WEBVTT - The ETF Halftime Report 0:00:06.480 --> 0:00:11.960 Welcome to Trilliance. I'm Joel Webber and I'm Eric bellionis Eric. 0:00:11.960 --> 0:00:14.400 We haven't spent that much time talking about trends year 0:00:14.440 --> 0:00:17.160 to date, right, and that's something I do a lot. 0:00:17.200 --> 0:00:19.200 And the rest of my job here is to track 0:00:19.280 --> 0:00:22.400 the flows. The flows. It's every year. It's almost like 0:00:22.400 --> 0:00:24.560 a horse race, you know, it's year to date flows. 0:00:24.600 --> 0:00:27.560 So now we're in June and we've got an update 0:00:27.600 --> 0:00:30.160 on the horse race. Where a basketball game. I gotta 0:00:30.160 --> 0:00:32.440 be honest with you, it's half time, Okay, give me 0:00:32.479 --> 0:00:35.040 a bird's eye view. What's happened in the first half. 0:00:35.640 --> 0:00:39.240 So this was not a normal year. Last year everything 0:00:39.360 --> 0:00:42.760 was like utopia. Everything was going up, namely US equities. 0:00:43.240 --> 0:00:45.240 This year was everything that was going up together, which 0:00:45.280 --> 0:00:47.959 is also unusual. So et s were just exploded. Four 0:00:48.040 --> 0:00:50.479 hundred and eighty six billion in flows. Last year, everything 0:00:50.479 --> 0:00:54.040 took in money practically. This year was much harder. Now 0:00:54.080 --> 0:00:56.320 e t f s up to this point of taking 0:00:56.320 --> 0:00:59.120 in a hundred and twenty seven billion dollars now this 0:00:59.160 --> 0:01:01.560 time last year they had taken in almost two billion. 0:01:02.040 --> 0:01:04.320 Now keep in mind, yes they're underperforming, but it's a 0:01:04.440 --> 0:01:08.120 rougher market. And if you look, active mutual funds are negative, 0:01:08.560 --> 0:01:10.600 not by a lot, but they haven't taken in any money. 0:01:10.800 --> 0:01:13.400 So a hundred seven billion in this environment, it's pretty good. 0:01:13.920 --> 0:01:16.640 And unlike last year where it was all US equities 0:01:16.720 --> 0:01:19.399 leading the way as usual, especially after since Trump, when 0:01:19.400 --> 0:01:22.440 it's been a US equity flow athon US equities were 0:01:22.440 --> 0:01:25.280 working on. That sounds fun, doesn't it. Yeah, you know, 0:01:25.319 --> 0:01:29.000 I like a basketball game better, but okay, But something 0:01:29.319 --> 0:01:33.160 magical happened in early May that sort of put us 0:01:33.200 --> 0:01:37.200 back on a type US equity flow athon which was 0:01:37.280 --> 0:01:39.120 lacking the rest of the year. Do you know what 0:01:39.200 --> 0:01:42.240 happened in early May? That sort of completely changed the 0:01:42.280 --> 0:01:46.160 directory of flows away from say begging a fixed income 0:01:46.240 --> 0:01:48.240 kind of year to being much more of a US 0:01:48.280 --> 0:01:52.280 equity kind of year like last year. What happened? I 0:01:52.320 --> 0:01:56.960 am racking my brain to remember early May, and you're 0:01:56.960 --> 0:01:59.680 just gonna have to help me out. Two words. Warren 0:01:59.680 --> 0:02:03.960 buff It h were Buffet. I've only seen two people 0:02:04.120 --> 0:02:08.160 have the ability to single handedly change the trajection questions. 0:02:08.160 --> 0:02:11.080 We could have just done the whole episode twenty questions. 0:02:11.760 --> 0:02:14.639 The first is the fed chair whoever that is when 0:02:14.680 --> 0:02:18.080 when they talk the flows changed? Happened already next Trump, 0:02:19.040 --> 0:02:22.520 Trump is able to move flows pretty regularly. Buffett did it. 0:02:22.960 --> 0:02:24.359 What he did is he came out and he said 0:02:24.400 --> 0:02:26.760 he was buying I think it was seventy million shares 0:02:26.840 --> 0:02:29.480 worth of Apple, which was adding to more of his 0:02:29.600 --> 0:02:32.600 Apple holdings. And it was over that weekend of the 0:02:32.600 --> 0:02:36.600 Berkshire Annual Meeting, and I guess it was the spiritual 0:02:36.720 --> 0:02:39.600 lift the market needed. Plus you had Apple doing buy 0:02:39.639 --> 0:02:43.359 back just before that, so that really got people going. 