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Speaker 1: Boken to trians. I'm Joel Weber and I'm Eric bel Tunis.

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Speaker 1: Eric would come to the end of twenty nineteen, which

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Speaker 1: means the end of the decade. Yeah, the decade, that's

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Speaker 1: the big one. I'm actually going out on New Year's

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Speaker 1: Eve this year. Yeah, you got a babysitter. Congratulations. No,

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Speaker 1: we're actually taking both the kids to this fun plex

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Speaker 1: place crazy your own words, fun family vacation. Yeah, you

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Speaker 1: can only have two of those three. Love that. Yeah

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Speaker 1: that's pretty good. Yeah, Okay, so markets up at the

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Speaker 1: end of the year. Market's way up for the decade,

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Speaker 1: but we don't want to look back so much. On

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Speaker 1: this episode is look forward. Yeah, a lot has happened

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Speaker 1: this year, a lot of unexpected things, some expected things, um,

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Speaker 1: and it's a good time to take stock of that,

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Speaker 1: but also look forward to what you know, some of

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Speaker 1: the smartest people who cover the industry are thinking about

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Speaker 1: looking for and um getting ready for so joining us

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Speaker 1: on this episode a couple of regulars, Rachel Evans of

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Speaker 1: Bloomberg News and Todd rosen Bluth with c f r A,

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Speaker 1: where he's the director of Mutual and Exchange Traded Fund Research.

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Speaker 1: How many times have you been on the show, Todd,

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Speaker 1: this is my fourth I think fourth or fifth time.

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Speaker 1: I think you get a jacket when you hit the

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Speaker 1: five times club or something year next year. Okay, you

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Speaker 1: and Rachel might be neck and neck for most appearances.

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Speaker 1: I think Rachel has you been. I think I'm I

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Speaker 1: think I'm ahead of the game that Rachel. Okay, let's

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Speaker 1: go eighties. You wanted eighties? Here you god, Rachel is

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Speaker 1: Paul Simon whoever that was the first five times? Remember

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Speaker 1: on SNL Tom Hanks was he became the second or

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Speaker 1: Steve Martin might have been the second. So maybe you're

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Speaker 1: the Steve Martin, but she's the first. Thank you, welcome

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Speaker 1: to be here this time on Trilliance, the Year Ahead

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Speaker 1: and the e t s. Okay, we've got a bunch

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Speaker 1: of topics we want to run through. We want to

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Speaker 1: start with flows, winners, losers, year decade. This kind of

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Speaker 1: looks backwards more than forwards. Eric, I mean we're sure

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Speaker 1: we want to do this? Yeah, I mean you have

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Speaker 1: to look back to get a ground of where you're going.

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Speaker 1: I'll just throw some numbers out and then you guys

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Speaker 1: tell me what you thought. I mean, obviously, fixed income

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Speaker 1: punched way above its weight. Why rates fell, I mean,

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Speaker 1: fixed income definitely takes some money anyway, but rates falling

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Speaker 1: is huge because it means bond prices go up, so

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Speaker 1: that's a big boost for fixed income. Equity had a

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Speaker 1: slow start, but it's coming back as taught as you know,

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Speaker 1: sweating because we have a bet um equity holding its own.

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Speaker 1: And I think also International probably had an underwhelming year,

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Speaker 1: but is had a little late run. But overall, I

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Speaker 1: think international is probably the weak spot among all the assets. Well,

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Speaker 1: I think, just to give Eric credit for giving us

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Speaker 1: the compliment for choosing fixed income, fixed income ETFs have

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Speaker 1: more money going in for the first time in a decade.

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Speaker 1: As Eric mentioned, it's a small part, it's of the pie.

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Speaker 1: As we're doing this now, there's about a fourteen billion

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Speaker 1: dollar lead for fixed income ETFs that doesn't have been

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Speaker 1: in an environment when the equity markets are up more.

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Speaker 1: And yes, Eric and I have a bet on this.

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Speaker 1: I brought my chop six to be able to commemorate

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Speaker 1: the fact that we're in the fixed income camp right now. Look,

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Speaker 1: we have a sushi lunch bet Okay, I'm gonna get

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Speaker 1: the salmon Lover special with a dessert of green tea

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Speaker 1: ice cream, and then you're gonna pay for my part

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Speaker 1: in this case, Yes, I will. I might even I

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Speaker 1: might even splurge on some saki. I don't know. We'll

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Speaker 1: say yea. But here's what Todd, here's what Todd is

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Speaker 1: sweating about that he will not mention is right now,

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Speaker 1: fixed income has a fourteen billion dollar lead on equities.

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Speaker 1: But equity this year, Yes, on average, equity has taken

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Speaker 1: thirty five billion more than fixed fixed income each December.

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Speaker 1: So you do the math. So I'll do the math,

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Speaker 1: and at some point we'll move and bring Rachel into

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Speaker 1: this conversation. But I'm enjoy watching the But but let's

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Speaker 1: just put it in perspective. Equity versus fixed income flows

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Speaker 1: has been two to one for the last five years.

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Speaker 1: This is rare and it's something we should be celebrating.

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Speaker 1: And even if and I think fixing InCom will still

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Speaker 1: be ahead, even if equity does what it typically does,

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Speaker 1: that's still reason to celebrate. Fixing. Comm ETFs as we

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Speaker 1: look into are going to remain a key part of

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Speaker 1: the portfolio. And I think we're gonna have another rending

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Speaker 1: year in twenty the way that we had in two

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Speaker 1: thousand nineteen. But I think that's a good point. Like,

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Speaker 1: I mean, if we're looking at the next couple of years,

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Speaker 1: the next decade, even I think this is kind of

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Speaker 1: like sort of fixed income sort of coming of age moment.

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Speaker 1: You know, we haven't seen it kind of taking in

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Speaker 1: the big flows and short you know, the rate outlook

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Speaker 1: definitely kind of has a role in exactly where we're

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Speaker 1: seeing flows going this year. But just in terms of

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Speaker 1: how people are using fixed in com ETFs, the use

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Speaker 1: of fixing comm ets has really broadened over the last

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Speaker 1: eighteen months two years. You're seeing people using bondy tfs

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Speaker 1: and ladders as a kind of laddering sort of strategy

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Speaker 1: that previously was looking at single bonds. You're seeing institutions

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Speaker 1: using them. You're seeing hedge funds and other kind of

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Speaker 1: sophisticated traders using for hedging and sort of swaps. So

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Speaker 1: I think kind of fixed in com ETFs are really

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Speaker 1: sort of going to be the whether the growth is

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Speaker 1: in the next decade. We've seen an awful lots of

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Speaker 1: kind of equity so dominant in the kind of the

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Speaker 1: previous sort of decades. I think looking forward, fixed income

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Speaker 1: is is certainly an area where we could see some growth.

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Speaker 1: Next topic returns. Yeah. I mean, well, first of all,

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Speaker 1: just the SMP being up. I know it doesn't feel

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Speaker 1: like it, but that is an amazing year. I used

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Speaker 1: to refer to seventeen as utopia. This was even better.

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Speaker 1: Didn't feel like it, but obviously you didn't have to

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Speaker 1: do much. This whole decade was just basically like by

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Speaker 1: the market, you know people call it. So it's been

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Speaker 1: very easy to make money. And of course there's some

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Speaker 1: high flyers. Todd, you want to guess what the best

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Speaker 1: performer was over the past ten years? Was it XBI

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Speaker 1: the biotech ets He follows me on Twitter. Um, no,

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Speaker 1: I did my research, did you? I did my research

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Speaker 1: showing up? Okay, hey man, hat tip to you. That's right.

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Speaker 1: XBI equalated biotech biotechs relentless. It's one of those areas

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Speaker 1: that's just defied the high flying odds. Usually you high

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Speaker 1: fly for a year or two and then you're in

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Speaker 1: the tank the next year. Biotech is very persistent. So

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Speaker 1: but outside of that, you've had some people come and go,

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Speaker 1: but mostly it's been a beta, beta decade. Yeah, but

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Speaker 1: I also is interesting when we looked at this year

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Speaker 1: and then the ten years. So this year ten, which

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Speaker 1: is a solar e TF that invest Goo offers. I

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Speaker 1: keep thinking of it as Guggenheim, but it's the investigal

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Speaker 1: product now is actually among the worst performers if you

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Speaker 1: look back at decade, So you know, just be careful

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Speaker 1: when you're choosing some of these high flyers and expecting

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Speaker 1: that they're going to continue to perform. Well, we've seen

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Speaker 1: it with some of them, and semiconductors are on the

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Speaker 1: top of both charts, but there's a number of ETFs

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Speaker 1: that are bounced around quite a bit when you get

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Speaker 1: more niche with these industry oriented ets What other losers

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Speaker 1: stand out? Yeah, the lisers for me, I was I

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Speaker 1: was looking this morning at the moment at this point

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Speaker 1: in the MJ is one of the worst performers of

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Speaker 1: the year, which is really really interesting. Marijuana it's like

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Speaker 1: such a kind of growth industry and it almost it's

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Speaker 1: kind of like sort of you think it might be

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Speaker 1: more correlated with biotech, just sort of given a lot

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Speaker 1: of it's sort of related kind of like health and

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Speaker 1: medical kind of innovations. But MJ has been doing very

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Speaker 1: badly this year, and it would actually be a second

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Speaker 1: year of losses. So cannabis it may be kind of

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Speaker 1: a long time trend that maybe kind of a long

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Speaker 1: time investment story there, but this year and last year

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Speaker 1: it really hasn't been the case. And one interesting thing

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Speaker 1: about cannabis though, despite that, you know, really rough for

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Speaker 1: telling you it's not thirty or something. UM, it's pretty

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Speaker 1: much retained a good amount of it hasn't really seen

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Speaker 1: much outflows. This is a good sign, and it's also

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Speaker 1: just remarkable. Normally, when you have these high flyers, the

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Speaker 1: money sort of follows the performance. But here, yeah, I mean, okay,

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Speaker 1: all right, all right, well we'll we'll let we'll, we'll

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Speaker 1: let that slide. You can. You can't talk about cannabis

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Speaker 1: ets without a pune jumping in too quickly. Well, I

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Speaker 1: will say, I do think some people forgot they bought it.

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Speaker 1: I mean, and I'm not I'm kidding, but I'm not kidding.

