1 00:00:06,000 --> 00:00:08,880 Speaker 1: Welcome to Trillians. I'm Joel Webber and I'm Eric bel Tunis. 2 00:00:10,560 --> 00:00:14,120 Speaker 1: So we have a guest, Eric, we do you brought him? Yeah? 3 00:00:14,160 --> 00:00:16,120 Speaker 1: I believe this is well. We've had an issue where 4 00:00:16,120 --> 00:00:19,319 Speaker 1: on before, but this is our first big time, big 5 00:00:19,360 --> 00:00:22,080 Speaker 1: company issuer. Kind of a big deal. Yeah, I mean 6 00:00:22,200 --> 00:00:25,959 Speaker 1: everybody knows this company. Which company isn't Fidelity? And who 7 00:00:26,000 --> 00:00:30,440 Speaker 1: is he? Matt Goolay who is E t F industry veteran. 8 00:00:31,080 --> 00:00:32,960 Speaker 1: Remember when we did inside E t FS we talked 9 00:00:33,000 --> 00:00:35,879 Speaker 1: to Brian Lake who was at JP Morgan, but he 10 00:00:35,920 --> 00:00:38,400 Speaker 1: had been in other areas. There was a trend and 11 00:00:38,440 --> 00:00:40,919 Speaker 1: it still goes on. A lot of companies that are 12 00:00:41,159 --> 00:00:43,560 Speaker 1: massive mutual fund companies get into the et F space. 13 00:00:43,880 --> 00:00:45,440 Speaker 1: They got to hire people who know what they're doing. 14 00:00:45,479 --> 00:00:47,400 Speaker 1: So they go to Black Rock and State Street and 15 00:00:47,400 --> 00:00:50,239 Speaker 1: they hire them away and they run. They start to 16 00:00:50,240 --> 00:00:52,560 Speaker 1: build up their Brandon Matt is one of those guys 17 00:00:52,640 --> 00:00:55,200 Speaker 1: who's like Fidelity guy. Yeah, he's kind of like the 18 00:00:55,200 --> 00:00:58,800 Speaker 1: E t F entrepreneur inside this massive company that that 19 00:00:58,880 --> 00:01:01,240 Speaker 1: everybody knows. And I think think there I mean a 20 00:01:01,240 --> 00:01:04,080 Speaker 1: household name to say the least, people use it as 21 00:01:04,319 --> 00:01:07,400 Speaker 1: their brokerage. Platform or they have funds. And I remember 22 00:01:07,480 --> 00:01:10,240 Speaker 1: as a as a reporter when I first started out 23 00:01:10,319 --> 00:01:15,000 Speaker 1: at Institutional Investor, covering mutual fund companies for fund Action, 24 00:01:15,040 --> 00:01:16,440 Speaker 1: which is one of the news that ares at II. 25 00:01:16,560 --> 00:01:19,639 Speaker 1: And back then, this is the late nineties mid nineties, 26 00:01:19,680 --> 00:01:22,360 Speaker 1: Fidelity was the king of the hill. I mean, Vanguard 27 00:01:22,400 --> 00:01:25,880 Speaker 1: was something you've covered occasionally. They've since grown big. Fidelity 28 00:01:25,959 --> 00:01:28,199 Speaker 1: is still big. But now you have this new world 29 00:01:28,280 --> 00:01:31,840 Speaker 1: where passive has risen up to a huge extent, right 30 00:01:31,840 --> 00:01:33,640 Speaker 1: a lot of them, Almost all the money is going there, 31 00:01:34,000 --> 00:01:37,920 Speaker 1: and you have firms like Fidelity making their imprint in 32 00:01:37,959 --> 00:01:40,440 Speaker 1: this world. And I think not only they representative from 33 00:01:40,440 --> 00:01:44,160 Speaker 1: an industry standpoint of it's almost like uh merging into 34 00:01:44,160 --> 00:01:48,520 Speaker 1: this new technology, but from an investor standpoint, somebody who's 35 00:01:48,520 --> 00:01:51,840 Speaker 1: worked in the et F industry works in Fidelity, and 36 00:01:51,880 --> 00:01:53,760 Speaker 1: there's all these structures and a lot of them get 37 00:01:53,840 --> 00:01:56,760 Speaker 1: used together. It's just an interesting way to look at Uh. 38 00:01:56,800 --> 00:01:58,680 Speaker 1: He kind of sits at the crossroads of a couple 39 00:01:58,720 --> 00:02:00,960 Speaker 1: of things happening at the same time. So he's like 40 00:02:01,560 --> 00:02:05,080 Speaker 1: the little fish in a big pond making a big difference. Yeah, 41 00:02:05,120 --> 00:02:06,480 Speaker 1: I was trying to think of another way to throw 42 00:02:06,480 --> 00:02:08,600 Speaker 1: a big on there, but you gotta go with it. Yeah, 43 00:02:08,639 --> 00:02:16,600 Speaker 1: you win this episode. Matt Gooley of Fidelity. All right, Matt, 44 00:02:16,639 --> 00:02:19,480 Speaker 1: we just described you. How would you describe yourself? That 45 00:02:19,480 --> 00:02:22,400 Speaker 1: that's a pretty lofty description and background you gave on me. Thanks. 46 00:02:22,440 --> 00:02:25,760 Speaker 1: I remember ten years ago when Eric was the Bloomberg consultant. 47 00:02:25,840 --> 00:02:27,720 Speaker 1: I was at spider et S and couldn't figure out 48 00:02:27,720 --> 00:02:29,400 Speaker 1: how to turn on my computer and he was showing 49 00:02:29,400 --> 00:02:30,920 Speaker 1: me how to use Bloomberg for the first time. So 50 00:02:31,040 --> 00:02:33,239 Speaker 1: I guess we've come along. Did he help you turn 51 00:02:33,280 --> 00:02:36,040 Speaker 1: on your computer? I told you I used to. I 52 00:02:36,120 --> 00:02:38,760 Speaker 1: was the Walmart manager of the data and sometimes they 53 00:02:38,760 --> 00:02:43,639 Speaker 1: send me to Aisle four to help Aisle four. Yeah, 54 00:02:43,880 --> 00:02:46,799 Speaker 1: clean up on Aisle four. So my first job, Matt 55 00:02:46,800 --> 00:02:48,920 Speaker 1: doesn't know how to log in this before AI, before 56 00:02:49,000 --> 00:02:51,840 Speaker 1: robotics or anything like. My first job a spider Ets 57 00:02:51,919 --> 00:02:54,360 Speaker 1: was aggregating news. We sent out a weekly email called 58 00:02:54,400 --> 00:02:56,720 Speaker 1: the Chatterbox, and it was this big deal if if 59 00:02:56,760 --> 00:02:58,440 Speaker 1: a blogger would talk about e t s and now 60 00:02:58,440 --> 00:03:00,280 Speaker 1: you read about them in the Wall Street Journal. So 61 00:03:00,320 --> 00:03:03,960 Speaker 1: how did you get that job at spider Luck chance 62 00:03:05,000 --> 00:03:06,920 Speaker 1: fell into it? How did how did you find the 63 00:03:06,919 --> 00:03:10,240 Speaker 1: e t F. I think growing up in Boston it 64 00:03:10,280 --> 00:03:12,680 Speaker 1: was more of who are the major employers and financial services. 65 00:03:12,760 --> 00:03:15,320 Speaker 1: Knew I wanted to do financial services. I remember getting 66 00:03:15,320 --> 00:03:17,200 Speaker 1: a call from a family friend and saying, look, there's 67 00:03:17,240 --> 00:03:20,320 Speaker 1: this small division within State Free Global Advisors that's working 68 00:03:20,320 --> 00:03:22,520 Speaker 1: on E t S. Might be something worth it looking into. 69 00:03:22,600 --> 00:03:24,520 Speaker 1: Got introduced to Dodd Kinsley, who I know, you know 70 00:03:24,680 --> 00:03:27,799 Speaker 1: Eric and and the rest of history. I guess history 71 00:03:27,840 --> 00:03:30,520 Speaker 1: already it was like a decade ago. Let me ask 72 00:03:30,560 --> 00:03:33,040 Speaker 1: you this question because I remember when I covered ETS. 73 00:03:33,040 --> 00:03:35,240 Speaker 1: We covered this a couple of weeks ago. There's like 74 00:03:35,240 --> 00:03:37,880 Speaker 1: a light bulb moment where you're like, damn, this thing 75 00:03:38,000 --> 00:03:41,840 Speaker 1: is like five evolutionary steps beyond other structures. It's going 76 00:03:41,880 --> 00:03:43,600 Speaker 1: to be a big deal. Did you have that moment 77 00:03:43,640 --> 00:03:46,520 Speaker 1: at Spider And how fast did it happened? Totally? It 78 00:03:46,560 --> 00:03:48,120 Speaker 1: was probably year two or year three. I knew it 79 00:03:48,160 --> 00:03:50,280 Speaker 1: was into something special and knew there was growth. And 80 00:03:50,280 --> 00:03:52,560 Speaker 1: I think the big evolution for me in my career anyways, 81 00:03:52,640 --> 00:03:55,280 Speaker 1: is that at the time we thought about financial advisors, 82 00:03:55,320 --> 00:03:57,280 Speaker 1: we thought about institutions. It was it was really cool 83 00:03:57,280 --> 00:04:00,360 Speaker 1: to think about hedge fund utilization and pension using e 84 00:04:00,400 --> 00:04:03,360 Speaker 1: T s now in the seat I'm in working at Fidelity. 