0:02:43.520 --> 0:02:46.079 And since then there's been a nice rally and US 0:02:46.120 --> 0:02:48.000 equity e t F s have taken in a lot 0:02:48.040 --> 0:02:50.000 more and sort of made up for lost ground earlier 0:02:50.000 --> 0:02:52.680 in the year. But anyway, that kind of brings us 0:02:52.720 --> 0:02:55.400 up to where we're at right now, which is a 0:02:55.440 --> 0:02:59.080 little less Linn last year, but the assets are more 0:02:59.080 --> 0:03:02.400 spread around after I Leffett, and so we're gonna drill 0:03:02.440 --> 0:03:05.240 into that this episode and actually look at where the 0:03:05.240 --> 0:03:09.320 flows and outflows have come from and joining us again. 0:03:10.280 --> 0:03:12.680 One of our favorite episodes, we had a guest named 0:03:12.680 --> 0:03:16.560 Todd Rosenbluth who's the director of mutual fund and E 0:03:16.639 --> 0:03:19.840 t F Research at the cf are A. Todd is 0:03:19.919 --> 0:03:22.480 back for this episode. Yeah, Joel instead of Ted too. 0:03:22.560 --> 0:03:24.840 This is like Todd to there's nobody better to pick 0:03:24.880 --> 0:03:27.560 apart first half flows than than Todd. He is a 0:03:27.560 --> 0:03:30.840 bona fide e t f nerd this week on Joyance 0:03:31.680 --> 0:03:36.320 Halftime with Todd Rosen Booths. All right, Eric, I'm looking 0:03:36.360 --> 0:03:39.280 at a bunch of pronounce First, we're gonna talk about inflows. 0:03:39.600 --> 0:03:42.400 Second we're going to talk about outflows. Thurd, we're gonna 0:03:42.400 --> 0:03:47.320 talk about performance inflows. What do you notice? Right? So 0:03:47.560 --> 0:03:49.880 I'll just throw out the top inflow leader of the 0:03:49.960 --> 0:03:51.960 year is a ticker I E f A, which is 0:03:51.960 --> 0:03:53.680 the I shares Core M s C i EFA E 0:03:53.760 --> 0:03:57.280 T f IFA is essentially an acronym that we know 0:03:57.360 --> 0:04:00.000 that's international developed markets, so mainly it's Europe and japp 0:04:00.040 --> 0:04:03.960 hand and that has taken in seventeen billion dollars, and 0:04:04.040 --> 0:04:07.000 keep in mind that is at increase on assets. So 0:04:07.080 --> 0:04:10.600 i f A is far and away the flow leader. 0:04:10.960 --> 0:04:12.680 The next one on the list is seven billion. But 0:04:12.760 --> 0:04:15.360 let's focus on I f A. Todd, what's your take? 0:04:15.520 --> 0:04:18.040 What is driving all of the traffic here? Yeah? I 0:04:18.040 --> 0:04:20.479 think it's a couple of things. One is that in 0:04:20.640 --> 0:04:24.840 prior years investors were under exposed to develop internationally were 0:04:24.880 --> 0:04:28.039 favoring US equities. It was a very home biased for 0:04:28.200 --> 0:04:32.839 US investors, and so international equities did relatively well last year. 0:04:32.880 --> 0:04:35.760 Investors wanted to rotate and make sure they had exposure 0:04:35.800 --> 0:04:38.120 to it. The second thing is investors are as we'll 0:04:38.120 --> 0:04:40.440 see with the rest of the flows, Investors are increasingly 0:04:40.480 --> 0:04:43.920 looking at lower cost products. So while I e f 0:04:43.960 --> 0:04:47.039 A was by far the biggest gainer of new money, 0:04:47.480 --> 0:04:50.360 a companion product that's more expensive from I shares e 0:04:50.600 --> 0:04:54.560 f A, which has a higher expense ratio largely similar 0:04:54.880 --> 0:04:59.000 portfolio was the second biggest and outflows. But you can 0:04:59.000 --> 0:05:01.360 still see a big different about a ten billion dollar 0:05:01.480 --> 0:05:04.800 difference net inflows between those two products. So there is 0:05:04.839 --> 0:05:08.560 still demand for developed international investing this year. Just to 0:05:08.680 --> 0:05:11.880 explain that price differential, e f A is point three 0:05:11.920 --> 0:05:16.080 t I f A is point oh eight, So doing 0:05:16.080 --> 0:05:19.600 the math there, that's four times cheaper. That's a That's enough. 