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Speaker 1: I also think it's the area that people are in

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Speaker 1: for long term. But that's kind of interesting. Another area

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Speaker 1: that I thought was interesting that UM symbolized the comeback

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Speaker 1: from two eight is a home builders I t b

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Speaker 1: it just like a month ago past. It's two thousand

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Speaker 1: seven high point. So it made this huge, huge trip

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Speaker 1: down like the Grand Canyon, it's finally come back up.

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Speaker 1: So homebuilders kind of like close the gap on that

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Speaker 1: story of the financial crisis. And well it's the other

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Speaker 1: strong perform The other peer in that group is x

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Speaker 1: HB And it's a thousand basis point difference between I

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Speaker 1: t B and x HB. So two similar sounding et

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Speaker 1: f s they're both working at. You would have still

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Speaker 1: made a lot of money if you held those products,

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Speaker 1: but a big difference because the exposure between those products

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Speaker 1: are different. As we've talked about on prior Rillians podcasts

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Speaker 1: that I've been on. You love that, but I thought

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Speaker 1: we're supposed to just pick on the cheapest e t F.

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Speaker 1: Isn't that the rule? Yeah, you're asking me that we

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Speaker 1: had c F. A would certainly disagree with with going

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Speaker 1: against the cheapest of the largest ETF and focusing on

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Speaker 1: looking what's inside the portfolio. Yeah. Actually, you want to

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Speaker 1: get Todd's great on panels, but the way to get

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Speaker 1: him started is just to say talk about everybody going

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Speaker 1: to the cheapest ttfs. Well, and we can do that, uh,

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Speaker 1: and then we can certainly I think we have on

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Speaker 1: the plan to talk about actively managed e t f

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Speaker 1: s and whether or not they're going to be a

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Speaker 1: star in the next decade. Next topic, let's talking about

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Speaker 1: the league table for a second. So the league table,

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Speaker 1: we're looking kind of who's taken in the most flows

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Speaker 1: this year, and there aren't really any great surprises at

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Speaker 1: the top, you know, black Rock is still kind of dominant,

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Speaker 1: followed by Vanguard, but the one that really stood out

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Speaker 1: to me actually is a little bit lower down in

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Speaker 1: the in the table, which is DWS, which is Deutsche

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Speaker 1: Banks are newly rebranded or not that newly rebranded asset

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Speaker 1: management a unit. They are poised to snap three years

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Speaker 1: of outflows. So they have been really struggling over the

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Speaker 1: last few years because so much of their assets were

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Speaker 1: in FX hedge products and that stopped really kind of

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Speaker 1: being something attractive in or so this year they are

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Speaker 1: looking to actually take in inflows and that seems to

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Speaker 1: be mostly attributable to h y LB, which is a

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Speaker 1: high yield et F that's pretty cheap and that they

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Speaker 1: launched with kind of quite a bit of a plum

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Speaker 1: a few years back, and also U S s G,

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Speaker 1: which is an e s G product so they've really

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Speaker 1: been riding those two funds to actually coming back to

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Speaker 1: having inflows for the first time in three years. League

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Speaker 1: Table jumps out at you, Well, they're bright spot. I

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Speaker 1: mean so two ends of the spectrum. SCHWAB, which is

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Speaker 1: everybody in this room and probably listening knows, made an

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Speaker 1: acquisition recently of t D a Merra trade. SCHWAB is

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Speaker 1: not approved but not improved UH, and so we probably

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Speaker 1: won't we won't see the impact from a flow standpoint

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Speaker 1: until late but they are the number three provider in

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Speaker 1: terms of flows this year UH, then the fifth largest provider.

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Speaker 1: It's just a sign that low cost products continue to resonate.

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Speaker 1: And then Goldman Sachs UH is top ten flows perspective,

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Speaker 1: them catching up with what JP Morgan has done. UH.

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Speaker 1: And Goldman is doing this even without having their low

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Speaker 1: cost suite of ETFs that are in the hopper that

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Speaker 1: are going to come out in and they've got some

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Speaker 1: advisory parts of the business that will likely do well.

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Speaker 1: So we've seen money going into GSLC, we've seen it

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Speaker 1: going into some of their bond products as well, and

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Speaker 1: I think they're a player to watch in the next

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Speaker 1: decade um. Yeah, and you know, I kind of divide

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Speaker 1: the E T F fishers into two camps. Was early guys,

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Speaker 1: you know, like so you've got black Rock, State Street

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Speaker 1: and Guard they taken almost like eight percent of the money.

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Speaker 1: Right then you've got the Wall Street banks, which were

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Speaker 1: sort of like the freshman maybe six years ago, Goldman,

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Speaker 1: JP Morgan, Deutsche Bank. They do very well. They do.

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Speaker 1: They do better than some of these by side firms

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Speaker 1: that have come in um like a leg Mason or

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Speaker 1: an open Him before they got acquired, or Hartford they do.

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Speaker 1: Those guys get maybe four, you know, three or four billion.

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Speaker 1: But the Wall Street banks have been very good about

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Speaker 1: seeing the writing on the wall and sort of being

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Speaker 1: their own little van guards in certain ways, in particular

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Speaker 1: JP Morgan. So I think most issuers now realize you

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Speaker 1: have to have some line of dirt cheap products to

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Speaker 1: just get in the door, get your call answer, get

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Speaker 1: advisor's interest, and then you try to maybe sprinkle in

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Speaker 1: some of the more expensive exotic stuff. And they have

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Speaker 1: quickly followed that template, which is basically the Vanguard I

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Speaker 1: shares template, and it's working. So as you go down

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Speaker 1: you're gonna see I think the next decade I think

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Speaker 1: a JP Morgan, Goldman, UM, You're gonna see a lot

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Speaker 1: of vertical integration, uh you know, Fidelity, JP Morgan, Goldman, Vanguard,

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Speaker 1: Schwab and these guys are going to have the platforms

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Speaker 1: and the advisors also that's just gonna suck in money

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Speaker 1: to their own e t f s And so I

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Speaker 1: don't see anything changing, big getting bigger UM and a

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Speaker 1: lot of the issuers sort of you know, you know

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Speaker 1: b y o A to an extent, you know, bring

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Speaker 1: your own assets up using their other arms to just

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Speaker 1: pull flows into their own funds. Okay, next topic, because

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Speaker 1: the fee wars are totally over right, not even close,

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Speaker 1: not even close. Let's just clear that all the time.

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Speaker 1: It makes a nice headline. If anybody here rights headlines

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Speaker 1: are is connected to headlines, please let me know about that.

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Speaker 1: Uh So, let's just recap a bit of what happened

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Speaker 1: this year. We had the first zero fee e t

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Speaker 1: F that came to market from so far. We had

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Speaker 1: negative fee e t s from Salt Financial. We had

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Speaker 1: JP Morgan coming in at two basis points, and to

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Speaker 1: some extent seeming like a bit of a disappointment because

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Speaker 1: there was a possibility that they might go to zero.

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Speaker 1: We've seen Vanguard bring pricing down, We've seen things coming down.

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Speaker 1: We're only in the middle of it, and I think it,

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Speaker 1: as we mentioned, Goldman is coming out, they're not. They're

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Speaker 1: not coming out with low cost ETFs and being at

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Speaker 1: a premium. JP Morgan has a an EFA based product

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Speaker 1: that's been filed. If it's going to take share, it

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Speaker 1: has to be seven basis points are less because that's

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Speaker 1: what I EFA. What is that? What is EVA mar Yeah?

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Speaker 1: Developed markets, so Europe, Australia, Japan, you know far Yeah,

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Speaker 1: that's it, so you know, developed, none developed, non US markets.

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Speaker 1: But I got stumped on that one. I was ready for,

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Speaker 1: like tickers, I wasn't gonna be able to be prepared

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Speaker 1: for you. It is funny like you can use an

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Speaker 1: acreative so much and then someone asks you what it

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Speaker 1: stands for. Is possible not to know? But I think

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Speaker 1: I think Todds right as well, just in terms of

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Speaker 1: kind of like the few will continuing, Like I think

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Speaker 1: it's it's going to broaden. You know, we're already seeing

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Speaker 1: it EFA products potentially, but also high yield. We've seen

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Speaker 1: kind of like big fee cuts in certain hi yield products.

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Speaker 1: This year, thematics are starting to kind of like trend

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Speaker 1: not towards zero per se, but they're getting significantly cheaper.

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Speaker 1: There's still a significant number of places where we could

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Speaker 1: see fee cuts that kind of like see fee compression

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Speaker 1: sort of happening before we really get to rock bottom

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Speaker 1: or or what about below bottom when people continue to

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Speaker 1: pay you. Yeah, I mean we we've already seen the

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Speaker 1: first fund that was well, it's not gathered assets. That's

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Speaker 1: that's the thing that surprised me. I was expecting we

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Speaker 1: would have seen more money going into these products. Distribution

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Speaker 1: remains a bit of a challenge and a brand name

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Speaker 1: that isn't as well known. But I don't think we're

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Speaker 1: gonna I think we're going to see we should see

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Speaker 1: more of these products. Instead of closing the doors, you

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Speaker 1: should just rebate the fee and hope to get someone

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Speaker 1: in before closing the doors if it doesn't work. And

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Speaker 1: also I'd argue the fee wars have spread to the

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Speaker 1: commission free trading that was essentially part of the fee war,

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Speaker 1: and it's spreading to advisors. You know, Schwab and Schwab

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Speaker 1: this year announced they're going to be an advisor where

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Speaker 1: they're going to give you a subscription services almost like Netflix,

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Speaker 1: and you add up the math, it's very very low

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Speaker 1: cost um. I don't see this really stopping for a

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Speaker 1: long time. I would argue that it's almost just beginning.

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Speaker 1: Next what's the future of smart beta. I'm very bullish

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Speaker 1: on smart beta. I think smart beta is here to stay.

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Speaker 1: It's just about cross the trillion dollars and that's that's

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Speaker 1: a trillion dollars the hard way. That's a trillion dollars

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Speaker 1: in the terror dome, you know, after tax picky advisor

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Speaker 1: money um and I think, look, Pete, not everybody wants

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Speaker 1: to just get the the index right. A good group

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Speaker 1: of people who want to outperform. The problem for active

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Speaker 1: managers is they want it cheap, rules based and tax efficient,

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Speaker 1: and that's smart beta. Us m V is a great

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Speaker 1: example the low vall minimum all et F from I

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Speaker 1: shares what is it, fifteen basis points, So it's under

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Speaker 1: that magical twenty basis point figure where most of the

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Speaker 1: flows go and you get a chance to do something better,

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Speaker 1: maybe a higher sharp ratio. You can talk to your

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Speaker 1: clients about something that's a little more you know, sophisticated.