85 00:04:03,520 --> 00:04:05,320 Speaker 1: I think the thing that excites me most is mainstream 86 00:04:05,360 --> 00:04:07,320 Speaker 1: America like and we'll get into this a little bit 87 00:04:07,400 --> 00:04:10,040 Speaker 1: later in the show, but but it's just very very 88 00:04:10,040 --> 00:04:13,000 Speaker 1: early in terms of retail households using E T s. 89 00:04:13,040 --> 00:04:14,840 Speaker 1: Were you at Spider when they launched g L D 90 00:04:16,040 --> 00:04:18,359 Speaker 1: uh No, that was before. It was a couple of 91 00:04:18,360 --> 00:04:20,240 Speaker 1: months before my time, but it was there for j 92 00:04:20,440 --> 00:04:22,440 Speaker 1: n K and and a lot of the fixed income 93 00:04:22,839 --> 00:04:26,120 Speaker 1: controversial j n K, what was the launch that made 94 00:04:26,120 --> 00:04:29,200 Speaker 1: you go WHOA? It was probably some of the fixed income, 95 00:04:29,279 --> 00:04:30,600 Speaker 1: It was some of the high yield, some of the 96 00:04:30,680 --> 00:04:33,440 Speaker 1: municipal bond ETFs. There were two issuers at the same time, 97 00:04:33,520 --> 00:04:35,320 Speaker 1: launching products a week apart, and it was a race 98 00:04:35,360 --> 00:04:37,600 Speaker 1: to who could get to a hundred million first. But 99 00:04:38,040 --> 00:04:39,800 Speaker 1: that was that was the time that felt real to me. 100 00:04:39,800 --> 00:04:41,320 Speaker 1: And you mentioned g L D. I think those are 101 00:04:41,320 --> 00:04:43,359 Speaker 1: the funniest phone calls we got in those days. Is 102 00:04:43,360 --> 00:04:44,800 Speaker 1: is every other phone call you would get from the 103 00:04:44,800 --> 00:04:49,039 Speaker 1: client was is the gold really in the vault? Is it? Though? 104 00:04:50,160 --> 00:04:52,520 Speaker 1: I'm going to a vault. We we got to get in. 105 00:04:53,279 --> 00:04:55,400 Speaker 1: We've been trying to get somebody in a vault uh 106 00:04:55,600 --> 00:04:57,840 Speaker 1: to interview the gold for a couple of months now. 107 00:04:57,880 --> 00:04:59,520 Speaker 1: So if anybody out there is listening, who can get 108 00:04:59,560 --> 00:05:02,640 Speaker 1: us into there's like twenty gold funds at this point. Um, 109 00:05:02,680 --> 00:05:04,440 Speaker 1: we're coming for you. Yeah, we we really want to 110 00:05:04,440 --> 00:05:06,560 Speaker 1: get your goal. Yeah, we want to see the man 111 00:05:06,640 --> 00:05:08,840 Speaker 1: with the machine gun guarding it. And it just Eric 112 00:05:08,920 --> 00:05:11,240 Speaker 1: keeps saying that, I just want to see the goal. Yeah, 113 00:05:11,680 --> 00:05:13,440 Speaker 1: I want to talk to the guard. They might put 114 00:05:13,440 --> 00:05:14,839 Speaker 1: a mask over your head, you know when they drive. 115 00:05:14,880 --> 00:05:16,720 Speaker 1: I'll do it. I'll do it. I'll put the bag 116 00:05:16,760 --> 00:05:19,159 Speaker 1: over my head, drive me around the city. I don't 117 00:05:19,200 --> 00:05:21,560 Speaker 1: care where I get out. Well, I mean, I want 118 00:05:21,560 --> 00:05:23,599 Speaker 1: to come home. But I get that question. I'm not 119 00:05:23,640 --> 00:05:25,320 Speaker 1: even I don't even work at Spider or any of 120 00:05:25,320 --> 00:05:27,080 Speaker 1: the goal places. I get that question a lot when 121 00:05:27,120 --> 00:05:29,359 Speaker 1: I go on on the road to do presentations. People 122 00:05:29,400 --> 00:05:31,120 Speaker 1: want to know if the gold is really there. It's 123 00:05:31,120 --> 00:05:33,720 Speaker 1: a top five question. So what are the top five 124 00:05:33,800 --> 00:05:36,960 Speaker 1: questions that you get today in the current role, which 125 00:05:37,000 --> 00:05:38,760 Speaker 1: is what, by the way, what's your job? So current 126 00:05:38,800 --> 00:05:41,360 Speaker 1: job fidelity is is E T F guys Eric put 127 00:05:41,360 --> 00:05:42,960 Speaker 1: it or one of you put it? But really it's 128 00:05:43,040 --> 00:05:46,039 Speaker 1: educating our financial advisors on our platform and in the industry, 129 00:05:46,040 --> 00:05:47,640 Speaker 1: and then retail investors on how to use e t 130 00:05:47,800 --> 00:05:49,600 Speaker 1: F s. So in some ways we're running the same 131 00:05:49,600 --> 00:05:51,720 Speaker 1: playbook we ran five years ago, ten years ago, e 132 00:05:51,800 --> 00:05:54,279 Speaker 1: t F education, how to use them. That's really the 133 00:05:54,360 --> 00:05:56,440 Speaker 1: role right now is is et F education and then 134 00:05:56,680 --> 00:05:59,039 Speaker 1: the role of fidelity products in that right. So in 135 00:05:59,080 --> 00:06:02,000 Speaker 1: the last four years, we've launched over twenty products. Every 136 00:06:02,000 --> 00:06:03,480 Speaker 1: time we launch a new product, we spend a lot 137 00:06:03,520 --> 00:06:05,960 Speaker 1: of time with our client facing teams educating them on 138 00:06:06,000 --> 00:06:08,080 Speaker 1: the product, how it works. How many products have you 139 00:06:08,120 --> 00:06:13,680 Speaker 1: sensed it if you've launched that many zero? Yeah, going 140 00:06:13,680 --> 00:06:16,040 Speaker 1: back to the two three when we launched one queue, Um, 141 00:06:16,440 --> 00:06:19,039 Speaker 1: we haven't closed in et F as of yet. So 142 00:06:19,360 --> 00:06:21,880 Speaker 1: what's the number one question that people ask you number 143 00:06:21,880 --> 00:06:25,040 Speaker 1: one question today? I think most of the questions we're 144 00:06:25,040 --> 00:06:28,240 Speaker 1: still getting our around trading right best practices, and that's 145 00:06:28,240 --> 00:06:30,200 Speaker 1: not just advisors, that's retail investors. So if you think 146 00:06:30,240 --> 00:06:32,600 Speaker 1: about the client experience, the customer experience, that's something we're 147 00:06:32,600 --> 00:06:34,800 Speaker 1: thinking about all the time. Is someone's interacting on fiddli 148 00:06:34,880 --> 00:06:36,640 Speaker 1: dot com or on their treating portal, what does it 149 00:06:36,640 --> 00:06:39,279 Speaker 1: look like and and you know this is et s 150 00:06:39,279 --> 00:06:41,480 Speaker 1: still sit kind of within the stock framework. So you 151 00:06:41,560 --> 00:06:43,640 Speaker 1: put up a trade ticket and will say market order 152 00:06:43,720 --> 00:06:45,880 Speaker 1: versus limit order. For someone who's only ever bought a 153 00:06:45,960 --> 00:06:48,599 Speaker 1: mutual fund, that can be something that you have to 154 00:06:48,600 --> 00:06:50,520 Speaker 1: walk through with them. So that's probably the number one 155 00:06:50,600 --> 00:06:52,400 Speaker 1: question we get in the retail spaces. How do you 156 00:06:52,400 --> 00:06:54,800 Speaker 1: trade et s? What are best practices for trading et s? 157 00:06:54,880 --> 00:06:57,599 Speaker 1: And how do you respond to that? We always encourage 158 00:06:57,600 --> 00:06:59,760 Speaker 1: people to consider limit orders, right, so if if it 159 00:06:59,800 --> 00:07:02,520 Speaker 1: needs YEF and you're putting a market order out there, uh, 160 00:07:02,680 --> 00:07:05,880 Speaker 1: that can lead to to a suboptimal outcome for trading execution. 161 00:07:06,160 --> 00:07:08,400 Speaker 1: So we encourage folks to look at limit orders, to 162 00:07:08,480 --> 00:07:10,960 Speaker 1: think about what's trading the overall market, and and just 163 00:07:11,000 --> 00:07:13,480 Speaker 1: to be thoughtful about their approach for trading ETFs. Let's 164 00:07:13,480 --> 00:07:15,120 Speaker 1: just break this down, because I think there's some people 165 00:07:15,160 --> 00:07:17,240 Speaker 1: who are like, what's a market limit order? Can you 166 00:07:17,280 --> 00:07:22,520 Speaker 1: talk about? Break it down? Your DJ mix sound sounded 167 00:07:22,600 --> 00:07:26,080 Speaker 1: your scratching sounded exactly like your squeaky wheel Squeaky Wheel 168 00:07:26,080 --> 00:07:28,840 Speaker 1: at the supermar very very similar. You gotta work with 169 00:07:29,200 --> 00:07:33,160 Speaker 1: their cousins. I take that one back to the moment. Okay, right, 170 00:07:34,200 --> 00:07:37,320 Speaker 1: limit orders you know, as an analyst, were always told 171 00:07:37,320 --> 00:07:40,200 Speaker 1: to just default to limit order, but you have you 172 00:07:40,240 --> 00:07:42,480 Speaker 1: have access to some of the data that people are 173 00:07:42,560 --> 00:07:45,560 Speaker 1: using on your platform. What's the breakdown between people using 174 00:07:45,600 --> 00:07:48,800 Speaker 1: market orders and limit orders? And and it just go 175 00:07:48,920 --> 00:07:52,960 Speaker 1: through what each is. Sure, So market order is the 176 00:07:53,000 --> 00:07:55,040 Speaker 1: majority of the client orders we see, and I think 177 00:07:55,120 --> 00:07:57,440 Speaker 1: most people in ETF space that could be alarming, right, 178 00:07:57,600 --> 00:07:59,960 Speaker 1: and it's close to sevent our orders are market orders. 179 00:08:00,240 --> 00:08:02,200 Speaker 1: But for the overwhelming majority of e t F to 180 00:08:02,240 --> 00:08:04,840 Speaker 1: trade millions, if not billions of day a day, that's 181 00:08:04,920 --> 00:08:07,960 Speaker 1: that's not a big problem. Limit orders are the minority. 