0:05:19.640 --> 0:05:22.120 And what was interesting about this this year we saw 0:05:22.160 --> 0:05:25.839 a five billion dollar trade, actually five point six billion 0:05:26.200 --> 0:05:28.760 out of e f A into I f A, so 0:05:28.839 --> 0:05:32.159 almost a third of that seventeen was one trade. I 0:05:32.200 --> 0:05:34.800 believe it was Merrill Lynch's model portfolios. They put all 0:05:34.800 --> 0:05:37.200 the f a's in and they basically were able to 0:05:37.279 --> 0:05:39.160 move that much money in the course of two or 0:05:39.200 --> 0:05:41.200 three days. It was, as far as we know, the 0:05:41.240 --> 0:05:43.760 largest et F trade on record, and that was just 0:05:43.839 --> 0:05:46.599 because even the big fish wont it cheaper if they can, 0:05:47.080 --> 0:05:50.080 and I f A had started to gain enough liquidity 0:05:50.120 --> 0:05:53.560 over the years that it became formidable for someone big 0:05:53.600 --> 0:05:55.320 to use it, Whereas before when it first came out, 0:05:55.360 --> 0:05:57.479 even though it was cheap, it wasn't liquid enough for 0:05:57.520 --> 0:05:59.840 the big guys. But now this thing is trading about 0:06:00.120 --> 0:06:02.800 a billion a day, which is almost good enough for anybody. Yeah, 0:06:02.839 --> 0:06:04.920 and I think it's similar. You know what's number two 0:06:04.960 --> 0:06:06.880 on the list of inflows is I E M G, 0:06:07.160 --> 0:06:10.400 which is another low cost product from I Shares. It's 0:06:10.400 --> 0:06:14.840 a cheaper version of E E M they're more incumbent 0:06:14.880 --> 0:06:17.920 emerging market product. You've got a slight difference and exposure. 0:06:18.040 --> 0:06:20.960 The core series of products from I Shares has some 0:06:21.040 --> 0:06:25.400 small and MidCap exposure, but these still are market cap weighted, 0:06:25.480 --> 0:06:28.960 So the largest companies nest Lee for example, in I 0:06:29.120 --> 0:06:32.360 E f A and Samsung for example in I E 0:06:32.520 --> 0:06:35.840 M G are still the same large companies in the 0:06:36.000 --> 0:06:40.440 cheaper and the more expensive products. And I'm noticing another trend, 0:06:40.480 --> 0:06:44.200 which is number three I v V also I shares right, so, 0:06:44.320 --> 0:06:47.880 and actually number four s h V also I shares, 0:06:48.040 --> 0:06:49.800 So I would put before we get to s h 0:06:49.880 --> 0:06:52.360 V because that one's unique I VV. If you look 0:06:52.400 --> 0:06:56.280 at the flows for last year, the top three were 0:06:56.320 --> 0:06:58.960 the same I F A, I M G I V 0:06:59.120 --> 0:07:02.400 V A slightly different order. But this is what we 0:07:02.440 --> 0:07:05.000 talked about a couple of weeks ago with Martin Small, 0:07:05.200 --> 0:07:07.920 what I call the four headed monster. These are dirt 0:07:08.000 --> 0:07:09.960 cheap ETFs that make up each a big slug of 0:07:10.000 --> 0:07:12.640 your portfolio. You throw a G G in there, which 0:07:12.640 --> 0:07:16.239 is your U S aggregate bond. That is number six 0:07:16.280 --> 0:07:19.000 on the list. Those four E t f s are 0:07:19.000 --> 0:07:22.320 taking in a third to all the money because you 0:07:22.320 --> 0:07:25.920 get an entire portfolio for six seven basis points all in. 0:07:26.520 --> 0:07:28.480 But let's look at v A. V A is a 0:07:28.480 --> 0:07:31.280 competing product on there. V A would be a competitor 0:07:31.320 --> 0:07:34.480 to I E F A, and that's number six. Yeah. 0:07:34.520 --> 0:07:36.680 So again, like what I was saying, some people are 0:07:36.760 --> 0:07:40.160 rotating to international. What's the difference between I F A 0:07:40.280 --> 0:07:42.680 and V A. If you were advising somebody which one 0:07:42.720 --> 0:07:44.400 to pick and what they should think about because they're 0:07:44.440 --> 0:07:48.120 both cheap, right, they're both cheap, so you can't. Investors 0:07:48.160 --> 0:07:49.800 just need to be mindful if you want to use 0:07:50.320 --> 0:07:53.240 I Shares and Vanguard together. Is the way that the 0:07:53.280 --> 0:07:57.080 index behind this is going to be different. So VA 0:07:57.240 --> 0:08:00.600 tracks and index that's offered more that's available from Foots, 0:08:00.640 --> 0:08:04.640 your Russell Foots, your Russell h includes and developed markets 0:08:04.720 --> 0:08:08.440 Canada as well as South Korea as part of the portfolio. 