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Speaker 1: UM I am very bullish on this. It's just a

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Speaker 1: great deal. The value proposition is there. I think investors

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Speaker 1: have been bullish on it. It's now the third most

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Speaker 1: popular HTF in terms of flows having a great year.

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Speaker 1: It's you know, having what side of the pie is

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Speaker 1: that now the pie? But that's about where it's been.

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Speaker 1: Well the pie is continue with the pies to keep

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Speaker 1: up alone. Yeah, i'd say a fifth yeah, yeah, but

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Speaker 1: we and what we're seeing is this year we're seeing

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Speaker 1: even though people shouldn't be buying just on past performance,

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Speaker 1: they will buy based on past performance. And two thousand

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Speaker 1: nineteen has been a good year for some of these

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Speaker 1: flagship products. Us m V is keeping up with the

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Speaker 1: broader market, lower risk and yet outperforming some of the

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Speaker 1: multi factor e t s. I mentioned g SLC earlier,

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Speaker 1: but O mf L, which is an investo multi factor

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Speaker 1: product John Hancock's multi factor product j h mL on

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Speaker 1: that one is also performing. I think if you're going

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Speaker 1: to pay a little bit more than a market cap

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Speaker 1: weighted portfolio, you want to hope that you're going to

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Speaker 1: keep up with a broader benchmark and perhaps even beat it.

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Speaker 1: And that's working out in many cases. This year and

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Speaker 1: that sets up well for for the future. Yeah, I

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Speaker 1: think it's it's gonna be interesting to so see how

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Speaker 1: these products to continue to evolved because a lot of

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Speaker 1: sort of the main kind of areas for for creating

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Speaker 1: products have now been taken. But the key thing from

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Speaker 1: my perspective is to make sure people keep looking under

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Speaker 1: the hurt that should speak to you to your kind

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Speaker 1: of focused taught on this as well, because a lot

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Speaker 1: of these smart beta products are very different to one another,

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Speaker 1: yet they sound very similar. You know, we've talked about

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Speaker 1: this in the past with people a way that they're

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Speaker 1: calculating value from one product to another is quite different.

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Speaker 1: So I think it's just important these products and you

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Speaker 1: have those returns and that can be that to eric

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Speaker 1: shiny object effects that can kind of let lure people in.

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Speaker 1: But if you if you are buying one of these products,

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Speaker 1: you should know exactly how they are calculating the particular

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Speaker 1: fact that you're looking for exposure to. Um. My colleague

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Speaker 1: Ethanacios in London did a study on the rolling twelve

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Speaker 1: month return of value et f s and found that

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Speaker 1: they normally have a twenty percent gap in one year returns,

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Speaker 1: which is still pretty significant. But in two thousand nine,

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Speaker 1: when value came roaring back, there was a nine percent

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Speaker 1: gap between the best performing value et F and the

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Speaker 1: and the worst. That is astonishing to me, and I

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Speaker 1: have a theory that right now a lot of the

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Speaker 1: value and smart baty e t F to get them

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Speaker 1: money are the ones that look most like the market.

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Speaker 1: They have a lot of beta low tracking error. I

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Speaker 1: think when there's a sell off for some turmoil where

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Speaker 1: value comes roaring back, the more pure ones will have

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Speaker 1: their shiny object moment and have their day in the sun.

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Speaker 1: But as Rachel mentioned, what goes up usually comes down,

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Speaker 1: and I think that now would be the time maybe

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Speaker 1: to look at a more pure one, given that beta

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Speaker 1: has had this long run. But most people again look

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Speaker 1: in the past, and they keep buying the sort of

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Speaker 1: water down value ETFs like VTV and i w D

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Speaker 1: shiny objects thematic ETFs. Let's talk about that for a second.

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Speaker 1: We talked about pot already, but there's some other ones.

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Speaker 1: We'll just put it in perspective twenty. About twenty billion

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Speaker 1: dollars are in thematic oriented e t s and there's

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Speaker 1: about a hundred and twenty or so of these products

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Speaker 1: they get a lot of attention because of as you mentioned,

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Speaker 1: the shiny objects. So we now have six cannabis ETFs.

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Speaker 1: We had one when the year started. They're all underperforming

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Speaker 1: the broader market because the socks inside them have have

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Speaker 1: done poorly. We've got a whole range of video gaming

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Speaker 1: oriented ets. Look at him, I knew he's gonna trash

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Speaker 1: on the video games. I'm saying, there's three hundred and

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Speaker 1: fifty large cap quality ets. Do we need a three

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Speaker 1: D fifty first? Though, I'm not complaining that we have

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Speaker 1: these products. I think what's great about it is, as

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Speaker 1: as Rachel talked about earlier, what is inside these portfolios

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Speaker 1: is quite different. The definitions between a product like NERD

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Speaker 1: and E s p O and Gamer, they're performing quite

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Speaker 1: different because they are quite different from what's inside. So

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Speaker 1: thematic is a great area to invest from the longer term.

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Speaker 1: And you've got some mid size and larger players that

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Speaker 1: have that are playing within this space. No pun intended,

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Speaker 1: and but what we are seeing is that how they

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Speaker 1: interpret the theme can be quite different. And so when

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Speaker 1: you have more only one of them that you just

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Speaker 1: buy that product. But when you've got four or five

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Speaker 1: or six of them then the homework is needed. Well,

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Speaker 1: I just hearn a little bit of on the on

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Speaker 1: the whole kind of UM thematic complex if from a

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Speaker 1: UM but just because the assets have been relatively static

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Speaker 1: this year. I mean, we did see this really exponential

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Speaker 1: rise like for a couple of years, and then over

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Speaker 1: the last sort of eighteen months or so, it's kind

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Speaker 1: of plateau. We've seen a little bit of a drop

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Speaker 1: with the market, a little bit of a rise as

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Speaker 1: the market picked up, but it's it's pretty steady with

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Speaker 1: where we were this time last year. And I think

428
00:20:19,960 --> 00:20:21,679
Speaker 1: that's a little bit of a question mark really for

429
00:20:21,800 --> 00:20:23,600
Speaker 1: for kind of issuers that have been coming out with

430
00:20:23,640 --> 00:20:26,600
Speaker 1: these products, like how do you actually keep gaining assets?

431
00:20:26,600 --> 00:20:29,080
Speaker 1: Has this reached the top for now? Like the the

432
00:20:29,160 --> 00:20:31,679
Speaker 1: ideas are all there, they're all good ideas and have

433
00:20:31,680 --> 00:20:33,439
Speaker 1: a kind of truthiness to them in terms of like

434
00:20:33,480 --> 00:20:36,919
Speaker 1: what's going to be going up in the future, but

435
00:20:36,960 --> 00:20:39,879
Speaker 1: they're they're not actually sort of like really bringing in

436
00:20:40,400 --> 00:20:42,119
Speaker 1: assets in the way that they were when you talk

437
00:20:42,160 --> 00:20:44,840
Speaker 1: about that plateau. And I think that's interesting. UM Robotics

438
00:20:44,880 --> 00:20:46,920
Speaker 1: to me sticks out that definitely got a haircut this

439
00:20:47,000 --> 00:20:50,240
Speaker 1: year in assets because the performance faltered, think it had

440
00:20:50,280 --> 00:20:52,480
Speaker 1: four or five billion outstand like one or two, and

441
00:20:52,520 --> 00:20:54,879
Speaker 1: I think that's sort of what happens. They'll they'll rise,

442
00:20:55,359 --> 00:20:57,959
Speaker 1: they'll get X amount of dollars and then half leaves,

443
00:20:58,160 --> 00:21:01,200
Speaker 1: and so that's part of the sort of topsy turvy

444
00:21:01,280 --> 00:21:04,520
Speaker 1: nature of thematic ETFs what they do though that A

445
00:21:04,560 --> 00:21:06,639
Speaker 1: couple of things I think they're the advantage of is

446
00:21:07,000 --> 00:21:10,320
Speaker 1: a you can understand them. The truthiness is definitely something

447
00:21:10,320 --> 00:21:12,119
Speaker 1: you need to worry about, and how they're designed. But

448
00:21:12,200 --> 00:21:16,000
Speaker 1: advisors having conversations, as our guest two weeks ago or

449
00:21:16,040 --> 00:21:19,040
Speaker 1: a month ago called it conversation alpha. An advisor can

450
00:21:19,040 --> 00:21:21,640
Speaker 1: talk about a story with and that's good for the advisor.

451
00:21:21,720 --> 00:21:23,600
Speaker 1: So that may not even be a natural reason to

452
00:21:23,600 --> 00:21:25,800
Speaker 1: buy it, but that's just a reality. So I think

453
00:21:25,840 --> 00:21:28,879
Speaker 1: that conversations happening on these areas a lot of times.

454
00:21:29,240 --> 00:21:31,600
Speaker 1: They don't track stocks that are in the big indexis

455
00:21:31,880 --> 00:21:33,440
Speaker 1: takes a lot for a big index to take in

456
00:21:33,480 --> 00:21:36,800
Speaker 1: a new stock, so you can capture an area before.

457
00:21:36,840 --> 00:21:38,680
Speaker 1: And the third thing is we talked about XBI is

458
00:21:38,720 --> 00:21:41,320
Speaker 1: the best performer in the decade. It's a hundred percent

459
00:21:41,359 --> 00:21:43,639
Speaker 1: more than IBB, which is the other biotech ETF that

460
00:21:43,680 --> 00:21:45,840
Speaker 1: market cap weights, and a big reason is M and

461
00:21:45,880 --> 00:21:48,399
Speaker 1: a pop um if these things go to mid and

462
00:21:48,440 --> 00:21:50,119
Speaker 1: small caps a lot of times in the marijuana has

463
00:21:50,160 --> 00:21:52,760
Speaker 1: had this a couple of times, they will own just

464
00:21:52,920 --> 00:21:55,439
Speaker 1: randomly own a small cap that gets bought. So you

465
00:21:55,520 --> 00:21:57,320
Speaker 1: have a little M and A action in there, which

466
00:21:57,400 --> 00:22:00,040
Speaker 1: I think is an underrated part of them. But that's it.