182 00:08:08,160 --> 00:08:10,240 Speaker 1: Limit order is you're setting a price, but you don't 183 00:08:10,280 --> 00:08:12,480 Speaker 1: know at what time it will execute. Market orders a 184 00:08:12,480 --> 00:08:14,320 Speaker 1: little bit of the inverse of that. So you want 185 00:08:14,320 --> 00:08:16,680 Speaker 1: it executed now, you want it executed the best price 186 00:08:16,680 --> 00:08:20,239 Speaker 1: available now, and you're willing to sacrifice price for time 187 00:08:20,480 --> 00:08:22,760 Speaker 1: now in that case, right, let's say it's a big 188 00:08:22,760 --> 00:08:25,240 Speaker 1: liquid one like I v V or J and K 189 00:08:25,440 --> 00:08:27,400 Speaker 1: or something like we mentioned or g l D. Is 190 00:08:27,400 --> 00:08:29,320 Speaker 1: there a case where market order just makes more sense 191 00:08:29,320 --> 00:08:31,280 Speaker 1: because it's so liquid, it will just digest to order 192 00:08:31,320 --> 00:08:33,720 Speaker 1: and you'll get a good deal. Is there a point 193 00:08:33,760 --> 00:08:36,360 Speaker 1: where if it doesn't trade a certain amount, then you 194 00:08:36,360 --> 00:08:39,000 Speaker 1: should go limit order because the spreads are wider and 195 00:08:39,040 --> 00:08:40,600 Speaker 1: if you put a limit order and it's likely you 196 00:08:40,640 --> 00:08:43,240 Speaker 1: could save a few basis points on that, right, how 197 00:08:43,400 --> 00:08:44,760 Speaker 1: do you work that out? Yeah? It's kind of like 198 00:08:44,760 --> 00:08:46,480 Speaker 1: when you're crossing the street of three young kids and 199 00:08:46,480 --> 00:08:48,280 Speaker 1: you're tell them across the street and look both ways. 200 00:08:48,640 --> 00:08:50,600 Speaker 1: When do you tell them to look both ways before 201 00:08:50,600 --> 00:08:52,160 Speaker 1: they crossed the street. For us in the e t 202 00:08:52,240 --> 00:08:55,120 Speaker 1: F market, it's probably of volume, right, if your trade 203 00:08:55,240 --> 00:08:57,760 Speaker 1: order represents of what that e t F trades in 204 00:08:57,760 --> 00:08:59,679 Speaker 1: a given day, you want to at least stop, look 205 00:08:59,720 --> 00:09:02,200 Speaker 1: to the flock to the right, think about what you're doing. Uh. 206 00:09:02,280 --> 00:09:04,000 Speaker 1: That's a general rule of thumb we use for for 207 00:09:04,080 --> 00:09:06,240 Speaker 1: kind of trade order guidance. But let's say I'm trading 208 00:09:06,280 --> 00:09:08,560 Speaker 1: one of your lesser liquid products, like the high dividend 209 00:09:08,760 --> 00:09:11,559 Speaker 1: et F and it trades a five thousand shares a 210 00:09:11,600 --> 00:09:14,160 Speaker 1: day or something. Would you tell me to put a 211 00:09:14,160 --> 00:09:17,520 Speaker 1: limit order in always? Or can you do a market order? 212 00:09:17,800 --> 00:09:20,240 Speaker 1: Not necessarily? I think if if you're a retail client 213 00:09:20,400 --> 00:09:22,600 Speaker 1: and time is important to you, and you want that 214 00:09:22,600 --> 00:09:25,000 Speaker 1: trade downe at ten am versus two pm in the afternoon, 215 00:09:25,400 --> 00:09:28,280 Speaker 1: mark orders is your option. So one of the things though, 216 00:09:28,520 --> 00:09:31,240 Speaker 1: in general about e t f s and the knock 217 00:09:31,360 --> 00:09:34,080 Speaker 1: is that you know, they really facilitate trading, Right, I 218 00:09:34,080 --> 00:09:36,040 Speaker 1: can sit there all day and just day trade, day trade, 219 00:09:36,120 --> 00:09:39,000 Speaker 1: day trade as a retail investor, and maybe that's not 220 00:09:39,080 --> 00:09:41,679 Speaker 1: the best thing for me, right, So how do you 221 00:09:41,720 --> 00:09:45,800 Speaker 1: guys talk about that with clients? Yeah, I think that's 222 00:09:45,800 --> 00:09:47,360 Speaker 1: that's a little bit of a myth out there. Certainly 223 00:09:47,400 --> 00:09:49,720 Speaker 1: there's active traders, and out of the nine million households 224 00:09:49,720 --> 00:09:52,320 Speaker 1: we have on the platform, uh that we have about 225 00:09:52,440 --> 00:09:54,640 Speaker 1: one million of those nine million households they're using ets 226 00:09:54,640 --> 00:09:56,960 Speaker 1: in some way, shape or form. Of that one million, 227 00:09:57,000 --> 00:09:59,400 Speaker 1: it's a relatively small majority of of day trader as 228 00:09:59,400 --> 00:10:01,199 Speaker 1: an active trade or as many of the people using 229 00:10:01,240 --> 00:10:03,839 Speaker 1: ETFs now are buy and hold investors. We ran some 230 00:10:03,960 --> 00:10:05,719 Speaker 1: analysis I think it was two years ago that looked 231 00:10:05,760 --> 00:10:07,800 Speaker 1: at holding periods, and the holding periods were up close 232 00:10:07,880 --> 00:10:10,440 Speaker 1: to two years for the average GTF position. And you 233 00:10:10,440 --> 00:10:12,560 Speaker 1: think about we're launching new products as in the industry 234 00:10:12,559 --> 00:10:15,360 Speaker 1: every day, the industry is growing. That holding period was 235 00:10:15,440 --> 00:10:17,160 Speaker 1: roughly in line with what you see with mutual funds. 236 00:10:17,160 --> 00:10:18,720 Speaker 1: And I don't have the data my fingertips, but the 237 00:10:18,760 --> 00:10:20,880 Speaker 1: point is that it's not as if because we're giving 238 00:10:20,880 --> 00:10:22,680 Speaker 1: people trading access into a day that they're trading and 239 00:10:22,679 --> 00:10:24,959 Speaker 1: all the time. And you look back on a kind 240 00:10:24,960 --> 00:10:27,240 Speaker 1: of historical basis if you might remember this, but four 241 00:10:27,320 --> 00:10:29,600 Speaker 1: one ks used to be monthly, they weren't daily. And 242 00:10:29,679 --> 00:10:31,680 Speaker 1: the question was, well, if you give people daily access 243 00:10:31,679 --> 00:10:34,040 Speaker 1: to their four and case traded every day and the 244 00:10:34,040 --> 00:10:37,120 Speaker 1: answer generally is no, people are belong buy and hold investors. 245 00:10:37,280 --> 00:10:40,600 Speaker 1: Of that data you just talked about on households, is 246 00:10:40,640 --> 00:10:42,800 Speaker 1: that regarding just your e t F s or all 247 00:10:42,840 --> 00:10:44,880 Speaker 1: the e t F they could be. That's all the 248 00:10:44,880 --> 00:10:46,560 Speaker 1: ETF And that's why it gets me so excited about 249 00:10:46,600 --> 00:10:48,560 Speaker 1: the space. So when I gave those steps before, there's 250 00:10:48,600 --> 00:10:52,199 Speaker 1: nine million households on the Fidelic brokerage platform, roughly about 251 00:10:52,240 --> 00:10:53,920 Speaker 1: one million of them use any t F, not just 252 00:10:53,960 --> 00:10:56,200 Speaker 1: to Fidelity ETF but any TF, so eleven percent of 253 00:10:56,200 --> 00:10:59,160 Speaker 1: the population. But within that and we're going over your 254 00:10:59,160 --> 00:11:03,920 Speaker 1: history before prior to Bloomberg right where Institutional Investors publication 255 00:11:04,080 --> 00:11:05,839 Speaker 1: two jobs before that, but my first job out of 256 00:11:05,840 --> 00:11:08,480 Speaker 1: school was Institutional Investors newsletter Division. So did you have 257 00:11:08,520 --> 00:11:11,960 Speaker 1: the job up here? Then I did, Yeah, first job, 258 00:11:13,160 --> 00:11:14,880 Speaker 1: I had my depth going hard. I was like a 259 00:11:14,920 --> 00:11:17,559 Speaker 1: twenty one year old in New York City living in Manhattan. 260 00:11:18,040 --> 00:11:21,240 Speaker 1: I mean, I'm still catching up on sleep. So I 261 00:11:21,280 --> 00:11:23,200 Speaker 1: didn't mean to go down this path. But my point was, 262 00:11:23,200 --> 00:11:24,520 Speaker 1: I presumed they paid you at the time, and I 263 00:11:24,559 --> 00:11:25,959 Speaker 1: presumed you had a four one K and maybe you 264 00:11:26,080 --> 00:11:27,720 Speaker 1: rolled it over into an I RA, and maybe that 265 00:11:27,760 --> 00:11:29,560 Speaker 1: money just sat there forever and you didn't really play 266 00:11:29,600 --> 00:11:31,480 Speaker 1: with it. And now you're making the big bucks at Bloomberg, 267 00:11:31,520 --> 00:11:34,320 Speaker 1: so you're you're investing in other things. My point there 268 00:11:34,400 --> 00:11:37,880 Speaker 1: is that if client accounts underneath a hundred thousand dollars, 269 00:11:37,920 --> 00:11:41,440 Speaker 1: only eleven percent across the board on ets. But I 270 00:11:41,480 --> 00:11:43,400 Speaker 1: started to look at client accounts that are over a 271 00:11:43,480 --> 00:11:45,360 Speaker 1: hundred thousand dollars of people who are probably spending some 272 00:11:45,400 --> 00:11:47,080 Speaker 1: time looking at their investments. And that's where it gets 273 00:11:47,080 --> 00:11:49,600 Speaker 1: really interesting, is is on the whole of client accounts 274 00:11:49,640 --> 00:11:51,920 Speaker 1: that are over a hundred thousand dollars, millennials are really 275 00:11:52,000 --> 00:11:55,480 Speaker 1: driving us. Of millennial accounts with over hundred thousand dollars 276 00:11:55,480 --> 00:11:57,520 Speaker 1: own an e t F that's much more than gen X, 277 00:11:57,559 --> 00:11:59,559 Speaker 1: that's much more than baby boomers. They're going to be 278 00:11:59,559 --> 00:12:01,840 Speaker 1: the ones that are driving