0:08:08.640 --> 0:08:11.640 Canada is not part of I e f A. The 0:08:11.880 --> 0:08:14.680 IFA part doesn't include a C in that there's no 0:08:15.640 --> 0:08:18.320 it's not KIFA so to speak, so there's gonna be 0:08:18.320 --> 0:08:22.680 no Canadian exposure and South Korea is considered an emerging 0:08:22.720 --> 0:08:25.280 market according to M S c I And at the 0:08:25.360 --> 0:08:27.240 risk of getting too far in the weeds, if you 0:08:27.400 --> 0:08:30.480 use one I Shares product and one Vanguard product that's 0:08:30.480 --> 0:08:32.680 from this list here, you could either be doubling down 0:08:32.720 --> 0:08:35.319 your exposure in certain countries or you could be having 0:08:35.360 --> 0:08:38.920 a whole in certain countries, depending upon how you structure that. 0:08:38.920 --> 0:08:42.800 Maybe based on the indicas bottom line, you should use 0:08:42.800 --> 0:08:44.680 them as a set right if you go I f A, 0:08:44.800 --> 0:08:46.959 you should also do i MG. If you go V 0:08:47.040 --> 0:08:48.560 E A, you should use V W O and not 0:08:48.640 --> 0:08:51.160 mix and match in that case, or do so with 0:08:51.200 --> 0:08:53.440 a full awareness that you're doubling down. So if you 0:08:53.520 --> 0:08:56.040 really like South Korea, for example, and you want exposure 0:08:56.080 --> 0:08:57.480 to it, that's the way of doing it. Or you 0:08:57.480 --> 0:08:59.640 want to really think that Canada is a part of it, 0:09:00.040 --> 0:09:02.640 than than Yes, But certainly going into buying an ETF 0:09:02.679 --> 0:09:05.000 not just because it's the cheapest one, because a lot 0:09:05.080 --> 0:09:06.600 of the ones that are on the top gainers this 0:09:06.679 --> 0:09:09.079 year or a top asset gatherers this year are cheap, 0:09:09.360 --> 0:09:11.600 but they're not the same products. It's not just one 0:09:11.640 --> 0:09:14.679 basis point cheaper than any other. So I mean cheapness 0:09:15.040 --> 0:09:18.000 is a trend. Um. There's also some tickers that are 0:09:18.200 --> 0:09:20.880 sort of boring s h V. Yes, so s h 0:09:21.000 --> 0:09:23.920 V is um fascinating. It's never on the top ten. 0:09:23.960 --> 0:09:25.760 This is the I share a short treasury bondy t 0:09:25.840 --> 0:09:29.079 F which holds treasuries that are really short term. It's 0:09:29.120 --> 0:09:31.560 almost like a money market funder or like putting your 0:09:31.559 --> 0:09:34.800 money under a mattress or cash and for it to 0:09:34.880 --> 0:09:37.960 take in you know, what is it six point two billion? 0:09:38.000 --> 0:09:41.000 That's a seventy eight percent increase in its assets. And 0:09:41.080 --> 0:09:43.720 this brings us to on there well earlier in the air. 0:09:43.679 --> 0:09:47.040 Remember when volatility is going crazy, everybody when they get 0:09:47.080 --> 0:09:49.280 scared that this is the kind of stuff they run 0:09:49.320 --> 0:09:50.760 to so they put it under the mattress, and they 0:09:50.760 --> 0:09:53.400 didn't take it up right. And so ultra short term 0:09:53.400 --> 0:09:56.480 and short term debt ETFs all told talking about twenty 0:09:56.520 --> 0:09:59.960 four billion, which is way punching above their weight because 0:10:00.040 --> 0:10:01.680 is they only make up one percent of the assets. 0:10:02.200 --> 0:10:03.679 What's your take on that? You think that money is 0:10:03.679 --> 0:10:06.440 gonna come back out, Todd if the market continues to rally. 