467
00:22:00,240 --> 00:22:03,600
Speaker 1: I do think they'll be niche. But remember everybody's on

468
00:22:03,640 --> 00:22:05,400
Speaker 1: and on on about E s G that has Third

469
00:22:05,400 --> 00:22:07,840
Speaker 1: Team billion. This has about fifty, So I think fifties

470
00:22:07,840 --> 00:22:09,840
Speaker 1: pretty significant. But yeah, it's nowhere near like say a

471
00:22:09,840 --> 00:22:11,919
Speaker 1: smart beta with a trillion. Okay, let's let's use that

472
00:22:12,000 --> 00:22:15,200
Speaker 1: moment to transition to s G S. Let me start,

473
00:22:15,200 --> 00:22:17,360
Speaker 1: because I'm so hot on this right now. Look, I've

474
00:22:17,359 --> 00:22:19,159
Speaker 1: been in this a lot. I have found that E.

475
00:22:19,320 --> 00:22:20,840
Speaker 1: S G. We've always look at the assets and like,

476
00:22:20,880 --> 00:22:22,840
Speaker 1: why aren't they gaining assets? That's been a question we've

477
00:22:22,840 --> 00:22:25,760
Speaker 1: But recently I've looked at the actual stocks in the

478
00:22:25,840 --> 00:22:28,760
Speaker 1: in the E t F and I've found something that's

479
00:22:28,800 --> 00:22:31,800
Speaker 1: just stunning to me that just apparently nobody really knows about,

480
00:22:31,840 --> 00:22:34,080
Speaker 1: which is there's a lot of stocks that don't make

481
00:22:34,080 --> 00:22:37,160
Speaker 1: these funds that you would shock people. I think Amazon

482
00:22:37,520 --> 00:22:40,199
Speaker 1: semi shocker. And then that brings to the question is

483
00:22:40,720 --> 00:22:42,639
Speaker 1: how many people who are thinking of E s G

484
00:22:42,840 --> 00:22:46,080
Speaker 1: are willing to forego the next Amazon that's a thousand

485
00:22:46,080 --> 00:22:48,879
Speaker 1: percent gain over ten years in order to sort of

486
00:22:48,920 --> 00:22:52,119
Speaker 1: do good. I think there's a lot of slacktivists or

487
00:22:52,200 --> 00:22:55,960
Speaker 1: tourists who probably don't have the stomach to withstand what

488
00:22:56,000 --> 00:22:59,399
Speaker 1: could be potential in the performance. Another example is Berkshire Hathaway.

489
00:22:59,480 --> 00:23:02,280
Speaker 1: Warren buff has just said I'm not filling out your questionnaires.

490
00:23:02,320 --> 00:23:04,960
Speaker 1: His board is not independent, but he says independent boards

491
00:23:04,960 --> 00:23:07,359
Speaker 1: aren't really independent either. He makes some good points, and

492
00:23:07,400 --> 00:23:10,320
Speaker 1: Berkshire is unless e s GT S and Exxon and

493
00:23:10,400 --> 00:23:14,280
Speaker 1: who doesn't want Warren Buffett in their portfolio. These exclusions

494
00:23:14,320 --> 00:23:18,359
Speaker 1: bring up really interesting questions about the metrics used and

495
00:23:18,560 --> 00:23:21,120
Speaker 1: what's in what's out, And I think there's a lot

496
00:23:21,200 --> 00:23:24,200
Speaker 1: to sort out here. And you know, they could outperform,

497
00:23:24,280 --> 00:23:27,040
Speaker 1: but they could also underperforming. You have to be ready. Well,

498
00:23:27,080 --> 00:23:29,280
Speaker 1: the same screens that are being done now for E

499
00:23:29,520 --> 00:23:32,399
Speaker 1: s G are being the same approach to it is

500
00:23:32,440 --> 00:23:35,640
Speaker 1: being done for value oriented et F. You know, VTV

501
00:23:35,880 --> 00:23:40,240
Speaker 1: value UH In undervalued securities or growth oriented ones, you

502
00:23:40,280 --> 00:23:42,520
Speaker 1: don't get the full market, and you are likely to

503
00:23:42,600 --> 00:23:46,640
Speaker 1: underperform or outperform based on what's inside the portfolio. So yes,

504
00:23:46,800 --> 00:23:49,000
Speaker 1: we knew that what's inside these et f s is

505
00:23:49,040 --> 00:23:51,360
Speaker 1: not the broader market. But what I think is appealing

506
00:23:51,359 --> 00:23:53,199
Speaker 1: about some of the newer products that have come to

507
00:23:53,240 --> 00:23:56,280
Speaker 1: market that we don't have that longer track record. You

508
00:23:56,320 --> 00:23:59,800
Speaker 1: mentioned the DWS product U S s g H s

509
00:23:59,880 --> 00:24:02,760
Speaker 1: U s L, which is another I shares product that's

510
00:24:02,800 --> 00:24:05,639
Speaker 1: tracking the same m M s C I index, s

511
00:24:05,760 --> 00:24:08,399
Speaker 1: n P E which is another product that's tracking the

512
00:24:08,480 --> 00:24:11,880
Speaker 1: S and P index. They're more inclusionary and so companies

513
00:24:11,920 --> 00:24:14,920
Speaker 1: make it into the portfolio as opposed to companies being

514
00:24:14,920 --> 00:24:18,720
Speaker 1: excluded from the portfolio. They're more sector diversified, and they

515
00:24:18,800 --> 00:24:22,040
Speaker 1: cost nine ten eleven basis points, so they're close to

516
00:24:22,200 --> 00:24:25,920
Speaker 1: the overall market from an index perspective. They're gonna be

517
00:24:26,040 --> 00:24:28,760
Speaker 1: niche initially, the same way that some of these thematic

518
00:24:28,800 --> 00:24:31,640
Speaker 1: oriented ones are. I think we can't get our too

519
00:24:31,680 --> 00:24:33,359
Speaker 1: far ahead of it as to how much money is

520
00:24:33,359 --> 00:24:34,960
Speaker 1: going to go in, but we are going to see

521
00:24:34,960 --> 00:24:37,240
Speaker 1: more money going in as people care about this are

522
00:24:37,240 --> 00:24:39,200
Speaker 1: you supposed to use this in place of your whole

523
00:24:39,200 --> 00:24:42,840
Speaker 1: equity portion of your portfolio? Well, I think over time

524
00:24:42,880 --> 00:24:45,760
Speaker 1: that there are people who are doing that versus then again,

525
00:24:45,880 --> 00:24:48,280
Speaker 1: it's so crucial to understand what you don't own. If

526
00:24:48,280 --> 00:24:50,480
Speaker 1: you use it as an overlay, then what's the point

527
00:24:50,480 --> 00:24:52,439
Speaker 1: because then you already own those other stocks anyway. And

528
00:24:52,600 --> 00:24:54,880
Speaker 1: so I think the difference between E s G and

529
00:24:54,880 --> 00:24:56,880
Speaker 1: and a factor focus fund is that the factor focus

530
00:24:56,960 --> 00:24:59,520
Speaker 1: fund is is looking at something that's very measurable. You know,

531
00:24:59,560 --> 00:25:02,040
Speaker 1: it's look, let say, kind of you know, whether a

532
00:25:02,080 --> 00:25:04,600
Speaker 1: stock is undervalued versus the rest of the market, and

533
00:25:04,640 --> 00:25:06,560
Speaker 1: it's looking at sort of price to earnings or something

534
00:25:06,600 --> 00:25:08,560
Speaker 1: like this. You know, these these E s G funds

535
00:25:08,600 --> 00:25:11,800
Speaker 1: are are largely based on ratings, and the ratings of

536
00:25:11,880 --> 00:25:14,680
Speaker 1: these companies is actually pretty oblique, Like it's quite hard

537
00:25:14,840 --> 00:25:18,120
Speaker 1: to find out exactly what criteria and exactly how certain

538
00:25:18,240 --> 00:25:20,560
Speaker 1: kind of like factors and how a company is managed

539
00:25:20,640 --> 00:25:23,080
Speaker 1: or what it does rolls up to this overall rating

540
00:25:23,119 --> 00:25:25,399
Speaker 1: and how that then gets incorporated and into an index.

541
00:25:25,480 --> 00:25:27,879
Speaker 1: Believe me, I've tried to figure out. It's quite complicated.

542
00:25:28,240 --> 00:25:29,760
Speaker 1: So I think there is kind of like a few

543
00:25:29,800 --> 00:25:32,359
Speaker 1: question marks there about kind of how some sort of

544
00:25:32,400 --> 00:25:34,439
Speaker 1: companies sort of like end up being sort of very

545
00:25:34,520 --> 00:25:36,639
Speaker 1: low rated and others end up being very high rated,

546
00:25:36,880 --> 00:25:39,119
Speaker 1: and then how that's been kind of like package altogether.

547
00:25:39,400 --> 00:25:41,120
Speaker 1: Like certainly, like you know, this year, we've seen kind

548
00:25:41,119 --> 00:25:44,080
Speaker 1: of huge amounts of inflows into EARSC funds, but it

549
00:25:44,160 --> 00:25:46,280
Speaker 1: is really kind of like those those big funds that

550
00:25:46,320 --> 00:25:48,760
Speaker 1: have kind of like marketing powerhouses behind them, you know,

551
00:25:48,800 --> 00:25:51,320
Speaker 1: your black rocks, your DWS is that really can kind

552
00:25:51,359 --> 00:25:53,600
Speaker 1: of like throw money and making sure these funds are

553
00:25:53,600 --> 00:25:55,920
Speaker 1: in the right place. And let's not forget that those

554
00:25:55,960 --> 00:25:57,679
Speaker 1: two funds, which are now I think the second and

555
00:25:57,720 --> 00:26:00,680
Speaker 1: the third biggest EARSC funds in e t f s

556
00:26:00,720 --> 00:26:02,840
Speaker 1: in the in the US, are both backed by I

557
00:26:02,840 --> 00:26:05,160
Speaker 1: think it's a finished pension fund. So we're not talking

558
00:26:05,200 --> 00:26:07,600
Speaker 1: about a huge amount of kind of retail or diversify

559
00:26:07,720 --> 00:26:11,359
Speaker 1: money coming in. It's still fairly sort of sporadic investment

560
00:26:11,440 --> 00:26:15,520
Speaker 1: in these products. Next worries about e t f s

561
00:26:16,600 --> 00:26:19,520
Speaker 1: are those going to go away? So you know, I'm

562
00:26:19,720 --> 00:26:21,680
Speaker 1: in research and a lot of the analysts I work

563
00:26:21,720 --> 00:26:23,560
Speaker 1: with they'll kind of like you know, kind of complain

564
00:26:23,560 --> 00:26:25,480
Speaker 1: a little bit about earning season, because it's like the

565
00:26:25,520 --> 00:26:28,560
Speaker 1: same thing every quarter, the earnings. They get busier, they

566
00:26:28,560 --> 00:26:31,040
Speaker 1: gotta work a little longer, and I'm like, myth busting

567
00:26:31,119 --> 00:26:33,280
Speaker 1: is my earnings. Because about once a quarter someone says

568
00:26:33,320 --> 00:26:35,480
Speaker 1: something and then everybody forwards me the email. I'm like, okay,

569
00:26:35,520 --> 00:26:38,080
Speaker 1: let me write our sort of response. The last one

570
00:26:38,119 --> 00:26:40,600
Speaker 1: was Michael Burry. This was a huge one, and everybody

571
00:26:40,840 --> 00:26:42,440
Speaker 1: thinks this guy is great, right, this is the guy

572
00:26:42,480 --> 00:26:44,880
Speaker 1: Christian Bill portrayed the big short. He even said they're

573
00:26:44,920 --> 00:26:48,960
Speaker 1: the next cdo, which was just really damning, and that

574
00:26:49,080 --> 00:26:50,400
Speaker 1: was one of the worst I've heard in a while.