this and of those millennials 279 00:12:01,840 --> 00:12:04,560 Speaker 1: that hold ets on our platform. If you hold an ETF, 280 00:12:04,920 --> 00:12:08,600 Speaker 1: it represents your assets. So I think as you see 281 00:12:08,880 --> 00:12:11,800 Speaker 1: some of the baby boomers retire and do accumulate assets, 282 00:12:11,840 --> 00:12:14,520 Speaker 1: millennials driving the growth the industry. That's what I'm really 283 00:12:14,520 --> 00:12:17,560 Speaker 1: excited about. Are you a millennial? What's the cut off? 284 00:12:18,559 --> 00:12:21,160 Speaker 1: It's it's kind of like one is sort of which 285 00:12:21,280 --> 00:12:23,960 Speaker 1: I am. I am a millennial. Yeah, okay, he's got 286 00:12:24,000 --> 00:12:26,040 Speaker 1: some gen X in them, though, I can just tell 287 00:12:26,160 --> 00:12:28,720 Speaker 1: he's not full blown giving him permission. Yeah, look, I 288 00:12:28,760 --> 00:12:31,560 Speaker 1: look like a gen xer. Do you remember when Nirvana 289 00:12:31,600 --> 00:12:34,280 Speaker 1: came out? Yes, okay, well he can't's not you can't 290 00:12:34,280 --> 00:12:37,200 Speaker 1: be full millennial if you have something full millennial. Yeah, 291 00:12:37,480 --> 00:12:41,079 Speaker 1: so you're like you're like maybe half millennial, like like 292 00:12:41,280 --> 00:12:43,800 Speaker 1: your millennial if your first rock band was like The Strokes. 293 00:12:45,480 --> 00:12:50,079 Speaker 1: That's not me okay, okay, So why why is there 294 00:12:50,120 --> 00:12:54,199 Speaker 1: so much enthusiasm with millennials From your perspective, I think 295 00:12:54,240 --> 00:12:55,839 Speaker 1: they're still learning about it, but they view e t 296 00:12:56,160 --> 00:12:58,679 Speaker 1: S as lower cost as more tax efficient. I think 297 00:12:58,720 --> 00:13:01,160 Speaker 1: the interesting thing about ETFs, there's not one reason that 298 00:13:01,200 --> 00:13:04,080 Speaker 1: someone buys an ETF. It's a whole host of reasons. 299 00:13:04,120 --> 00:13:06,000 Speaker 1: It could be lower costs, could be in day trading, 300 00:13:06,440 --> 00:13:07,679 Speaker 1: could be any of that. And I think they're being 301 00:13:07,720 --> 00:13:09,640 Speaker 1: introduced to it by a lot of the robo advisors, 302 00:13:09,640 --> 00:13:11,680 Speaker 1: by a lot of the digital platforms that are using ETF. 303 00:13:11,800 --> 00:13:14,040 Speaker 1: So if an ETF shows up in your managed account, 304 00:13:14,080 --> 00:13:16,079 Speaker 1: let's say that's going to be the first product that 305 00:13:16,120 --> 00:13:17,800 Speaker 1: you kind of grow up using. And I think that's 306 00:13:17,800 --> 00:13:19,600 Speaker 1: what a lot of millennials are using, is they're using 307 00:13:19,600 --> 00:13:22,840 Speaker 1: different applications and different sources for investing. So you have 308 00:13:22,960 --> 00:13:26,160 Speaker 1: one million of your nine million people using your platform 309 00:13:26,240 --> 00:13:30,160 Speaker 1: that use ETFs in some way. I mean, are where 310 00:13:30,160 --> 00:13:33,200 Speaker 1: are we looking at this number in say ten years, 311 00:13:33,520 --> 00:13:36,040 Speaker 1: let's just even go twenty, because you're talking about bay 312 00:13:36,080 --> 00:13:40,440 Speaker 1: Boomers eventually passing on assets and millennials clearly like this structure. 313 00:13:41,240 --> 00:13:43,280 Speaker 1: I mean, have you done any projections? Is this going 314 00:13:43,360 --> 00:13:45,720 Speaker 1: to be like seven out of nine or all nine? 315 00:13:45,800 --> 00:13:48,760 Speaker 1: I mean one of your podcasts recently, somebody was projecting 316 00:13:48,760 --> 00:13:50,319 Speaker 1: thirty trillion. I don't think i'd be that bold in 317 00:13:50,360 --> 00:13:52,320 Speaker 1: the next ten years that might have been. That was 318 00:13:52,480 --> 00:13:56,480 Speaker 1: a thirty by thirty, the thirty trillion by thirty. A 319 00:13:56,520 --> 00:13:59,320 Speaker 1: lot of that is market cap accumulation of the stock markets, 320 00:13:59,360 --> 00:14:01,800 Speaker 1: but it's still definitely ambitious. I mean, let's go back 321 00:14:01,800 --> 00:14:03,800 Speaker 1: in time. I mean, I don't have any projections for you, 322 00:14:03,840 --> 00:14:06,439 Speaker 1: but I think a historical perspective is interesting. Right, that 323 00:14:06,520 --> 00:14:09,960 Speaker 1: was the time all the sound effects in the studio 324 00:14:09,960 --> 00:14:12,440 Speaker 1: are great. Here. I just think he watched Police Academy 325 00:14:12,440 --> 00:14:15,040 Speaker 1: way too much. Remember that sound effects guy. Yeah, he 326 00:14:15,480 --> 00:14:17,880 Speaker 1: was highly inspired. Okay, so we went back in time. 327 00:14:17,960 --> 00:14:19,600 Speaker 1: So we go back in time. We're in the eighties 328 00:14:19,640 --> 00:14:23,880 Speaker 1: when the millennials are being born. Eric's like sweet spot. Yeah, 329 00:14:24,240 --> 00:14:26,720 Speaker 1: cultural references glory. So I see, I looks at what 330 00:14:26,800 --> 00:14:28,880 Speaker 1: percent of Americans held mutual funds every year, and they 331 00:14:28,920 --> 00:14:31,000 Speaker 1: go back to the eighties, and you think about that's 332 00:14:31,040 --> 00:14:33,840 Speaker 1: when mutual funds first start showing up in four one 333 00:14:33,920 --> 00:14:37,200 Speaker 1: K plans, and the percent of American households that held 334 00:14:37,280 --> 00:14:41,120 Speaker 1: mutual funds in the late nineteen eighties was about and 335 00:14:41,160 --> 00:14:43,000 Speaker 1: that's kind of where we're at now, right, So I said, 336 00:14:43,040 --> 00:14:46,520 Speaker 1: millennials on the moment, but in the masses it's about. 337 00:14:47,520 --> 00:14:49,360 Speaker 1: So think about the growth of ets. We're kind of 338 00:14:49,360 --> 00:14:52,480 Speaker 1: in the year seven in terms of the growth trajectory, 339 00:14:52,680 --> 00:14:55,080 Speaker 1: and then think about how quickly mutual funds grew in 340 00:14:55,120 --> 00:14:57,040 Speaker 1: the nineties, and that's what's ahead of us for e 341 00:14:57,080 --> 00:15:04,720 Speaker 1: t S. Okay, So, Matt, one of the things I'm 342 00:15:04,760 --> 00:15:09,080 Speaker 1: really interested about is how Fidelity, which really created its 343 00:15:09,160 --> 00:15:14,360 Speaker 1: name through actively managed mutual funds, has in recent decades 344 00:15:14,400 --> 00:15:19,800 Speaker 1: adopted ETFs. So what's that like culturally inside Fidelity? I 345 00:15:19,840 --> 00:15:21,880 Speaker 1: think it's a really exciting time. If you think about 346 00:15:21,920 --> 00:15:26,120 Speaker 1: the masses of investment professionals and analysts and portfolio managers 347 00:15:26,120 --> 00:15:29,000 Speaker 1: we have, they're excited about the et F initiative. For us, 348 00:15:29,040 --> 00:15:31,360 Speaker 1: it's just a different delivery mechanism. It's a different structure 349 00:15:31,400 --> 00:15:33,200 Speaker 1: to do what we're already doing on a daily basis 350 00:15:33,200 --> 00:15:34,760 Speaker 1: in a mutual fund or in a managed to counter 351 00:15:34,840 --> 00:15:36,560 Speaker 1: or in a c I T And I'll give you 352 00:15:36,560 --> 00:15:39,560 Speaker 1: an example. You know this, but two years ago we 353 00:15:39,640 --> 00:15:43,040 Speaker 1: launched factory tfs. These are Fidelity ETFs that track of 354 00:15:43,080 --> 00:15:46,280 Speaker 1: Fidelity index. That index was built by our product team 355 00:15:46,280 --> 00:15:49,600 Speaker 1: and our quantitative team. That quant team sits with active 356 00:15:49,600 --> 00:15:52,480 Speaker 1: portfolio managers on a daily basis, managing risk and helping 357 00:15:52,520 --> 00:15:55,400 Speaker 1: pick stocks. So active is very much in our DNA. 358 00:15:55,520 --> 00:15:58,240 Speaker 1: We believe in active management. It's just being built in 359 00:15:58,280 --> 00:16:01,400 Speaker 1: a different structure and in a different every mechanism for consumers. 