0:10:06.679 --> 0:10:08.920 I think part of that's in there in part because 0:10:09.000 --> 0:10:11.400 the Federal Reserve is raising interest rates and has on 0:10:11.400 --> 0:10:14.280 a path to continue to raise interest rates further. And 0:10:14.320 --> 0:10:17.880 so short term and ultra short term products aren't gonna 0:10:17.920 --> 0:10:20.440 go down. You know when when the usually bonds go 0:10:20.559 --> 0:10:23.520 down in value and bond ETFs go down in value 0:10:24.000 --> 0:10:27.440 as rates spike higher, this is a flight to safety 0:10:27.559 --> 0:10:30.680 and a flight to liquidity. I don't think it's parking there. 0:10:30.720 --> 0:10:32.679 I do think there's there's money that's gonna stay in 0:10:32.720 --> 0:10:34.600 there for a period of time, and it's you know, 0:10:34.800 --> 0:10:37.120 SHV is one of them, but we're seeing floating rate 0:10:37.480 --> 0:10:40.240 bond products. I think f l O T S is 0:10:40.280 --> 0:10:42.600 one of the top ones as well. But you're actually 0:10:42.600 --> 0:10:45.280 we're seeing it from various products. You know. JP Morgan 0:10:45.360 --> 0:10:48.720 has a product jps T as an example, that just 0:10:48.800 --> 0:10:51.360 launched late last year, and I think it's already above 0:10:51.400 --> 0:10:55.320 five million in assets already based on net inflows. There's 0:10:55.320 --> 0:10:57.920 a lot of demand that's out there for short term products. 0:10:58.200 --> 0:11:01.160 I think that's going to continue as we move it 0:11:01.200 --> 0:11:02.960 to the second half of this game. So it's a 0:11:02.960 --> 0:11:05.440 little bit like how Eric uses jacuzzi where you just 0:11:05.440 --> 0:11:08.040 like get in, relax a little bit, and then get 0:11:08.040 --> 0:11:11.400 back in the game. Well to some I think some 0:11:11.679 --> 0:11:14.920 you know, some of the money that rotates is gonna stick. 0:11:15.200 --> 0:11:16.960 Those people are just going to hang in the jacuzzi 0:11:17.080 --> 0:11:19.040 and until they get all wrinkled and whatnot, and then 0:11:19.080 --> 0:11:21.479 you gotta get out. Yeah, other people are gonna get out. 0:11:21.520 --> 0:11:25.199 This top ten list is a good mix and of 0:11:25.200 --> 0:11:28.520 of products that tend to cater to both the sort 0:11:28.559 --> 0:11:31.280 of quick hit types and also the more long term 0:11:32.040 --> 0:11:34.840 But SHV and s h Y or two products that 0:11:34.880 --> 0:11:38.600 you see have grown over the last five years. So yes, 0:11:38.600 --> 0:11:40.800 it's a quick hit this year, but they've steadily grown 0:11:41.280 --> 0:11:45.520 and I think they're actually replacing other vehicles that people 0:11:45.600 --> 0:11:47.920 use back in the day. Four places to park cash 0:11:48.000 --> 0:11:50.080 or hideout from rates. Yeah, I mean some money markets 0:11:50.080 --> 0:11:51.920 obviously are a place where people have hidden out. And 0:11:52.600 --> 0:11:55.160 you know, we were obviously talking about this on an 0:11:55.200 --> 0:11:57.800 E t F show, but money is moving from et 0:11:58.160 --> 0:12:00.960 or into e t F s from from utualer than that. 0:12:01.360 --> 0:12:04.559 It's a cultural phenomenon. This show definitely is. But because 0:12:05.280 --> 0:12:07.600 you know, if rachel going up and if the returns 0:12:07.600 --> 0:12:09.800 are gonna be lower, you want to pay as little 0:12:09.840 --> 0:12:13.280 as possible. And so these products ETFs in general, or 0:12:13.320 --> 0:12:17.920 bond ETFs tend to be significantly cheaper than actively managed 0:12:18.000 --> 0:12:21.160 mutual funds. And so if if the returns are gonna 0:12:21.160 --> 0:12:24.240 be relatively muted, you want to pay as little as possible. 0:12:24.400 --> 0:12:28.360 So number UH six is agg which I think we've 0:12:28.400 --> 0:12:30.600 hit on with what we've been talking about with bonds 0:12:31.240 --> 0:12:36.960 UH number seven float fl LT also bonds UH number 0:12:37.280 --> 0:12:42.439 nine momentum m t u M. That's a shocker. Why well, 0:12:42.440 --> 0:12:45.480 because it's it's kind of hasn't come from oblivion per se, 0:12:45.520 --> 0:12:47.280 but it only had about, you know, a couple of 0:12:47.320 --> 0:12:50.920 billion last year. Now it's taken in, it's basically doubled 0:12:50.920 --> 0:12:53.920 in size in the past um six or seven months. 