575
00:26:50,480 --> 00:26:53,560
Speaker 1: But um, I wouldn't expect this to slow down. I

576
00:26:53,600 --> 00:26:56,480
Speaker 1: think to a degree. There's some that are going to

577
00:26:56,560 --> 00:26:59,520
Speaker 1: take be be taken more seriously, like Michael Burry. Um,

578
00:26:59,560 --> 00:27:01,600
Speaker 1: and there's some that I think you need to just say, Okay,

579
00:27:01,600 --> 00:27:04,719
Speaker 1: this is a guy from this active shop who's like

580
00:27:04,760 --> 00:27:06,160
Speaker 1: one time there was a guy who called them weapons

581
00:27:06,160 --> 00:27:08,760
Speaker 1: of mass destruction and I looked at who the source

582
00:27:08,800 --> 00:27:10,520
Speaker 1: of the article was, a guy un performing his index

583
00:27:10,560 --> 00:27:13,199
Speaker 1: by and I'm like, all right, come on, like this

584
00:27:13,240 --> 00:27:17,359
Speaker 1: guy probably shouldn't be the guy quoted on this that

585
00:27:17,480 --> 00:27:19,440
Speaker 1: said you know, like I said, I do think E

586
00:27:19,520 --> 00:27:21,280
Speaker 1: t F s you gotta there's a couple of things

587
00:27:21,280 --> 00:27:23,560
Speaker 1: that are more legitimate. They could be brought up less,

588
00:27:23,840 --> 00:27:26,159
Speaker 1: but the illegitimate ones seemed to get brought up more.

589
00:27:26,200 --> 00:27:29,679
Speaker 1: They're distorting fundamentals. Everybody's going to their weak hands. The

590
00:27:29,720 --> 00:27:32,320
Speaker 1: opposite seems to be true. So look that people are

591
00:27:32,320 --> 00:27:34,399
Speaker 1: gonna worry. I think they're not perfect. You have to

592
00:27:34,440 --> 00:27:36,720
Speaker 1: decide what you would buy the stocks and bonds yourself,

593
00:27:36,840 --> 00:27:38,719
Speaker 1: use a mutual fund or using E t F and

594
00:27:38,720 --> 00:27:40,560
Speaker 1: then take it from there. Rachel, Yeah, I mean I

595
00:27:40,600 --> 00:27:42,080
Speaker 1: think this is kind of a sign that the ETF

596
00:27:42,200 --> 00:27:44,960
Speaker 1: industry is being such a success. Really, you know, it's

597
00:27:44,960 --> 00:27:47,640
Speaker 1: past four point two trillion an asset, and I think

598
00:27:47,640 --> 00:27:50,600
Speaker 1: active managers you know, obviously see that and I'll certainly

599
00:27:50,920 --> 00:27:52,879
Speaker 1: to some extent threatened by that. So this, I mean,

600
00:27:52,920 --> 00:27:55,000
Speaker 1: this is the fact that people question kind of the

601
00:27:55,160 --> 00:27:56,720
Speaker 1: basis of the industry. I think it is actually a

602
00:27:56,760 --> 00:27:59,280
Speaker 1: positive thing because the more people talk about this, the

603
00:27:59,320 --> 00:28:01,800
Speaker 1: more opportunity is there are to educate about what are

604
00:28:01,800 --> 00:28:04,040
Speaker 1: the real and what are that the potentially not real

605
00:28:04,400 --> 00:28:06,479
Speaker 1: risks out there. So I kind of us of all

606
00:28:06,520 --> 00:28:09,200
Speaker 1: these question marks as being a positive, and I think,

607
00:28:09,400 --> 00:28:11,320
Speaker 1: you know, any sort of attempt to kind of you know,

608
00:28:11,400 --> 00:28:13,800
Speaker 1: dial those back would be bad for the industry. It's

609
00:28:13,800 --> 00:28:16,040
Speaker 1: good to have people that are asking those questions, holding

610
00:28:16,080 --> 00:28:18,720
Speaker 1: the institute to account and making people educate in a

611
00:28:18,760 --> 00:28:21,760
Speaker 1: more articulate and more thorough manner to actually make sure

612
00:28:21,800 --> 00:28:24,439
Speaker 1: that everyone's the questions are addressed. Wow, Rachel had a

613
00:28:24,520 --> 00:28:29,359
Speaker 1: cup of sunshine this morning, because I love the opportunity

614
00:28:29,400 --> 00:28:33,760
Speaker 1: to educate and have a rational conversation. But eats distorting

615
00:28:33,800 --> 00:28:36,080
Speaker 1: the market, and weapons and mass destruction, those are not

616
00:28:36,400 --> 00:28:39,200
Speaker 1: things that normally you get said. Macy's is one of

617
00:28:39,200 --> 00:28:41,600
Speaker 1: the worst performing stocks this year. It's in the SMP

618
00:28:41,760 --> 00:28:46,160
Speaker 1: five hundred. It's down something like You've got semiconductor stocks

619
00:28:46,160 --> 00:28:49,080
Speaker 1: that are have doubled this year, also in the same

620
00:28:49,200 --> 00:28:53,120
Speaker 1: SMP five index. If money is driving and distorting the

621
00:28:53,160 --> 00:28:56,160
Speaker 1: price of these stocks, that God help these companies. If

622
00:28:56,200 --> 00:28:58,720
Speaker 1: they were not part of the SMP five index and

623
00:28:58,720 --> 00:29:02,200
Speaker 1: they weren't being propped up by by having ownership within I,

624
00:29:02,320 --> 00:29:05,120
Speaker 1: v V and v OH, the market is not being

625
00:29:05,120 --> 00:29:07,160
Speaker 1: distorted by the et F. It's gonna be interesting to

626
00:29:07,160 --> 00:29:09,000
Speaker 1: see what happens. And in a downturn. I mean, because

627
00:29:09,120 --> 00:29:11,000
Speaker 1: there is this whole kind of and some people would

628
00:29:11,040 --> 00:29:12,760
Speaker 1: say this is a myth about this idea that you know,

629
00:29:12,760 --> 00:29:14,840
Speaker 1: a t s haven't been tested yet. Now I think

630
00:29:14,840 --> 00:29:16,240
Speaker 1: the jury is a little bit out on that. We

631
00:29:16,280 --> 00:29:19,640
Speaker 1: have definitely seen tests. However, until we see something of

632
00:29:19,640 --> 00:29:21,800
Speaker 1: the kind of magnitude of Lehman, and no one is

633
00:29:21,840 --> 00:29:23,840
Speaker 1: going to be satisfied that the test was big enough

634
00:29:23,880 --> 00:29:25,840
Speaker 1: for that when the assets have been large enough. So

635
00:29:25,840 --> 00:29:27,320
Speaker 1: I think it's gonna be interesting if we do see

636
00:29:27,320 --> 00:29:28,960
Speaker 1: a correction to see how the market does, because it

637
00:29:29,040 --> 00:29:31,320
Speaker 1: might put some of those concerns to bed or show

638
00:29:31,360 --> 00:29:33,200
Speaker 1: that there are market structure issues that still need to

639
00:29:33,200 --> 00:29:36,680
Speaker 1: be fixed. Post August. Yeah, I would agree with that.

640
00:29:36,720 --> 00:29:39,080
Speaker 1: I also think that mutual funds in a downturn, it's

641
00:29:39,080 --> 00:29:41,160
Speaker 1: going to get interesting. Those are the bond funds have

642
00:29:41,200 --> 00:29:44,040
Speaker 1: gone into more liquid stuff to outperform. That's gonna be

643
00:29:44,040 --> 00:29:46,880
Speaker 1: tough to sell. And also think just generally, people who

644
00:29:46,880 --> 00:29:49,480
Speaker 1: were are in active mutual funds were likely put there

645
00:29:49,480 --> 00:29:51,600
Speaker 1: by their broker, and people who bought an e t

646
00:29:51,720 --> 00:29:54,160
Speaker 1: F for an index fund bought it themselves, and I

647
00:29:54,160 --> 00:29:57,239
Speaker 1: think they're going to have a little more loyalty, and

648
00:29:57,280 --> 00:29:59,800
Speaker 1: that's why you tend to see them not panic in

649
00:29:59,840 --> 00:30:03,320
Speaker 1: a downturn. So far we've seen them largely hang in UM.

650
00:30:03,360 --> 00:30:05,600
Speaker 1: In fact, they'll take in money net, So I do

651
00:30:05,720 --> 00:30:08,959
Speaker 1: think that matters. The loyalty and the commitment to that

652
00:30:09,040 --> 00:30:11,440
Speaker 1: low cost long term story I think is stronger. I

653
00:30:11,440 --> 00:30:14,880
Speaker 1: think active mutual funds you could see some really wild

654
00:30:14,960 --> 00:30:17,120
Speaker 1: things happen if all the boomers who were already you know,

655
00:30:17,120 --> 00:30:19,680
Speaker 1: getting up there in age, plus the market downturn, I'll

656
00:30:19,680 --> 00:30:22,680
Speaker 1: try to sell their what fifteen trillion of ACTI mutual

657
00:30:22,680 --> 00:30:24,200
Speaker 1: funds or a portion of it. That's a lot more

658
00:30:24,240 --> 00:30:26,440
Speaker 1: selling than a t F S could ever drum up.