360 00:16:02,040 --> 00:16:04,480 Speaker 1: So we talk a lot about these E t F 361 00:16:04,600 --> 00:16:06,680 Speaker 1: and how to make a portfolio because ultimately that's what 362 00:16:06,680 --> 00:16:08,200 Speaker 1: you're trying to do. These are the raw materials you 363 00:16:08,240 --> 00:16:12,600 Speaker 1: put into a portfolio. Is the portfolio changing? Is it? 364 00:16:12,640 --> 00:16:15,080 Speaker 1: Is it becoming more of like instead of having your 365 00:16:15,680 --> 00:16:18,480 Speaker 1: core equity be a large cap growth funder or value 366 00:16:18,480 --> 00:16:21,840 Speaker 1: fund or large cap blend, it's now like a cheap 367 00:16:22,080 --> 00:16:25,760 Speaker 1: smp FI et F and then you keep your core 368 00:16:25,800 --> 00:16:28,320 Speaker 1: real passive and cheap, and then you kind of go 369 00:16:28,360 --> 00:16:30,160 Speaker 1: on the outside with your active Do you see a 370 00:16:30,240 --> 00:16:35,120 Speaker 1: shift that the active manager will be much more on 371 00:16:35,160 --> 00:16:37,280 Speaker 1: the outside, used, as we like to say, like hot 372 00:16:37,320 --> 00:16:41,239 Speaker 1: sauce or spice on top to try to get some alpha, 373 00:16:41,360 --> 00:16:44,040 Speaker 1: which would allow the investor more patients to hang in 374 00:16:44,080 --> 00:16:45,960 Speaker 1: there with some underperformance. It would allow them to get 375 00:16:45,960 --> 00:16:48,400 Speaker 1: more active share. Do you see a shift in what 376 00:16:48,560 --> 00:16:51,840 Speaker 1: active is used for and how it's used in a portfolio? Maybe, 377 00:16:51,840 --> 00:16:53,720 Speaker 1: I mean, certainly you've seen a number of factor products 378 00:16:53,760 --> 00:16:55,680 Speaker 1: come into the marketplace, and that's a little bit of 379 00:16:55,760 --> 00:16:57,840 Speaker 1: active but I don't necessarily see that. And I think 380 00:16:57,880 --> 00:17:00,200 Speaker 1: a good example is is FBNDR Total Bond e t 381 00:17:00,320 --> 00:17:03,160 Speaker 1: F that portfolio management team led by Ford O'Neil. They've 382 00:17:03,160 --> 00:17:05,240 Speaker 1: been running a mutual fund version of that. It's not 383 00:17:05,280 --> 00:17:09,040 Speaker 1: exactly a clone, but it's it's similar for years, and 384 00:17:09,119 --> 00:17:11,239 Speaker 1: we're just delivering that in the ETF structure. But we're 385 00:17:11,320 --> 00:17:13,159 Speaker 1: running it very similar to what we run in the 386 00:17:13,200 --> 00:17:16,280 Speaker 1: mutual funds. We're not changing our fundamental investment process or 387 00:17:16,280 --> 00:17:19,000 Speaker 1: bottoms up research. We're just delivering it in a different structure. 388 00:17:19,040 --> 00:17:20,640 Speaker 1: So I don't know if I you know, that could 389 00:17:20,640 --> 00:17:24,120 Speaker 1: be the case in certain areas, but it's not fundamentally 390 00:17:24,160 --> 00:17:27,399 Speaker 1: changing the way we manage money. And what about how 391 00:17:27,480 --> 00:17:30,480 Speaker 1: people are managing their own money, because I mean, we 392 00:17:30,480 --> 00:17:32,879 Speaker 1: were just talking about the mutual fund growth from the 393 00:17:32,920 --> 00:17:36,119 Speaker 1: eighties nineties, Like the one of the reasons that it 394 00:17:36,160 --> 00:17:39,399 Speaker 1: took off was that, you know, you guys have a 395 00:17:39,480 --> 00:17:43,000 Speaker 1: platform that is my four oh one K, and my 396 00:17:43,200 --> 00:17:47,920 Speaker 1: four oh one K auto fills every pay period into 397 00:17:48,000 --> 00:17:50,440 Speaker 1: that account, right, But yet e t f s are 398 00:17:50,520 --> 00:17:54,879 Speaker 1: barely in that device yet right in the four So 399 00:17:55,359 --> 00:17:59,240 Speaker 1: how do you guys see that evolving? Yeah, so specifically 400 00:17:59,240 --> 00:18:01,280 Speaker 1: ets within four OW one case, you do see them 401 00:18:01,320 --> 00:18:02,960 Speaker 1: from time to time. You see them in self directed 402 00:18:02,960 --> 00:18:05,640 Speaker 1: brokerage accounts, which many four own K plans offer. Um, 403 00:18:05,640 --> 00:18:07,600 Speaker 1: what's kind of interesting is you actually see e t 404 00:18:07,720 --> 00:18:09,119 Speaker 1: F show up in I ra A s, which are 405 00:18:09,119 --> 00:18:11,480 Speaker 1: non taxable for for most people. So it's not as 406 00:18:11,480 --> 00:18:14,080 Speaker 1: if people are only using them for their tax efficiency. 407 00:18:14,600 --> 00:18:16,000 Speaker 1: The four O on K questions been out there for 408 00:18:16,000 --> 00:18:17,760 Speaker 1: a while. I think it's operational, and I think it's 409 00:18:17,800 --> 00:18:20,240 Speaker 1: just that clients probably don't need the intraday liquidity like 410 00:18:20,280 --> 00:18:22,720 Speaker 1: they do with maybe their taxable account. But the way 411 00:18:22,720 --> 00:18:25,320 Speaker 1: we're interacting with investors on the platform a fuel and 412 00:18:25,320 --> 00:18:27,560 Speaker 1: that was kind of your original question is we're giving 413 00:18:27,600 --> 00:18:29,840 Speaker 1: them choice and we're giving them value. Right, So, on 414 00:18:29,880 --> 00:18:33,800 Speaker 1: our platform, most e t F F whatever right today 415 00:18:33,880 --> 00:18:36,040 Speaker 1: are available for trading. We offer ninety three of those 416 00:18:36,040 --> 00:18:38,440 Speaker 1: e t F commission free. So we're offering the clients 417 00:18:38,480 --> 00:18:40,760 Speaker 1: commission free trading and some I shares ets and some 418 00:18:40,760 --> 00:18:43,679 Speaker 1: fidelity tfs. And also if they want passive, it's not 419 00:18:43,720 --> 00:18:45,639 Speaker 1: all about an e t F. And you know this, 420 00:18:45,760 --> 00:18:48,760 Speaker 1: but there's passive mutual funds. So we offer low cost 421 00:18:48,880 --> 00:18:51,640 Speaker 1: passive mutual funds to investors and we give choice between 422 00:18:51,680 --> 00:18:54,639 Speaker 1: the actual structure, which leads me to something I saw recently. 423 00:18:54,680 --> 00:18:57,280 Speaker 1: There was an advertisement that someone tweeted out that I 424 00:18:57,280 --> 00:19:01,200 Speaker 1: can't remember the makeup, but it basically was Fidelities sing, Hey, 425 00:19:01,280 --> 00:19:04,320 Speaker 1: forget Vanguard, We're really the low cost provider in the 426 00:19:04,320 --> 00:19:06,720 Speaker 1: index mutual fund space. I think yours are like point 427 00:19:06,760 --> 00:19:10,280 Speaker 1: oh one or point two percent for an index mutual fund. 428 00:19:10,320 --> 00:19:12,960 Speaker 1: So they've they've sort of vanguarded Vanguard if you will 429 00:19:13,560 --> 00:19:16,560 Speaker 1: um and that works right. You see flows when you 430 00:19:16,600 --> 00:19:19,040 Speaker 1: go cheaper. And I don't think it's about a specific competitor. 431 00:19:19,040 --> 00:19:20,880 Speaker 1: There's a number of competitors out there that offer low 432 00:19:20,880 --> 00:19:24,480 Speaker 1: cost index products. But get not about Vanguard. Dude, he's 433 00:19:25,240 --> 00:19:28,119 Speaker 1: nice Dodge, but he's told not to talk about that. 434 00:19:28,640 --> 00:19:30,360 Speaker 1: A lot of these issuers can't say the V word. 435 00:19:30,600 --> 00:19:34,280 Speaker 1: It's like Voldemort. You saw the advertisement, the name was 436 00:19:34,320 --> 00:19:37,560 Speaker 1: in the advertisement and said it. Yet he won't. He 437 00:19:37,600 --> 00:19:40,240 Speaker 1: won't do it, like the competitor you just mentioned, Eric, 438 00:19:41,720 --> 00:19:45,920 Speaker 1: the Valley Forge based competitor. In out of twenty nine 439 00:19:46,480 --> 00:19:48,600 Speaker 1: chances where we have index funds, an ets that go 440 00:19:48,640 --> 00:19:51,280 Speaker 1: ahead to head roughly finally has a lower cost product. 441 00:19:51,440 --> 00:19:54,439 Speaker 1: Think about this what the world has turned. Yeah, you 442 00:19:54,480 --> 00:19:59,119 Speaker 1: also talked about commission free trading. Now this drives a 443 00:19:59,119 --> 00:20:02,560 Speaker 1: lot of flows. Yes, you get your your trade commission free, 444 00:20:02,600 --> 00:20:06,040 Speaker 1: but if you trade an ETF that has a commission, 445 00:20:06,160 --> 00:20:08,960 Speaker 1: not that much. Go over the differences in cost. And 446 00:20:09,000 --> 00:20:11,800 Speaker 1: the second thing is are the commission free ones sometimes 447 00:20:11,800 --> 00:20:15,119 Speaker 1: the one the issuers are looking to promote and they 448 00:20:15,160 --> 00:20:18,359 Speaker 1: might not be the most liquid or uh ones that 449 00:20:18,400 --> 00:20:21,200 Speaker 1: people want and talk about that and how that draws 450 00:20:21,200 --> 00:20:24,200 Speaker 1: flows and trading. Absolutely, it's a great question and something 451 00:20:24,200 --> 00:20:26,600 Speaker 1: I wish investors and advisors were looking at more closely. 452 00:20:26,640 --> 00:20:29,120 Speaker 1: There's a number of different custodians and brokerage sites out there. 453 00:20:29,359 --> 00:20:31,880 Speaker 1: We've been deliberate in the way we've manicured our commission 454 00:20:31,880 --> 00:20:34,040 Speaker 1: free list to make products that are best and breed, 455 00:20:34,080 --> 00:20:36,199 Speaker 1: or what we feel are best and breed, and that 456 00:20:36,359 --> 00:20:39,560 Speaker 1: means low cost, that means good secondary market volume. We 457 00:20:39,560 --> 00:20:41,240 Speaker 1: don't see that across the board. There's a number of 458 00:20:41,280 --> 00:20:43,680 Speaker 1: commission free products on other platforms that might actually have 459 00:20:43,760 --> 00:20:46,000 Speaker 1: higher expense ratios. Wide or bit of spreads things like that. 460 00:20:46,000 --> 00:20:48,000 Speaker 1: So that's definitely something to watch out for. Is is 461 00:20:48,000 --> 00:20:49,840 Speaker 1: I would never advocate for somebody that you buy an 462 00:20:49,800 --> 00:20:52,359 Speaker 1: ETF strictly because it's commission free and you save five dollars. 