0:12:54.720 --> 0:12:58.120 And this hasn't been the most exciting year for stock, 0:12:58.240 --> 0:13:00.960 so it is interesting that momentum would be that high 0:13:00.960 --> 0:13:03.640 on the list. Yeah, A couple of things. One, what 0:13:03.760 --> 0:13:05.760 we've seen this year is that the winners of last 0:13:05.800 --> 0:13:08.120 year in many cases have continued to move higher. And 0:13:08.200 --> 0:13:12.120 this is basically a let your winners run approach. The 0:13:12.160 --> 0:13:14.720 socks that get in have performed relatively well and have 0:13:14.800 --> 0:13:19.320 strong relative strength and strong technical metrics from a momentum perspective, 0:13:20.080 --> 0:13:22.559 and so that's TECH. Where that was Tech at the 0:13:22.640 --> 0:13:24.360 end of the year, and Tech has done relatively well, 0:13:24.400 --> 0:13:28.040 which explains number ten, Which explains number ten as well. Uh. 0:13:28.080 --> 0:13:29.760 The second thing is we at c F r A 0:13:29.960 --> 0:13:32.880 we do individual research on on e t F fourteen 0:13:32.920 --> 0:13:35.719 hundred in total. We decided to write about M t 0:13:35.840 --> 0:13:37.720 U M for the month of June as our focus 0:13:37.800 --> 0:13:40.680 et F and we did so because we were pleasantly 0:13:40.720 --> 0:13:43.880 surprised that despite the strong run for many of the 0:13:43.920 --> 0:13:47.000 socks inside the portfolio, we still our analysts still felt 0:13:47.200 --> 0:13:49.599 they were many of them were still undervalued. Some of 0:13:49.640 --> 0:13:52.800 those are bank companies, some of them in the financial sector. 0:13:52.800 --> 0:13:55.880 Summer technology stocks like Cisco and Intel, and I believe 0:13:55.920 --> 0:13:59.560 it actually just rebalanced UM and I saw one of 0:13:59.559 --> 0:14:02.400 your members of the team here posted on Twitter in 0:14:02.480 --> 0:14:05.240 June just examples of stocks that made it in additional 0:14:05.280 --> 0:14:08.600 technology stocks have rotated and this is not unlike the 0:14:08.640 --> 0:14:13.400 agg or i VV products. This does rotate and rebalance 0:14:13.720 --> 0:14:16.000 every six months, and so it's something for investors to 0:14:16.040 --> 0:14:18.720 be top of the top of mind. Yeah, I'm looking 0:14:18.800 --> 0:14:23.000 right now MTUM. The tech waiting is so you're getting 0:14:23.000 --> 0:14:26.120 a lot of tech here. Okay, So there's there's some 0:14:26.120 --> 0:14:30.360 some themes that I noticed, cheapness being one, tech being another, 0:14:31.000 --> 0:14:34.440 the things that did well last year. What do you go? 0:14:34.600 --> 0:14:37.560 How do you guys feel about this top ten for influence. 0:14:38.520 --> 0:14:40.720 I'm not surprised to see. I think many of the 0:14:40.800 --> 0:14:42.920 names are what you would expect in the market, which 0:14:42.920 --> 0:14:47.080 has been expectations of of bonds declining and value, so 0:14:47.160 --> 0:14:50.400 investors hiding out in that and then continue demand for 0:14:50.480 --> 0:14:54.320 international investing. I think the fact that we have a 0:14:54.400 --> 0:14:57.680 single factor product m t UM and we have net 0:14:57.680 --> 0:15:01.200 inflows for the triple queues, which is often seen net outflows. 0:15:01.840 --> 0:15:03.560 It's been around for a while, but his money has 0:15:03.560 --> 0:15:06.000 flowed out of it over time. I think it's encouraging 0:15:06.040 --> 0:15:08.040 that there's still adoption of e t f s to 0:15:08.080 --> 0:15:11.760 be had. And I also think that this top ten list, 0:15:12.200 --> 0:15:14.720 when the market's a little shaky a lot of times, 0:15:14.760 --> 0:15:17.720 that will clear off some of the crazy hot trends. 