659
00:30:27,160 --> 00:30:31,440
Speaker 1: Talking of things closing, let's talk about et F closures

660
00:30:31,600 --> 00:30:34,480
Speaker 1: as well as launches. What's left a lot of closures

661
00:30:34,480 --> 00:30:36,440
Speaker 1: this year. Death is a part of the part of

662
00:30:36,440 --> 00:30:38,560
Speaker 1: the industry. It's just this part of life. Death is

663
00:30:38,600 --> 00:30:42,640
Speaker 1: part of life, and UM I salute it. I think

664
00:30:42,680 --> 00:30:45,680
Speaker 1: it's good to get these UM non traded duds off

665
00:30:45,680 --> 00:30:48,680
Speaker 1: the market because if you put a market order in overnight,

666
00:30:48,960 --> 00:30:52,000
Speaker 1: it's possible you get hit at a bad price in

667
00:30:52,040 --> 00:30:55,280
Speaker 1: the morning. So I just clear them out, except you know, admit,

668
00:30:55,320 --> 00:30:58,480
Speaker 1: defeat um, and there's a lot more. I think also

669
00:30:58,520 --> 00:31:00,240
Speaker 1: the fee war that Todd mentioned earlier in the year

670
00:31:00,280 --> 00:31:03,800
Speaker 1: has scared investor issuers, made them think twice. I think

671
00:31:03,800 --> 00:31:07,400
Speaker 1: the spaghetti bazooka or cannon that Ben Johnson from Morning

672
00:31:07,400 --> 00:31:09,400
Speaker 1: Star free is a great phrase. I think it's kind

673
00:31:09,400 --> 00:31:10,959
Speaker 1: of turned more into a rifle. I think they are

674
00:31:11,000 --> 00:31:12,640
Speaker 1: throwing spaghett at the wall, but it's a little more

675
00:31:12,640 --> 00:31:15,040
Speaker 1: targeted these days, a little more thoughtful. The launches just

676
00:31:15,040 --> 00:31:17,480
Speaker 1: don't seem as as wild as they were, so I

677
00:31:17,480 --> 00:31:20,000
Speaker 1: think that's just maturing industry. Well. A couple of things

678
00:31:20,000 --> 00:31:22,280
Speaker 1: to add to that. One is that we used to

679
00:31:22,320 --> 00:31:25,200
Speaker 1: be roughly three years before in et F would have

680
00:31:25,240 --> 00:31:27,920
Speaker 1: a chance and then see what would happen uh, and

681
00:31:28,000 --> 00:31:29,960
Speaker 1: we're seeing that sped up to some extent. There's e

682
00:31:30,000 --> 00:31:32,560
Speaker 1: t F that have launched in two thousand nineteen that

683
00:31:32,640 --> 00:31:34,520
Speaker 1: are already will be closed by the end of two

684
00:31:34,560 --> 00:31:38,200
Speaker 1: thousand nineteen. That's a very short shelf life that's out there.

685
00:31:38,200 --> 00:31:40,800
Speaker 1: But we did we ran some data using what we

686
00:31:40,920 --> 00:31:42,920
Speaker 1: rate at c f r A, and there's a hundred

687
00:31:42,920 --> 00:31:45,120
Speaker 1: and seventy five e t F s that are more

688
00:31:45,120 --> 00:31:48,200
Speaker 1: than three years old. That have less than fifty million

689
00:31:48,240 --> 00:31:51,480
Speaker 1: in assets under management, which is sort of the threshold,

690
00:31:51,600 --> 00:31:53,800
Speaker 1: right which it tends to be the ballpark where it is,

691
00:31:53,880 --> 00:31:56,880
Speaker 1: you know, fifty or a hundred million. You know, it

692
00:31:56,880 --> 00:31:58,880
Speaker 1: tends to be the thresholds where it is. So these

693
00:31:58,880 --> 00:32:01,240
Speaker 1: are products that have had it hands for success that

694
00:32:01,400 --> 00:32:03,160
Speaker 1: have not been able to do. So there's some wine

695
00:32:03,200 --> 00:32:05,640
Speaker 1: ups that are out there that probably would shock people

696
00:32:05,680 --> 00:32:09,360
Speaker 1: that that still have a place on the shoulder. Could

697
00:32:09,360 --> 00:32:11,280
Speaker 1: be a calling. I think there's going to be an

698
00:32:11,320 --> 00:32:14,320
Speaker 1: ongoing calling. And as asset managers decide what are their

699
00:32:14,360 --> 00:32:19,600
Speaker 1: priorities for and as we get to it the new active,

700
00:32:19,640 --> 00:32:22,880
Speaker 1: non transparent ETFs that are coming out, if you if

701
00:32:22,920 --> 00:32:25,120
Speaker 1: you offer those or you plan to offer those, and

702
00:32:25,160 --> 00:32:27,480
Speaker 1: you offer some of these products that have no money

703
00:32:27,520 --> 00:32:29,479
Speaker 1: in it, you want to put your bang where your

704
00:32:29,480 --> 00:32:32,239
Speaker 1: buck is. Yeah, And I think that's kind of a positive, right,

705
00:32:32,240 --> 00:32:34,120
Speaker 1: you know, if we start to see less froth in

706
00:32:34,160 --> 00:32:36,200
Speaker 1: the industry, I mean Derek's it's like it's kind of

707
00:32:36,200 --> 00:32:39,080
Speaker 1: a pruning of the industry more than kind of like

708
00:32:39,160 --> 00:32:41,560
Speaker 1: a sign of failure. But we were seeing some pretty

709
00:32:41,600 --> 00:32:43,280
Speaker 1: kind of crazy launches out there. Some of them are

710
00:32:43,320 --> 00:32:45,320
Speaker 1: still in the market, and I think, you know, any

711
00:32:45,360 --> 00:32:47,239
Speaker 1: kind of like sort of reckoning where we see some

712
00:32:47,320 --> 00:32:49,720
Speaker 1: of those slightly more out their products sort of curved,

713
00:32:49,880 --> 00:32:51,200
Speaker 1: it has got to be kind of a positive in

714
00:32:51,320 --> 00:32:54,080
Speaker 1: terms of the long term outlook for ETFs and making

715
00:32:54,120 --> 00:32:57,280
Speaker 1: sure that people are in sensible smart investment strategies rather

716
00:32:57,320 --> 00:33:02,160
Speaker 1: than fats speed round Bitcoin. We're gonna see an e

717
00:33:02,160 --> 00:33:06,000
Speaker 1: t f UM. James safered on my team is up

718
00:33:06,000 --> 00:33:08,760
Speaker 1: to odds. I'm I'd be in that ballpark because the

719
00:33:08,800 --> 00:33:11,240
Speaker 1: SEC just approved an interval fund that uses futures. I

720
00:33:11,280 --> 00:33:12,600
Speaker 1: think if they do approve, then they might start with

721
00:33:12,640 --> 00:33:15,200
Speaker 1: the futures et Fdhlia Blast came out with some interesting

722
00:33:15,240 --> 00:33:18,360
Speaker 1: comments that said, every time I've given odds, it hasn't happened.

723
00:33:18,400 --> 00:33:20,840
Speaker 1: So um, you didn't give him? You give James God,

724
00:33:21,200 --> 00:33:23,120
Speaker 1: I feel like I come every time and I got

725
00:33:23,240 --> 00:33:26,120
Speaker 1: asked this question and my answer still is the SEC

726
00:33:26,280 --> 00:33:29,560
Speaker 1: doesn't seem comfortable. I don't think they're gonna get any

727
00:33:29,600 --> 00:33:31,840
Speaker 1: more comfortable about fraud. So no, I don't think it's

728
00:33:31,880 --> 00:33:37,360
Speaker 1: gonna happen in WOWO. Well, it's good. We'll see what happens.

729
00:33:37,680 --> 00:33:41,560
Speaker 1: We'll have Todd back if it happens. Okay, the answererce,

730
00:33:42,840 --> 00:33:46,080
Speaker 1: what is that. I'm gonna throw this to Rachel. She's

731
00:33:46,120 --> 00:33:48,600
Speaker 1: the source of the term, and I love. I think

732
00:33:48,640 --> 00:33:54,400
Speaker 1: it's gonna happen. Good dame, We're making it happen. Making

733
00:33:55,240 --> 00:33:57,680
Speaker 1: the name, not the success. That's a whole different stat

734
00:33:57,960 --> 00:34:01,720
Speaker 1: is active non transparent UM so active non transparent answers.

735
00:34:01,720 --> 00:34:04,320
Speaker 1: I'm trying to get this to be a thing because

736
00:34:04,360 --> 00:34:07,640
Speaker 1: it's like spiders and vipers, you know. UM. It is

737
00:34:07,680 --> 00:34:09,680
Speaker 1: basically kind of the idea that you can sell an

738
00:34:09,719 --> 00:34:13,000
Speaker 1: exchange trade of fund that doesn't disclose its holdings every day.

739
00:34:13,000 --> 00:34:15,319
Speaker 1: So instead of kind of the daily transparency that we

740
00:34:15,360 --> 00:34:17,600
Speaker 1: sort of see from most ETFs are currently out there,

741
00:34:17,840 --> 00:34:19,640
Speaker 1: you would have kind of more of a mutual fund

742
00:34:19,760 --> 00:34:21,919
Speaker 1: esque disclosure. Now, there are a few models out there

743
00:34:21,960 --> 00:34:23,920
Speaker 1: that would kind of give different ways of doing that.

744
00:34:24,160 --> 00:34:26,360
Speaker 1: Typically they fall into kind of like the proxy model,

745
00:34:26,440 --> 00:34:31,160
Speaker 1: which we've just seen approved Fidelity t row Blue Tractor,

746
00:34:31,280 --> 00:34:34,480
Speaker 1: and the Texas UM all the kind of indicative value

747
00:34:34,480 --> 00:34:37,239
Speaker 1: model that Presidian has been pushing. We obviously had dam

748
00:34:37,320 --> 00:34:39,880
Speaker 1: a capon a few months ago now to kind of

749
00:34:39,880 --> 00:34:41,719
Speaker 1: talk about that. So those are kind of like that.

750
00:34:41,680 --> 00:34:44,439
Speaker 1: The models are out there. We are expecting to see

751
00:34:44,440 --> 00:34:47,200
Speaker 1: the first funds launched in Q one of next year.