463 00:20:52,840 --> 00:20:54,639 Speaker 1: There's a whole boatload of costs that go went to that, 464 00:20:54,680 --> 00:20:56,600 Speaker 1: and depending on the trade sides, right, the more you're 465 00:20:56,600 --> 00:20:59,320 Speaker 1: trading dollars, the less that five dollars matters, and the 466 00:20:59,359 --> 00:21:01,720 Speaker 1: smaller the universe. And that's a one time cost that 467 00:21:01,720 --> 00:21:04,919 Speaker 1: dilutes over time, whereas the expense ratio is coming rain 468 00:21:05,000 --> 00:21:09,119 Speaker 1: or shine every day, coming. Then yeah, they're like my 469 00:21:09,160 --> 00:21:11,480 Speaker 1: metaphor is the expense ratio is like termites living in 470 00:21:11,520 --> 00:21:15,920 Speaker 1: your returns. They're not going away, they just live there where. Well, 471 00:21:15,960 --> 00:21:17,679 Speaker 1: that that's sort of like a round trip ticket, like 472 00:21:17,800 --> 00:21:19,280 Speaker 1: you know, you buy it and you and then you 473 00:21:19,320 --> 00:21:21,679 Speaker 1: sell it. It's a one time it's almost like a tiny, 474 00:21:21,720 --> 00:21:24,000 Speaker 1: tiny load if you think of the mutual fund model 475 00:21:24,600 --> 00:21:27,000 Speaker 1: or a you know, like I said, a round trip ticket. 476 00:21:27,000 --> 00:21:28,680 Speaker 1: I was looking for another termite analogy. That's what I 477 00:21:28,720 --> 00:21:31,320 Speaker 1: was getting. Yeah, sorry, that's my one. That the termite 478 00:21:31,320 --> 00:21:33,399 Speaker 1: one is. Uh, it kind of works though, because if 479 00:21:33,400 --> 00:21:36,840 Speaker 1: the expense ratio is small it just limits the amount 480 00:21:36,920 --> 00:21:39,160 Speaker 1: that nibbles away at the return. Not that you can't 481 00:21:39,359 --> 00:21:43,560 Speaker 1: outperform if you're active, but that expense is truly uh 482 00:21:43,640 --> 00:21:46,000 Speaker 1: something that comes. And some people don't realize that the 483 00:21:46,000 --> 00:21:48,400 Speaker 1: expense ratio is taken out in tiny little bits every day. 484 00:21:48,720 --> 00:21:51,120 Speaker 1: It's not like once a year. And that is why 485 00:21:51,320 --> 00:21:53,800 Speaker 1: the termite metaphor, it's just nibbling a little bit each day, 486 00:21:54,200 --> 00:21:56,679 Speaker 1: pro rated at the at the annual cost. I think 487 00:21:56,680 --> 00:21:58,639 Speaker 1: you're right, there's parallels to mutual fund Land, right, and 488 00:21:58,720 --> 00:22:00,520 Speaker 1: mutual fund Land. We talked about the search charges or 489 00:22:00,560 --> 00:22:03,040 Speaker 1: transaction fees in et f land because it's a brokerage 490 00:22:03,080 --> 00:22:05,080 Speaker 1: product and trades in the stock exchange. It's a commission. 491 00:22:05,720 --> 00:22:08,399 Speaker 1: And but you're right, some of these costs are analogous 492 00:22:08,440 --> 00:22:11,480 Speaker 1: and and it just begs for more tools and more 493 00:22:11,520 --> 00:22:13,720 Speaker 1: research and screener tools. So there's some really great comparison 494 00:22:13,720 --> 00:22:16,240 Speaker 1: tools out there. I know Bloomberg has some, Fidelity has some, 495 00:22:16,520 --> 00:22:18,119 Speaker 1: but these are the costs need to be looking at 496 00:22:18,160 --> 00:22:20,840 Speaker 1: to create this total cost framework of the bidst spread, 497 00:22:20,920 --> 00:22:23,600 Speaker 1: the commission, the expense ratio, and the tax cost. If 498 00:22:23,600 --> 00:22:25,440 Speaker 1: that matters to you, so talk to me about being 499 00:22:25,480 --> 00:22:29,200 Speaker 1: an issuer, that seems like a really big deal. And 500 00:22:29,800 --> 00:22:33,440 Speaker 1: specifically though, where's the white space that you guys see 501 00:22:33,560 --> 00:22:36,520 Speaker 1: right now? So as an issuer, so we've talked about 502 00:22:36,520 --> 00:22:39,199 Speaker 1: fidelity as a platform, and now we're talking about fidelitis 503 00:22:39,200 --> 00:22:41,960 Speaker 1: an issue. As an issuer. Five years ago, I think 504 00:22:41,960 --> 00:22:44,200 Speaker 1: we were maybe outside the top twenty. Now we're number 505 00:22:44,200 --> 00:22:46,080 Speaker 1: fifteen or number sixteen, and I think you were sharing 506 00:22:46,200 --> 00:22:48,080 Speaker 1: with me yesterday. I just looked at the numbers that 507 00:22:48,080 --> 00:22:50,800 Speaker 1: their number six they're the sixteenth biggest issue. Where um, 508 00:22:50,840 --> 00:22:52,800 Speaker 1: they came out of nowhere. They have five years old 509 00:22:53,040 --> 00:22:55,120 Speaker 1: most they had that one from the two thousand three, 510 00:22:55,160 --> 00:22:57,600 Speaker 1: but let's just not count that. Mostly their big effort 511 00:22:57,600 --> 00:23:00,200 Speaker 1: was five years old. They have ten billion. How our 512 00:23:00,240 --> 00:23:02,359 Speaker 1: sixteenth place and E T f LAN only gives you 513 00:23:02,359 --> 00:23:04,639 Speaker 1: a point three percent market share because it's a lot 514 00:23:04,680 --> 00:23:07,120 Speaker 1: of concentration at the top. But look, they're but they're 515 00:23:07,200 --> 00:23:10,800 Speaker 1: they're passing the quiet march. Yeah, I don't know if 516 00:23:10,800 --> 00:23:12,639 Speaker 1: it's a quiet march. But I think the point is 517 00:23:12,640 --> 00:23:15,439 Speaker 1: we're growing, we're taking market share. We're top ten in 518 00:23:15,480 --> 00:23:17,240 Speaker 1: flows here to day, So continue to move up the 519 00:23:17,320 --> 00:23:19,560 Speaker 1: ladder and the white space they get to your question 520 00:23:19,800 --> 00:23:22,239 Speaker 1: is the retail investor. I'm convinced of that. I'm I'm 521 00:23:22,280 --> 00:23:24,480 Speaker 1: convinced that there are still advisors out there who don't 522 00:23:24,560 --> 00:23:26,960 Speaker 1: use et s, But there's masses of retail investors that 523 00:23:27,000 --> 00:23:29,240 Speaker 1: have not been introduced to ets yet. And that is 524 00:23:29,280 --> 00:23:31,280 Speaker 1: the white space I think in in E t F land, 525 00:23:31,600 --> 00:23:32,879 Speaker 1: when I look at your E t f s, you 526 00:23:32,960 --> 00:23:35,840 Speaker 1: kind of have three main components. There's sector E t 527 00:23:36,040 --> 00:23:38,720 Speaker 1: S where you came out and you basically again you 528 00:23:38,840 --> 00:23:41,960 Speaker 1: van guarded the sector category. They charge point eight percent, 529 00:23:42,359 --> 00:23:45,280 Speaker 1: meaning they came in and they undercut everybody. Those are 530 00:23:45,400 --> 00:23:48,680 Speaker 1: a five percent of your assets. Talk about those those 531 00:23:48,720 --> 00:23:52,239 Speaker 1: track tech, the general sectors. What's the play there? Why 532 00:23:52,280 --> 00:23:54,919 Speaker 1: why would somebody use those? So those fidelity sector et 533 00:23:55,040 --> 00:23:57,119 Speaker 1: F they track M s c I benchmarks the big 534 00:23:57,400 --> 00:23:59,439 Speaker 1: not just the cost, they're the lowest cost sector et 535 00:23:59,560 --> 00:24:01,400 Speaker 1: F on the mark it. But they also are all 536 00:24:01,440 --> 00:24:03,879 Speaker 1: cap and I think that's the key differentiator is having 537 00:24:03,920 --> 00:24:06,240 Speaker 1: small cap within your portfolio. You look at some of 538 00:24:06,240 --> 00:24:08,840 Speaker 1: the bigger We're talking about technology earlier, and technology is 539 00:24:08,880 --> 00:24:11,080 Speaker 1: a great example where some of the biggest quote unquote 540 00:24:11,080 --> 00:24:13,520 Speaker 1: technology ETFs have a T and T and veries and 541 00:24:13,520 --> 00:24:15,520 Speaker 1: a lot of telecom names in them. They're missing out 542 00:24:15,520 --> 00:24:17,439 Speaker 1: on some of the MidCap and smaller cap names like 543 00:24:17,480 --> 00:24:19,679 Speaker 1: Twitter and Square and some of these other names. So 544 00:24:19,960 --> 00:24:22,200 Speaker 1: that's the biggest differentiator for me, is that the mid 545 00:24:22,200 --> 00:24:25,320 Speaker 1: cap the small cap exposure and delivering that all commission 546 00:24:25,320 --> 00:24:27,440 Speaker 1: free on the fidel A platform at a basis points 547 00:24:27,480 --> 00:24:30,200 Speaker 1: to anyone. That's the key differentiator, and I think what's 548 00:24:30,240 --> 00:24:32,240 Speaker 1: led to the growth of the FIDELI sector series over 549 00:24:32,240 --> 00:24:34,719 Speaker 1: the last few years. And