But it could be anybody, could
Speaker 1: be anybody. Um, we were just talking about that a
Speaker 1: little bit like t g N a little underwhelming. I
Speaker 1: think you could have done better with this ticker gun
Speaker 1: No mav ice are there four letter yes r r K. Yeah.
Speaker 1: This guy might might not have wanted to be so,
Speaker 1: I mean old than why would he name a top gun?
Speaker 1: But I don't know anyway, Um he chose it, but
Speaker 1: like approximately what his vintage is? We know how old
Speaker 1: he is? Last one? Yeah, so the last one I'm
Speaker 1: going to tell about his v x U S, which
Speaker 1: is kind of boring. It's just the global stock market
Speaker 1: without the us UM. Yeah, yeah, it isn't believe it,
Speaker 1: I believe it or not. Some people might want to
Speaker 1: invest not in the us UM. So this thing, it's
Speaker 1: a it's a massive fundage from Vanguard. But why it
Speaker 1: draws so much interest from me is because this thing
Speaker 1: has seen three days of outflows in its history since
Speaker 1: it launched in three days of outflows. That's it, No
Speaker 1: nothing else. Part of the reason is because, as most
Speaker 1: people likely know, the US market has trounced the international
Speaker 1: market over the last decade um. But if that starts
Speaker 1: to change, we might see some outflows here. So I'm
Speaker 1: gonna be watching for that because essentially, if you have
Speaker 1: like a set allocation, you want to have a certain
Speaker 1: percentage to to your domestic stocks. If you're in the US,
Speaker 1: you want have a certain percentage international. As US continually
Speaker 1: outperforms the international, you're gonna sell the US and buy international.
Speaker 1: So we that's my theory on why this thing consistently
Speaker 1: sees inflows day in and day out and doesn't see
Speaker 1: a single day of outflow. Um. So I'm gonna be
Speaker 1: watching basically to see, uh if if we can see
Speaker 1: international stocks keep up. They've actually if you look in
Speaker 1: two they kept pace roughly with with domestic stocks. So
Speaker 1: if we see a outperformance of international stocks, I'll be
Speaker 1: watching to see if this things these outflows. Okay, there
Speaker 1: are a couple of Bloomberg intelligence analysts who couldn't join
Speaker 1: our recording, Henry Jim and Europe and Rebecca's in in Asia,
Speaker 1: But we do want to go through some of their picks. Athanasius,
Speaker 1: you wanna kick us off with with some of Henry's Uh, sure,
Speaker 1: so I wanna. Eric doesn't like acronyms, so just no,
Speaker 1: all of them has you sits in the name already,
Speaker 1: so I won't repeat it every time. I'm just trying
Speaker 1: to keep the audience and falling asleep European regulatory acronyms.
Speaker 1: I mean, if you're listening right now, do you want
Speaker 1: him to just like sort of spellt s about those off? Okay,
Speaker 1: go ahead for another good but sure, it's a lot
Speaker 1: of the similar themes that we've seen in the US,
Speaker 1: so like dividends, you know, people want income. It's actually
Speaker 1: probably a bigger focus in Europe. So one of his
Speaker 1: picks was the smp US David and E t F
Speaker 1: U D v D, which is one of the tickers.
Speaker 1: And then inflation. You know, the U S isn't the
Speaker 1: only place in inflation, it's it's you know that's going
Speaker 1: up in Europe too. There's some interesting etf that are
Speaker 1: tracking European inflation expectations. This one's by Licks or the
Speaker 1: Licks or your year two tenure inflation Expectations et f
Speaker 1: I NFL is a ticker there and uh, Henry is
Speaker 1: pretty bullish on active ets. They haven't really penetrated that market,
Speaker 1: uh as much as they have here. So he's looking
Speaker 1: at some by JP Morgan, who I think now is
Speaker 1: the largest active shop in the US. They've got a
Speaker 1: pretty big or they're trying to increase that of fall
Speaker 1: hold in Europe. So he's got one j R e U,
Speaker 1: which is a JP Morgan US Research Enhanced Index Equity
Speaker 1: e s G. Oh my god, e t F. That
Speaker 1: is a long name. Uh, did I get you a
Speaker 1: niner in there? And James, you got one more for
Speaker 1: us from from Henry. Yeah, it's just r M a U.
Speaker 1: It's a gold et F. It's listed on the London
Speaker 1: Stock Exchange. Henry is interested in looking at precious metals
Speaker 1: ets and specifically gold because he's watching there was a
Speaker 1: lot of bitcoin and crypto et f s that launched
Speaker 1: in Europe and people have been burned pretty badly. There
Speaker 1: was actually an f t T or FTX token e
Speaker 1: t F in Europe. There's a few of them that
Speaker 1: have closed. There's been a few things that have been
Speaker 1: hit really hard. So he thinks people are going to
Speaker 1: go back to the tangible tangible. Yeah, exactly. Uh and
Speaker 1: and Eric, you've got some from Rebecca uh and from Asia. Yeah. Um,
Speaker 1: she's really watching the tech, the tech scene over in
Speaker 1: Hong Kong and China. I mean some of these are
Speaker 1: like the c SAW three oh three three. The tickers
Speaker 1: in Asia are like so they're just numbers basically, but
Speaker 1: generally speaking, she's looking at tech because you know, China
Speaker 1: has been beat up in the tech sector in particular.
Speaker 1: So she's watching some tech ETFs over there. So looking
Speaker 1: at the crypto et FUM. She was covering the Hong
Speaker 1: Kong cover the first ether and bitcoin ETFs, so she's
Speaker 1: following them. They already have I believe somewhere in the
Speaker 1: neighborhood eighty million right off the bat. It's really good.
Speaker 1: Eighty million over there is like that would be like
Speaker 1: if it was a billion dollars in the US in
Speaker 1: terms of how big that et F market is versus ours.
Speaker 1: She also like semi conductor. She's looking at a semi
Speaker 1: conductor et F. The Samsung Bloomberg Global Semiconductor three one
Speaker 1: three two h K is the ticker UM. This track
Speaker 1: twenty companies. Her point is that semi is obviously used
Speaker 1: in industrial shows, but also electric vehicles, so they can
Speaker 1: be an e V play as well. And then our
Speaker 1: final one, she's looking at Indonesia and Thailand, so if
Speaker 1: you look at Southeast Asia, she likes those two countries,
Speaker 1: or at least thinks good things may happen there. And
Speaker 1: so she's looking at the premier Dow Jones Emerging a
Speaker 1: can Titans one Dred which cut two tracks the top
Speaker 1: one hundred companies in Indonesia, Malaysia, it's in Vietnam. Interest. Yeah,
Speaker 1: so that's like, um, you know again, sort of like
Speaker 1: a cont and traded Southeast Asia et F. Given that
Speaker 1: there's again a lot of Asia is really just like
Speaker 1: can we please rebound because they've been beat up even
Speaker 1: worse than us. And that's sort of I think the
Speaker 1: thread through a lot of her her t s James
Speaker 1: Athanasios Scarlett, thanks for joining us on Trillions. Thanks for
Speaker 1: having me back. I was happy to be here, was
Speaker 1: a lot of fun. Happy New Year, Happy New Year.
Speaker 1: Thanks for listening to Trillions. Until next time. You can
Speaker 1: find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcast, Spotify,
Speaker 1: and wherever else you like to listen. We'd love to
Speaker 1: hear from you. We're on Twitter. I'm at Joel Weaper Show.
Speaker 1: He's at Eric Faltinas. This episode of Trillions was produced
Speaker 1: by Magnus Hindrances but