752
00:34:47,480 --> 00:34:50,239
Speaker 1: And the big question from my perspective is really kind

753
00:34:50,239 --> 00:34:52,239
Speaker 1: of like whether we see investors kind of moving into

754
00:34:52,239 --> 00:34:55,839
Speaker 1: these products. I think there are some philosophical questions about

755
00:34:55,880 --> 00:34:59,600
Speaker 1: whether investors really want to go into active now if

756
00:34:59,640 --> 00:35:02,480
Speaker 1: they're not there already, and of how sort of putting

757
00:35:02,480 --> 00:35:04,239
Speaker 1: in an e t F wrapper will make it more

758
00:35:04,440 --> 00:35:06,799
Speaker 1: or less appealing. So that's a nice transition to there's

759
00:35:06,840 --> 00:35:10,960
Speaker 1: some regulatory stuff on the horizon here. How do you

760
00:35:11,000 --> 00:35:14,320
Speaker 1: think that's going to implicate? Uh, what are the implications

761
00:35:14,320 --> 00:35:16,600
Speaker 1: for that stuff? Well, we believe that we're going to

762
00:35:16,680 --> 00:35:19,480
Speaker 1: see success. I think that we've we've got the approvals

763
00:35:20,000 --> 00:35:21,719
Speaker 1: so far. We think we're gonna make it's gonna be

764
00:35:21,800 --> 00:35:24,160
Speaker 1: easier to launch in e t F than it ever

765
00:35:24,320 --> 00:35:26,800
Speaker 1: was beforehand with the et F rule going into effect

766
00:35:27,080 --> 00:35:29,600
Speaker 1: at the end of this year. And we think that

767
00:35:29,800 --> 00:35:33,640
Speaker 1: firms like Fidelity, like tiro Price, that have strong brands

768
00:35:33,920 --> 00:35:37,520
Speaker 1: in active management, that already are a relatively low cost provider,

769
00:35:37,800 --> 00:35:40,680
Speaker 1: that have strong track records, they're going to be able

770
00:35:40,719 --> 00:35:44,440
Speaker 1: to have some success with these products. You know, Fidelity

771
00:35:44,440 --> 00:35:47,560
Speaker 1: gathered three billion dollars of money into their E t

772
00:35:47,719 --> 00:35:51,720
Speaker 1: F s in two thousand nineteen without their flagship active

773
00:35:51,760 --> 00:35:54,719
Speaker 1: equity strategies being available. We think they're going to have

774
00:35:54,840 --> 00:35:58,480
Speaker 1: that and then some going forward, right, but that fidelity,

775
00:35:58,520 --> 00:36:01,359
Speaker 1: it's only three billion b those A lot of those

776
00:36:01,360 --> 00:36:03,799
Speaker 1: are the cheap sector ones, low cost, which brings me

777
00:36:03,840 --> 00:36:06,960
Speaker 1: to the three reasons ants will struggle. Number one, Active

778
00:36:06,960 --> 00:36:10,120
Speaker 1: transparent already exists, been around for ten years, and all

779
00:36:10,160 --> 00:36:12,240
Speaker 1: through those ten years they now have managed to scrape

780
00:36:12,320 --> 00:36:14,799
Speaker 1: up point four percent of totally t F assets. It's

781
00:36:14,880 --> 00:36:18,120
Speaker 1: it's like nothing. Nearly every dimond flows goes to E

782
00:36:18,200 --> 00:36:20,799
Speaker 1: E t F charging twenty basis points are less. These

783
00:36:20,800 --> 00:36:24,160
Speaker 1: are all going to be above that important line. Number three,

784
00:36:24,200 --> 00:36:26,839
Speaker 1: A trillion of outflows from active equity mutual funds over

785
00:36:26,880 --> 00:36:32,440
Speaker 1: the past few years alone. Those are really hard, almost insurmountable.

786
00:36:32,440 --> 00:36:34,879
Speaker 1: And then there's the anecdotal. When I talk to advisors,

787
00:36:35,280 --> 00:36:38,640
Speaker 1: they'll say, yeah, look, um, I know some managers will

788
00:36:38,760 --> 00:36:40,840
Speaker 1: perform each year, some funds will do better. But the

789
00:36:40,880 --> 00:36:42,239
Speaker 1: problem is I don't know ahead of time who that

790
00:36:42,280 --> 00:36:45,120
Speaker 1: will be. And by if I chase ones that already

791
00:36:45,120 --> 00:36:46,719
Speaker 1: did a lot of times, they won't persist and then

792
00:36:46,760 --> 00:36:49,359
Speaker 1: I'll lose more because I bought at the top. And

793
00:36:49,400 --> 00:36:53,480
Speaker 1: so the persistence has become such a damning mental state,

794
00:36:54,120 --> 00:36:58,080
Speaker 1: uh for the advisors. So whether the hard data matches

795
00:36:58,160 --> 00:37:00,960
Speaker 1: that mental mindset from advisors and night Like I said,

796
00:37:00,960 --> 00:37:03,200
Speaker 1: there's probably a couple of hits, but I see largely

797
00:37:03,400 --> 00:37:05,319
Speaker 1: a lot of struggle. And we've seen big issuers come

798
00:37:05,360 --> 00:37:07,799
Speaker 1: to the ETF industry and get humbled. Well, we've also

799
00:37:07,800 --> 00:37:09,680
Speaker 1: seen big issues come to the t F market and

800
00:37:09,760 --> 00:37:12,520
Speaker 1: use their scale to their advantage because to do that,

801
00:37:12,560 --> 00:37:14,480
Speaker 1: but like a JP Morgan and a Goldman, it's a

802
00:37:14,560 --> 00:37:17,200
Speaker 1: largely because they followed the vanguard model to a degree.

803
00:37:17,200 --> 00:37:19,520
Speaker 1: If you're coming in with ants at fifty basis points

804
00:37:19,520 --> 00:37:22,600
Speaker 1: since your value or growth active fund, that's a whole

805
00:37:22,640 --> 00:37:25,480
Speaker 1: different story. Who's been successful with that? That's the thing.

806
00:37:25,560 --> 00:37:28,360
Speaker 1: We haven't seen that. So your ten years of history.

807
00:37:28,760 --> 00:37:30,759
Speaker 1: The providers that were out there a long time ago

808
00:37:30,880 --> 00:37:33,880
Speaker 1: in the active equity space are not providers that are

809
00:37:33,960 --> 00:37:37,799
Speaker 1: household names that have for that. Who's a household name?

810
00:37:38,840 --> 00:37:41,440
Speaker 1: You mean the brands, not the people, the brands, the brands.

811
00:37:41,680 --> 00:37:43,359
Speaker 1: So the brands that are act there, you're not mean

812
00:37:43,400 --> 00:37:45,640
Speaker 1: blowing your manager into it. You're going to get the

813
00:37:45,640 --> 00:37:49,600
Speaker 1: tax efficiency benefits. I've gone to many events that are

814
00:37:49,640 --> 00:37:53,240
Speaker 1: held by asset managers that the primary audience are existing

815
00:37:53,320 --> 00:37:56,240
Speaker 1: mutual fund investors, and they need to be educated about

816
00:37:56,280 --> 00:37:58,920
Speaker 1: et s. The other thing you have is demographics. A

817
00:37:58,960 --> 00:38:01,239
Speaker 1: lot of the big mutual fund esters are boomers who are,

818
00:38:01,400 --> 00:38:05,200
Speaker 1: if anything, selling to give to millennials who are not

819
00:38:05,400 --> 00:38:08,920
Speaker 1: mutual fund investors. So there's that other larger drink, you know,

820
00:38:09,080 --> 00:38:12,200
Speaker 1: headwind on this whole situation. Eventually, if you label something

821
00:38:12,200 --> 00:38:14,560
Speaker 1: as an e t F, those those millennials might be

822
00:38:14,600 --> 00:38:16,520
Speaker 1: interested in it, whether it's active or paths. That's a

823
00:38:16,520 --> 00:38:18,279
Speaker 1: good point. I think it's gonna be a distribution kind

824
00:38:18,280 --> 00:38:20,440
Speaker 1: of challenge. Really. It's like it's it's going to be

825
00:38:20,680 --> 00:38:23,360
Speaker 1: like the marketing tactic is going to be to emphasize

826
00:38:23,360 --> 00:38:25,640
Speaker 1: how the strategies are different and how the content is

827
00:38:25,680 --> 00:38:27,960
Speaker 1: superior to the pass if I would imagine. But I

828
00:38:27,960 --> 00:38:29,640
Speaker 1: think in terms of the actual success, it's going to

829
00:38:29,680 --> 00:38:32,400
Speaker 1: be can you get that into the hands of investors

830
00:38:33,000 --> 00:38:35,200
Speaker 1: and present it in a way where it can compete

831
00:38:35,200 --> 00:38:38,279
Speaker 1: alongside mutual funds which they may already own, or e

832
00:38:38,360 --> 00:38:39,759
Speaker 1: t F so they may be a bit skeptical. Well,

833
00:38:39,800 --> 00:38:41,720
Speaker 1: I think that's the challenge if I can real quickly

834
00:38:41,960 --> 00:38:46,600
Speaker 1: on it is the distribution. So will brokerage platforms allow

835
00:38:46,680 --> 00:38:49,280
Speaker 1: these to go sit side by side with the mutual

836
00:38:49,320 --> 00:38:52,600
Speaker 1: funds alternatives? I hope that they will. I think that

837
00:38:52,880 --> 00:38:55,360
Speaker 1: they're going to understand that this is a different product

838
00:38:55,880 --> 00:38:58,239
Speaker 1: from the same asset manager that they were familiar with.

839
00:38:58,440 --> 00:39:00,399
Speaker 1: But if they're not allowed on these brokerage pot forms,

840
00:39:00,400 --> 00:39:02,200
Speaker 1: then you're gonna be the same thing, like the low

841
00:39:02,280 --> 00:39:06,520
Speaker 1: salt ls LT product that's giving away money and still

842
00:39:06,520 --> 00:39:09,319
Speaker 1: can't get money coming in the door. Um. I had

843
00:39:09,320 --> 00:39:11,239
Speaker 1: a real quick one for for you guys, and you

844
00:39:11,320 --> 00:39:15,520
Speaker 1: can weigh into dull if you want. Um yeah. Um.

845
00:39:15,560 --> 00:39:17,120
Speaker 1: If we look at the top E T S by

846
00:39:17,120 --> 00:39:19,880
Speaker 1: flows over the past decade, uh, this decade, it was

847
00:39:19,920 --> 00:39:21,640
Speaker 1: I V V and VOO at number one and two.