you guys have sector mutual 550 00:24:34,720 --> 00:24:37,480 Speaker 1: funds though, we do, and how does that work? I mean, 551 00:24:37,600 --> 00:24:39,800 Speaker 1: when you're out there trying to sell the sector et F, 552 00:24:39,840 --> 00:24:42,000 Speaker 1: does it step on the toes of the mutual fund 553 00:24:42,040 --> 00:24:44,760 Speaker 1: sales people? Not at all from a client facing perspective 554 00:24:44,800 --> 00:24:46,480 Speaker 1: of the same people in most cases, right, it's not 555 00:24:46,520 --> 00:24:49,840 Speaker 1: like we have some rogue organization. And but but if 556 00:24:49,840 --> 00:24:54,720 Speaker 1: you're working with maybe maybe, but absolutely not. They're both growing, 557 00:24:54,800 --> 00:24:56,720 Speaker 1: right And I think a great example in Bloomberg featured 558 00:24:56,720 --> 00:24:58,879 Speaker 1: our portfolio manager Charlie Chai is the PM of our 559 00:24:58,960 --> 00:25:01,639 Speaker 1: active technolo G sector fund and and he had one 560 00:25:01,680 --> 00:25:04,000 Speaker 1: of the better performing mutual funds last year for seen 561 00:25:04,320 --> 00:25:07,359 Speaker 1: over the last twelve months through Q one that mutual 562 00:25:07,359 --> 00:25:10,000 Speaker 1: fund is brought in almost a billion dollars. The technology 563 00:25:10,000 --> 00:25:11,919 Speaker 1: et F a basis points is brought in almost a 564 00:25:11,920 --> 00:25:15,720 Speaker 1: billion dollars. So they're both growing when active is doing 565 00:25:15,720 --> 00:25:18,119 Speaker 1: well and doing what it should. The stat I look at, 566 00:25:18,119 --> 00:25:20,360 Speaker 1: which is kind of the crossover stat, right, So take 567 00:25:20,400 --> 00:25:23,000 Speaker 1: the people who hold our technology et F F tech 568 00:25:23,080 --> 00:25:26,679 Speaker 1: ft e C. There's about forty eight households there that 569 00:25:26,800 --> 00:25:30,040 Speaker 1: hold FTECK on the fail A platform, only about of 570 00:25:30,080 --> 00:25:33,560 Speaker 1: them on any active sector mutual fund at Fidelity whatsoever. 571 00:25:33,920 --> 00:25:35,520 Speaker 1: My point in giving you that stat is that the 572 00:25:35,560 --> 00:25:38,080 Speaker 1: majority of our et F clients are new clients. They're 573 00:25:38,119 --> 00:25:41,280 Speaker 1: they're using ets for whatever reason. I don't see a 574 00:25:41,320 --> 00:25:43,880 Speaker 1: lot of people selling the active mutual fund to buy 575 00:25:43,920 --> 00:25:47,960 Speaker 1: the passive ETF directly. One for one, I think, in fact, 576 00:25:48,160 --> 00:25:49,720 Speaker 1: the people who are buying the sector e t F 577 00:25:49,840 --> 00:25:51,960 Speaker 1: s are more likely to buy an index mutual fund 578 00:25:52,080 --> 00:25:54,040 Speaker 1: than they are to buy one of our active mutual funds. 579 00:25:54,160 --> 00:25:56,040 Speaker 1: Is just a different client set completely from what I've 580 00:25:56,080 --> 00:25:58,840 Speaker 1: seen in the data. So let's talk about the factory tfs. 581 00:25:58,880 --> 00:26:01,600 Speaker 1: We just spent last episode talking about factory tfs and 582 00:26:01,640 --> 00:26:04,439 Speaker 1: smart beta and the conversion. Like you said of active 583 00:26:04,480 --> 00:26:09,000 Speaker 1: into an index your factory tfs. They cover the main 584 00:26:09,200 --> 00:26:13,159 Speaker 1: areas quality, value, momentum. These are these areas. Here's what 585 00:26:13,400 --> 00:26:16,280 Speaker 1: I really want to ask you, which is that if 586 00:26:16,320 --> 00:26:18,640 Speaker 1: you look at factory t f s from the different brand, 587 00:26:18,840 --> 00:26:20,840 Speaker 1: there's a lot of brands out there that have factory 588 00:26:20,840 --> 00:26:24,040 Speaker 1: t F lns. Here's an example. The SMP five hundred 589 00:26:24,080 --> 00:26:27,400 Speaker 1: indexes their value et F does not hold Apple. In fact, 590 00:26:27,400 --> 00:26:30,000 Speaker 1: Apple is not in any of their factory e t 591 00:26:30,160 --> 00:26:33,200 Speaker 1: f s in fidelity, Apple makes all of them. But 592 00:26:33,280 --> 00:26:35,719 Speaker 1: let's just stick to value. Why would Apple be in 593 00:26:35,800 --> 00:26:38,560 Speaker 1: your value e t F and not in the SMP 594 00:26:38,600 --> 00:26:40,680 Speaker 1: five hundreds, which is tracked by Investco. So you bring 595 00:26:40,760 --> 00:26:42,600 Speaker 1: up a great point is that when you buy two 596 00:26:42,640 --> 00:26:45,119 Speaker 1: large cap passive ETF, whether their benchmark to Russell one 597 00:26:45,119 --> 00:26:46,840 Speaker 1: thousand or S and P five hundred, they move in 598 00:26:46,880 --> 00:26:49,280 Speaker 1: line with each other very close. There's very little dispersion 599 00:26:49,440 --> 00:26:52,080 Speaker 1: between the outcomes in factory land. It's all over the place. 600 00:26:52,240 --> 00:26:53,679 Speaker 1: You can buy two different value e t F two 601 00:26:53,680 --> 00:26:56,000 Speaker 1: different low vol ETFs, they're gonna have very different performance 602 00:26:56,040 --> 00:26:58,400 Speaker 1: based on the underlying methodology. So you ask the question 603 00:26:58,440 --> 00:27:00,200 Speaker 1: about Apple, and let's dig a little bit to the 604 00:27:00,240 --> 00:27:02,520 Speaker 1: methodology for fit all these factors serious and this applies 605 00:27:02,560 --> 00:27:04,480 Speaker 1: to all of the single factor e t F you 606 00:27:04,560 --> 00:27:07,040 Speaker 1: just mentioned. Our e t F s are sector neutral, 607 00:27:07,440 --> 00:27:09,800 Speaker 1: their size neutral, meaning we don't drift down into small 608 00:27:09,880 --> 00:27:12,560 Speaker 1: cap as many factor products do. And all the individual 609 00:27:12,560 --> 00:27:15,520 Speaker 1: security bets are are capped. It's called equal active waiting. 610 00:27:15,800 --> 00:27:18,560 Speaker 1: It's a long way of saying it's relatively constrained to 611 00:27:18,640 --> 00:27:21,080 Speaker 1: what the eligible universe is, which is the top thousand names. 612 00:27:21,359 --> 00:27:23,439 Speaker 1: So when you go through that approach, it's no surprise 613 00:27:23,480 --> 00:27:24,879 Speaker 1: that a name like Apple might show up in a 614 00:27:24,920 --> 00:27:27,359 Speaker 1: value or given an et F, Apple today yields one 615 00:27:27,400 --> 00:27:29,320 Speaker 1: point five percent, it's not like it yields nothing. And 616 00:27:29,480 --> 00:27:32,080 Speaker 1: we're looking at it within the technology sector, right, so 617 00:27:32,119 --> 00:27:34,399 Speaker 1: all of our metrics are applied within the technology sector. 618 00:27:34,680 --> 00:27:36,199 Speaker 1: That's why you might not see it. And I think 619 00:27:36,240 --> 00:27:37,760 Speaker 1: that might be a rare case where it shows up 620 00:27:37,760 --> 00:27:39,560 Speaker 1: in all of the ETFs. Some of the other names 621 00:27:39,560 --> 00:27:41,440 Speaker 1: I was looking at the other day, where Amazon, So 622 00:27:41,560 --> 00:27:44,840 Speaker 1: Amazon can only be found in our momentum ETF General Electric, 623 00:27:45,440 --> 00:27:48,960 Speaker 1: that's not value. That would be kind of messed up, 624 00:27:49,000 --> 00:27:50,560 Speaker 1: But that's my point. I think that would be messed 625 00:27:50,640 --> 00:27:52,879 Speaker 1: up it could be messed up, but I mean Amazon 626 00:27:52,920 --> 00:27:54,920 Speaker 1: still is concerned discretionary. But my point there was that 627 00:27:55,119 --> 00:27:56,880 Speaker 1: at the individual stock name, they tell you a story 628 00:27:56,880 --> 00:27:59,399 Speaker 1: about the individual methodology of each product, and I think 629 00:27:59,440 --> 00:28:02,240 Speaker 1: Apple's example, but there are other examples of individual names 630 00:28:02,280 --> 00:28:04,520 Speaker 1: that show up where you think they whether they should 631 00:28:04,560 --> 00:28:07,359 Speaker 1: be the other products that you mentioned, just a quick bullet. 632 00:28:07,359 --> 00:28:09,399 Speaker 1: I don't know the SMP series too well, but I 633 00:28:09,480 --> 00:28:11,399 Speaker 1: think when you get unconstrained, you can get some funky 634 00:28:11,480 --> 00:28:14,920 Speaker 1: things happening. Right, So the book value of financial services companies, 635 00:28:15,280 --> 00:28:17,760 Speaker 1: from accounting reasons is can be kind of goofy. You 636 00:28:17,800 --> 00:28:20,320 Speaker 1: could load up on financials and a value e t 637 00:28:20,440 --> 00:28:22,200 Speaker 1: F just based if you're just looking at price the 638 00:28:22,240 --> 00:28:25,920 Speaker 1: book value. So we try to constrain these products. When 639 00:28:25,920 --> 00:28:28,679 Speaker 1: you say constrain yours, make sure the sectors are somewhat 640 00:28:28,680 --> 00:28:31,800 Speaker 1: aligned to the sector weightings of the SMPT, whereas the 641 00:28:31,920 --> 00:28:34,560 Speaker 1: SMP they don't care. They're just going after it and 642 00:28:34,680 --> 00:28:37,440 Speaker 1: their sector. They have no sector bands. Yeah, I don't. 643 00:28:37,480 --> 00:28:39,040 Speaker 1: I don't know that the SMP series as well as 644 00:28:39,080 --> 00:28:40,840 Speaker 1: I should. But for the Fidelity series it's and it's 645 00:28:40,840 --> 00:28:42,360 Speaker 1: not to the SMP, it's to a universe of a 646 00:28:42,400 --> 00:28:44,240 Speaker 1: thousand names. But yes, you're on You're on the right track. 