0:15:17.720 --> 0:15:20.080 I think MTUM is one example where that that does, 0:15:20.200 --> 0:15:22.920 and the cues uh and what it will leave with 0:15:23.120 --> 0:15:27.040 is the huge secular shift from like high cost mutual 0:15:27.080 --> 0:15:29.960 funds into low cost ttfs. A lot of this money 0:15:30.000 --> 0:15:31.640 was going to come over no matter what was going on, 0:15:32.240 --> 0:15:34.760 So I think this is like a baseline that you 0:15:34.800 --> 0:15:36.440 can expect to see for a while. I think half 0:15:36.480 --> 0:15:39.040 these e t f s, maybe even six of them, 0:15:39.080 --> 0:15:40.920 are probably gonna be on the top ten list for 0:15:40.960 --> 0:15:43.840 a long time. It's the floating rate debt e t 0:15:44.000 --> 0:15:46.960 F the momentum which I think will come and go. Look, 0:15:46.960 --> 0:15:49.440 you gotta I shares in Vanguard are just so dominant. 0:15:49.880 --> 0:15:52.200 The cues on there is Investco. But outside of that, 0:15:52.360 --> 0:15:53.960 I mean, I haven't gone down to the top twenty five, 0:15:54.000 --> 0:15:56.440 but you're probably looking at four of the top twenty 0:15:56.440 --> 0:15:58.920 five or two companies. And I bet if you look 0:15:58.960 --> 0:16:01.320 at the flows in the first or I did this 0:16:01.360 --> 0:16:04.560 when there was volatility. Still of the money goes to 0:16:04.600 --> 0:16:07.480 products that charge less than twenty basis points. So even 0:16:07.480 --> 0:16:18.080 with its volatile or it's utopia, there's nothing like dirt cheap. Okay. 0:16:18.080 --> 0:16:21.720 So we talked about inflows. Part two, Let's talk about outflows. 0:16:22.560 --> 0:16:29.160 Number one. This is a shocker spy also known as spiders, 0:16:29.560 --> 0:16:33.080 also known as the first ETF. I can keep going 0:16:33.800 --> 0:16:36.960 well when you're the largest HEATF, you know that you 0:16:36.960 --> 0:16:40.080 can obviously gain as as the pie continues to expand, 0:16:40.600 --> 0:16:43.920 or when there's a lower cost alternative, as there is. 0:16:44.160 --> 0:16:46.440 You know there's two of them actually I VV and 0:16:46.560 --> 0:16:48.880 v O that are on the top ten list. Some 0:16:49.000 --> 0:16:51.600 of that money that's going into those respected products are 0:16:51.640 --> 0:16:55.640 coming out of spy spy and then spy tends to 0:16:55.680 --> 0:16:59.560 be used more by from a trading perspective, institutional investors 0:17:00.160 --> 0:17:02.800 that are trying to position ahead of something or using 0:17:02.840 --> 0:17:05.480 it as a hedging vehicle. So it tends to either 0:17:05.520 --> 0:17:07.920 be the biggest from an inflows or tends to be 0:17:07.960 --> 0:17:10.919 the biggest from an outflows perspective year after year just 0:17:11.000 --> 0:17:13.919 because of its scale. Yeah, I agree, Spies got a 0:17:14.080 --> 0:17:17.280 crosshairs on it. I VV in particular is going after Spies. 0:17:17.840 --> 0:17:20.240 It's a little cheaper, right, spies point o nine percent 0:17:20.280 --> 0:17:23.040 i vvs point four pc IVV starting to trade a 0:17:23.080 --> 0:17:25.240 little more. Uh, they're gonna be going back and forth 0:17:25.280 --> 0:17:27.040 for a while. One thing about Spy though, is in 0:17:27.080 --> 0:17:29.320 the first month January was a killer month before the 0:17:29.359 --> 0:17:32.440 vall came, Spy took in nineteen billion in a month 0:17:33.200 --> 0:17:38.360 and that was like, uh, almost of the whole months flows. 