848
00:39:22,120 --> 00:39:25,680
Speaker 1: The in the outs or outs it was a SPY

849
00:39:25,760 --> 00:39:27,719
Speaker 1: and e F A, and in the nineties it was

850
00:39:27,760 --> 00:39:30,640
Speaker 1: SPY in qq Q. But largely the top five and

851
00:39:30,680 --> 00:39:33,120
Speaker 1: ten lists haven't quite been the same. They've been different

852
00:39:33,120 --> 00:39:35,279
Speaker 1: each decade. What's an E T F or two that

853
00:39:35,400 --> 00:39:38,160
Speaker 1: you think could just end up being one of the

854
00:39:38,239 --> 00:39:40,440
Speaker 1: leaders of the next decade. So I think A g

855
00:39:40,600 --> 00:39:44,240
Speaker 1: G uh So this is I shares core bond ETF

856
00:39:44,600 --> 00:39:48,120
Speaker 1: I mentioned earlier, bond etf are gaining market share. We

857
00:39:48,160 --> 00:39:50,120
Speaker 1: think they're going to continue to gain market share, and

858
00:39:50,160 --> 00:39:52,719
Speaker 1: you're going to see roughly at some point more of

859
00:39:52,840 --> 00:39:55,160
Speaker 1: the asset allocation that you'd have with the equity and

860
00:39:55,200 --> 00:39:58,319
Speaker 1: fixed income. Everybody owns the AGG. Whether you hate the

861
00:39:58,320 --> 00:40:01,440
Speaker 1: egg or not. People still own NIAGG. It's from my

862
00:40:01,560 --> 00:40:03,640
Speaker 1: shares and it's all costs, and I think it's going

863
00:40:03,680 --> 00:40:07,080
Speaker 1: to be extremely popular in the next decade. I tend

864
00:40:07,080 --> 00:40:08,600
Speaker 1: to time in with one. I'm not going to pick

865
00:40:08,600 --> 00:40:11,239
Speaker 1: a favorite, because I shouldn't play favorites, but I would

866
00:40:11,280 --> 00:40:12,920
Speaker 1: point out that, I mean, if you look at kind

867
00:40:12,920 --> 00:40:15,320
Speaker 1: of like the top flow in takes this year, B N,

868
00:40:15,400 --> 00:40:17,640
Speaker 1: D G, O V T T L T I E

869
00:40:17,760 --> 00:40:19,719
Speaker 1: F and M b B and A G G just

870
00:40:19,800 --> 00:40:22,200
Speaker 1: outside all kind of like big bond funds that have

871
00:40:22,239 --> 00:40:25,400
Speaker 1: been kind of taking in significant flows. To my point earlier,

872
00:40:25,440 --> 00:40:27,279
Speaker 1: I really do think like in the next decade is

873
00:40:27,280 --> 00:40:29,920
Speaker 1: going to be about fixed income and people using that

874
00:40:29,960 --> 00:40:31,720
Speaker 1: more and more. So I think some of those broad

875
00:40:32,280 --> 00:40:34,440
Speaker 1: bond funds will be great for buying a hold investors.

876
00:40:34,480 --> 00:40:36,520
Speaker 1: And I think you kind of also got to count

877
00:40:36,560 --> 00:40:38,399
Speaker 1: out some of the ones that traders are going to use.

878
00:40:38,440 --> 00:40:41,440
Speaker 1: If we do see kind of institutional and tactical traders

879
00:40:41,520 --> 00:40:43,640
Speaker 1: kind of using e t F s more in place

880
00:40:43,680 --> 00:40:46,200
Speaker 1: of kind of swaps and options and other kind of

881
00:40:46,200 --> 00:40:49,240
Speaker 1: derivative type functions, then I think some of those products

882
00:40:49,239 --> 00:40:51,640
Speaker 1: have the potential to end up with a lot of assets,

883
00:40:51,680 --> 00:40:53,920
Speaker 1: you know, just because people are using them so frequently.

884
00:40:54,320 --> 00:40:56,560
Speaker 1: And I'll trymem in with a couple, Um, you could

885
00:40:56,560 --> 00:41:02,000
Speaker 1: see what going to like skip me there. Oh sorry, geez, geez, geez. Sorry,

886
00:41:02,280 --> 00:41:04,279
Speaker 1: you know you were on your phone. I know, I

887
00:41:04,320 --> 00:41:11,319
Speaker 1: know that's his research. So I actually think, um, you know,

888
00:41:11,360 --> 00:41:13,719
Speaker 1: I know you're cool on the E S G thing

889
00:41:13,840 --> 00:41:16,960
Speaker 1: that I think the between E t F s and

890
00:41:16,960 --> 00:41:20,239
Speaker 1: the millennials and being able to actually like put your

891
00:41:20,280 --> 00:41:22,799
Speaker 1: money and things you believe in. I don't know if

892
00:41:22,840 --> 00:41:25,479
Speaker 1: it's gonna have like it might not take on agg

893
00:41:25,560 --> 00:41:27,799
Speaker 1: I totally think you're right, it's probably one out there.

894
00:41:27,840 --> 00:41:30,640
Speaker 1: But the fact that there are like low carbon E

895
00:41:30,800 --> 00:41:35,040
Speaker 1: t F that track the benchmarks that they're up against

896
00:41:35,280 --> 00:41:37,480
Speaker 1: and have a fraction of the carbon footprint at a

897
00:41:37,520 --> 00:41:40,319
Speaker 1: moment in time when we we think that, you know,

898
00:41:40,360 --> 00:41:43,600
Speaker 1: millennials are going to probably invest some money into causes

899
00:41:43,640 --> 00:41:45,960
Speaker 1: that they believe in. I think that something like that,

900
00:41:46,000 --> 00:41:48,799
Speaker 1: like that, what's the m s C I, the I shares,

901
00:41:48,920 --> 00:41:52,160
Speaker 1: MSCI spy X. I think that's an interesting play. I

902
00:41:52,200 --> 00:41:54,000
Speaker 1: don't think it's gonna be like a number one thing,

903
00:41:54,280 --> 00:41:57,640
Speaker 1: but I think if it's like you're passionate about climate change,

904
00:41:57,680 --> 00:42:00,000
Speaker 1: you actually have an ability to like invest in stuff

905
00:42:00,000 --> 00:42:02,520
Speaker 1: thing that might feel good. That's a good out of

906
00:42:02,520 --> 00:42:05,319
Speaker 1: the box answer. Um, it's inspired. I like it. I

907
00:42:05,320 --> 00:42:10,000
Speaker 1: don't agree. Okay, I'm going with B y O A.

908
00:42:10,239 --> 00:42:12,920
Speaker 1: I think you're gonna have this vertical integration and like

909
00:42:13,040 --> 00:42:16,560
Speaker 1: six big companies start to control most of America's money,

910
00:42:16,600 --> 00:42:19,279
Speaker 1: and I think you could see s c h X,

911
00:42:19,280 --> 00:42:22,080
Speaker 1: the Schwab large cap sort of rise above and really

912
00:42:22,080 --> 00:42:24,480
Speaker 1: start to challenge the eye shares and vanguards of the world.

913
00:42:24,880 --> 00:42:27,919
Speaker 1: I also think you could see something like a beat towel,

914
00:42:27,960 --> 00:42:30,680
Speaker 1: which is the anti beta. It's possible the whole next

915
00:42:30,680 --> 00:42:33,279
Speaker 1: decade is just rough and things that are supposed to

916
00:42:33,320 --> 00:42:35,280
Speaker 1: go up when the market goes down go up. Maybe

917
00:42:35,320 --> 00:42:38,839
Speaker 1: some alternatives you could have gold up there. I will

918
00:42:38,920 --> 00:42:41,799
Speaker 1: bet you will come back here in ten years and

919
00:42:41,840 --> 00:42:45,440
Speaker 1: I will have the susy lunch of my dreams that

920
00:42:45,600 --> 00:42:49,000
Speaker 1: beat Howe will not be within the top ten of

921
00:42:49,160 --> 00:42:52,080
Speaker 1: the list. I will pay for that lunch. Okay, yeah,

922
00:42:52,200 --> 00:42:54,520
Speaker 1: I don't think so either. I'm saying something that does

923
00:42:55,000 --> 00:42:57,760
Speaker 1: the opposite of the market. I'm not s h something

924
00:42:58,080 --> 00:43:00,399
Speaker 1: could be a deep value. Who knows value, by the way,

925
00:43:00,560 --> 00:43:03,280
Speaker 1: is just do for a long, long stretch, We'll see.

926
00:43:03,640 --> 00:43:06,000
Speaker 1: I'm just saying something out of the box that's um,

927
00:43:06,040 --> 00:43:08,040
Speaker 1: you know, not what you'd expect, not the cheap beta,

928
00:43:08,080 --> 00:43:10,719
Speaker 1: typical fair. And on that note, we have another year

929
00:43:11,239 --> 00:43:14,160
Speaker 1: decade since seeing him. In ten years, it's just an

930
00:43:14,160 --> 00:43:16,480
Speaker 1: interesting visable. I can't get out of that in my head.

931
00:43:16,680 --> 00:43:20,200
Speaker 1: It's like I have no hair. Now it's gonna have hair.

932
00:43:20,320 --> 00:43:25,920
Speaker 1: It's gonna be swinging. Todd Rachel thanks for joining us, Trillian,

933
00:43:30,239 --> 00:43:32,560
Speaker 1: thanks for listening to Trillions. Until next time. You can

934
00:43:32,560 --> 00:43:36,600
Speaker 1: find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcast, Spotify,

935
00:43:36,840 --> 00:43:39,279
Speaker 1: and Warbelis you like to listen, We'd love to hear

936
00:43:39,320 --> 00:43:42,520
Speaker 1: from you. We're on Twitter. I'm at Joel Webber Show.

937
00:43:42,719 --> 00:43:46,040
Speaker 1: He's at Eric Faltrins. You can find Rachel at Rachel

938
00:43:46,040 --> 00:43:49,120
Speaker 1: Evans Undersport, n Y. And you can find Todd rosen

939
00:43:49,160 --> 00:43:53,480
Speaker 1: Blues at Todd c f R. Trillions is produced by

940
00:43:53,480 --> 00:43:56,960
Speaker 1: Magnus Hendrickson. Francesca Levy is the head of Bloomberg podcast

941
00:43:57,360 --> 00:43:57,520
Speaker 1: by