647 00:28:44,280 --> 00:28:47,640 Speaker 1: It's sector neutral to the overall eligible universe. So when 648 00:28:47,680 --> 00:28:49,880 Speaker 1: you look at a fidelity factor ETF single factory t 649 00:28:50,000 --> 00:28:53,520 Speaker 1: f IF technology on the market, you're gonna see likely 650 00:28:54,600 --> 00:28:59,040 Speaker 1: in technology. Um. So I got a big meta question, 651 00:28:59,200 --> 00:29:03,320 Speaker 1: which is what are people not talking enough about in 652 00:29:03,400 --> 00:29:06,320 Speaker 1: the ETS space that you think they should be considering. 653 00:29:06,680 --> 00:29:08,960 Speaker 1: So I think the common response from et F issuers 654 00:29:09,000 --> 00:29:11,080 Speaker 1: there is active, and I certainly believe in active. We've 655 00:29:11,120 --> 00:29:13,040 Speaker 1: talked about this a little bit already, but the flows 656 00:29:13,080 --> 00:29:14,920 Speaker 1: have gone from a billion a year to seven billion 657 00:29:15,000 --> 00:29:18,280 Speaker 1: and fifteen billion, and I really feel excited about active management. 658 00:29:18,320 --> 00:29:20,080 Speaker 1: But one of the trends I'm starting to follow is 659 00:29:20,320 --> 00:29:23,920 Speaker 1: what I call multipurpose ETFs. And you think backed years ago, 660 00:29:24,080 --> 00:29:26,400 Speaker 1: and you might remember this is we always position ets 661 00:29:26,480 --> 00:29:29,840 Speaker 1: is precise. They were precise instruments. You've got SPI, nothing else, 662 00:29:29,880 --> 00:29:32,640 Speaker 1: no small cap, no emerging markets, no surprises. And what 663 00:29:32,720 --> 00:29:35,840 Speaker 1: I'm seeing now is that investors don't necessarily want that 664 00:29:35,920 --> 00:29:39,479 Speaker 1: precision in all circumstances. Sometimes they want a multi purpose ETF. 665 00:29:39,880 --> 00:29:41,600 Speaker 1: So one example of that that we brought to the 666 00:29:41,640 --> 00:29:44,600 Speaker 1: market was the Fideli DIVN and et F four rising rates. 667 00:29:44,800 --> 00:29:46,640 Speaker 1: It does two things. It's a divn and e t F, 668 00:29:47,080 --> 00:29:49,880 Speaker 1: but it protects rising rates relative to they're diven in 669 00:29:49,920 --> 00:29:52,280 Speaker 1: et f s right. So it's not probably the best 670 00:29:52,360 --> 00:29:53,720 Speaker 1: vehicle if you're just trying to make a play on 671 00:29:53,840 --> 00:29:56,040 Speaker 1: rising rates. But it's a divn and ETF that has 672 00:29:56,240 --> 00:29:59,479 Speaker 1: the rising rate birds one stone exactly, and I think 673 00:29:59,520 --> 00:30:00,840 Speaker 1: that's a trend you're going to see more of. This 674 00:30:01,040 --> 00:30:02,480 Speaker 1: is e t F to do two things that do 675 00:30:02,640 --> 00:30:04,800 Speaker 1: three things that maybe aren't precisest people are used to 676 00:30:04,920 --> 00:30:07,000 Speaker 1: going back five and ten years, but it's what the 677 00:30:07,080 --> 00:30:09,480 Speaker 1: marketplaces is asking for, and it's what our customers are 678 00:30:09,520 --> 00:30:14,120 Speaker 1: asking us for. How dangerous is that? Not necessarily dangerous 679 00:30:14,120 --> 00:30:16,280 Speaker 1: from my perspective. I mean, these products are still well 680 00:30:16,320 --> 00:30:18,680 Speaker 1: diversified across a hundred or more names. But if you 681 00:30:18,760 --> 00:30:20,680 Speaker 1: get three or four things that these things are doing, 682 00:30:20,840 --> 00:30:22,760 Speaker 1: like maybe you don't know what what you're going to get, 683 00:30:22,920 --> 00:30:28,000 Speaker 1: Like the currency hedged low volatility income rising rate factory 684 00:30:28,160 --> 00:30:33,880 Speaker 1: with the side of fries we have that's coming down 685 00:30:33,920 --> 00:30:35,960 Speaker 1: the plate. I'm sure it could be. It could be. 686 00:30:36,160 --> 00:30:38,040 Speaker 1: I I don't know. I think it's all about the 687 00:30:38,120 --> 00:30:40,520 Speaker 1: name and how it's positioned the marketplace, right, So this 688 00:30:40,560 --> 00:30:43,240 Speaker 1: would be a good day write that down bringing that 689 00:30:43,280 --> 00:30:46,360 Speaker 1: back to our products. Uh. But in the case of FDRR, 690 00:30:46,440 --> 00:30:47,920 Speaker 1: it's just it's up to us as the issue or 691 00:30:47,960 --> 00:30:50,000 Speaker 1: to educate people that this is first and foremost a 692 00:30:50,080 --> 00:30:54,560 Speaker 1: divin an ETF with built in added methodology features. And 693 00:30:54,800 --> 00:30:56,360 Speaker 1: it just goes back to the to the long march 694 00:30:56,400 --> 00:30:58,840 Speaker 1: for education that we were talking about earlier. So I 695 00:30:58,920 --> 00:31:00,320 Speaker 1: think one of the things that's in our thing with 696 00:31:00,400 --> 00:31:05,200 Speaker 1: what's basically happening in the ETS space is it used 697 00:31:05,200 --> 00:31:08,160 Speaker 1: to be that, you know, like you could have a 698 00:31:08,240 --> 00:31:12,600 Speaker 1: great idea enter the space, maybe blow up in both 699 00:31:12,640 --> 00:31:17,480 Speaker 1: good ways and bad. But like as institutions like Fidelity 700 00:31:18,440 --> 00:31:20,840 Speaker 1: enter and take over more and more of the market, 701 00:31:21,360 --> 00:31:26,160 Speaker 1: it does become more institutional. And I'm wondering how you 702 00:31:26,320 --> 00:31:30,680 Speaker 1: guys see the overall space as all this white space 703 00:31:30,760 --> 00:31:33,640 Speaker 1: gets kind of gobbled up, what is the space gonna 704 00:31:33,760 --> 00:31:38,920 Speaker 1: look like going forward? My perspective would be that over 705 00:31:39,080 --> 00:31:41,800 Speaker 1: the next five or ten years, you'll probably see it 706 00:31:41,840 --> 00:31:43,720 Speaker 1: won't be as black and white between e t F 707 00:31:43,760 --> 00:31:46,120 Speaker 1: and mutual fund, between active and passive and all these 708 00:31:46,640 --> 00:31:49,560 Speaker 1: nomenclature things we used to describe the space. But I 709 00:31:49,600 --> 00:31:51,840 Speaker 1: think there'll be a grain and that five ten years 710 00:31:51,880 --> 00:31:53,920 Speaker 1: from now, it could be structures that come together. It 711 00:31:53,960 --> 00:31:57,360 Speaker 1: could be how indexes are put together. But people won't 712 00:31:57,360 --> 00:31:59,840 Speaker 1: be spending as much time thinking about active versus passive. 713 00:31:59,880 --> 00:32:01,360 Speaker 1: The be talking about how to use them both together 714 00:32:01,440 --> 00:32:04,360 Speaker 1: in a portfolio, how to incorporate factor based investing. And 715 00:32:04,440 --> 00:32:05,840 Speaker 1: I don't know if that answers your question, but I 716 00:32:05,920 --> 00:32:09,720 Speaker 1: think from my perspective ten years ago, it was a 717 00:32:09,760 --> 00:32:13,080 Speaker 1: little bit of ets versus mutual funds, passive versus active. 718 00:32:13,120 --> 00:32:15,600 Speaker 1: You're starting to see that a road as as as 719 00:32:15,640 --> 00:32:17,480 Speaker 1: active has come back and favor a little bit, and 720 00:32:17,560 --> 00:32:19,440 Speaker 1: active managers have entered the space, and I just think 721 00:32:19,520 --> 00:32:22,360 Speaker 1: that will lead to an overall conversation about portfolio construction. 722 00:32:22,560 --> 00:32:24,800 Speaker 1: I think that's just good for advisor, is good for retail, 723 00:32:24,960 --> 00:32:33,280 Speaker 1: big gray portfolio oatmeal, oatmeal. Yeah, that's good for you. Yeah, Matcool, 724 00:32:33,440 --> 00:32:38,640 Speaker 1: Thanks so much for joining, Thanks for having me, Thanks 725 00:32:38,680 --> 00:32:41,400 Speaker 1: for listening to trillions Until next time. You can find 726 00:32:41,480 --> 00:32:45,200 Speaker 1: us on the Bloomberg terminal, Bloomberg dot com, Apple podcasts, 727 00:32:45,600 --> 00:32:47,800 Speaker 1: and whatever else you listen to podcasts we'd love to 728 00:32:47,880 --> 00:32:51,320 Speaker 1: hear from you. We're on Twitter. I'm at Joel Webber Show. 729 00:32:51,960 --> 00:32:57,080 Speaker 1: He's at Eric Balcunos. Trillions is produced by Magnus Hendrickson. 730 00:32:57,680 --> 00:33:00,840 Speaker 1: Francesca Levy is the head of Bloomberg podcast from Paco