0:17:38.400 --> 0:17:41.040 So it's sort of like when Spy is on, it 0:17:41.160 --> 0:17:44.080 carries a lot of the weight, and when Spy goes away, 0:17:44.119 --> 0:17:46.679 when the hot money pulls out, what you find is 0:17:46.680 --> 0:17:49.680 Spy had nineteen billion and outflows the next month. So 0:17:50.680 --> 0:17:53.800 Spy we'll see flows in a day that would be 0:17:53.840 --> 0:17:56.040 like a lifetime for other ETFs. So a lot of 0:17:56.080 --> 0:17:59.200 the Spy volume and flows our money coming in and 0:17:59.240 --> 0:18:02.280 out using spin inst the futures. But there is this 0:18:02.359 --> 0:18:05.399 sort of secular shift away inside baseball of I v 0:18:05.480 --> 0:18:08.280 V and VU sort of maybe chipping away at spies 0:18:08.320 --> 0:18:11.159 long term holders. Yeah, because some of the products we 0:18:11.200 --> 0:18:13.040 talked about it in the first segment, I guess the 0:18:13.080 --> 0:18:16.200 first quarter of this segment to use the basketball analogy, 0:18:16.280 --> 0:18:19.200 even though it's okay, I don't know. Is that a 0:18:19.320 --> 0:18:21.920 cricket game. I don't know. I'm an American, I don't 0:18:21.920 --> 0:18:25.080 real cricket. Sorry about that. It's a great mystery. But 0:18:25.560 --> 0:18:27.639 what we saw is, you know, the difference between the 0:18:27.760 --> 0:18:30.320 Eye Shares International and the Vanguard and National. There are 0:18:30.400 --> 0:18:34.280 differences the VOO product, I, VV and SPY all hold 0:18:34.359 --> 0:18:37.159 the same exact stocks within the SMP five hundred. They 0:18:37.200 --> 0:18:40.800 all trade quite well. They all have significant volume behind 0:18:40.880 --> 0:18:43.000 it and type bit esque spreads, so you're really not 0:18:43.160 --> 0:18:45.120 getting the difference and needing to go into the weeds 0:18:45.160 --> 0:18:48.439 and understand what's inside it. People are buying the cheaper product. 0:18:49.119 --> 0:18:51.160 So number two is e f A. We talked about 0:18:51.160 --> 0:18:54.639 that one in the first segment. Number three l q D. 0:18:55.920 --> 0:18:59.360 What's that. L q D is the famous investment Great 0:18:59.400 --> 0:19:02.320 corporate bond d t F four billion, four point five 0:19:02.320 --> 0:19:06.960 billion and outflows. That's eleven organic negative growth there. Here's 0:19:07.000 --> 0:19:08.960 the thing is a lot of people don't realize that 0:19:09.200 --> 0:19:12.120 how big the duration is on l q T. It's 0:19:12.160 --> 0:19:15.760 a like seven years, eight years, meaning that it's very 0:19:15.840 --> 0:19:18.040 sensitive to interest rate. So I think the FED is 0:19:18.119 --> 0:19:20.119 why you saw some money come out of l q D. 0:19:20.200 --> 0:19:21.760 I don't know if Toddy, you've beenything to add. Yeah, 0:19:21.760 --> 0:19:23.360 I think what we saw is that the short term 0:19:23.440 --> 0:19:26.480 bond products for much of the year, in both investment 0:19:26.520 --> 0:19:28.760 grade and high yield, which we'll get to, took some 0:19:28.880 --> 0:19:31.680 of that share as investors were rotating to reduce the 0:19:31.760 --> 0:19:34.119 interest rate risk. So it's again important to not just 0:19:34.200 --> 0:19:36.640 look at the expense ratio with the liquidity of THETF, 0:19:36.800 --> 0:19:40.280 but looking at the interest rate sensitivity that a product provides. 0:19:40.320 --> 0:19:46.800 Also Number four I w D Number five easy you 0:19:47.160 --> 0:19:50.520 both I shares. The first one the I shares Russell 0:19:50.640 --> 0:19:53.800 one thousand value et F. Second ones I shares MSc 0:19:53.960 --> 0:19:56.760 I Eurozone ETF. So both I shares. What do you 0:19:56.800 --> 0:20:00.119 guys seeing these two? Yeah, I mean the Russell one 0:20:00.200 --> 0:20:03.520 thousand series. You know, the growth and the value are 0:20:03.600 --> 0:20:07.760 relatively expensive compared to other products that are out there 0:20:07.800 --> 0:20:09.840 that are either tied to the SMP five hundred that 0:20:10.200 --> 0:20:14.840 that I shares offers, or relative to vanguards lineup of 0:20:14.960 --> 0:20:17.760 growth versus values. I think there's more of an incumbent 0:20:17.840 --> 0:20:21.960 base that money is moving out of it. Values underperformed 0:20:22.200 --> 0:20:24.200 or you know, this year relative to growth. So I 0:20:24.240 --> 0:20:26.720 think that may play apart as well as people have. 0:20:26.800 --> 0:20:29.200 We talked about earlier about momentum and and the triple 0:20:29.320 --> 0:20:31.680