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Speaker 1: Well trillions. I'm Joel Webber and I'm Eric bell Tunis Eric.

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Speaker 1: Halloween is almost upon us. Uh, my five year old

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Speaker 1: is going to be a butterfly wearing a mask that

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Speaker 1: may not be triggered treating. Well, we'll see as we

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Speaker 1: get a little closer. Maybe how about how about your kids? Uh, well,

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Speaker 1: the nine year olds excited. We got him a costume.

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Speaker 1: He wants to be possessed pumpkin. We went to this

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Speaker 1: store and that's when he picked out and uh, it

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Speaker 1: is it's it's a good it's a good costume. He's

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Speaker 1: now into the scary stuff. He wants to scare people.

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Speaker 1: And um, whether we go out probably I think around

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Speaker 1: here there's one street that closed that has a big

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Speaker 1: deal every year. But if we do, usually when we

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Speaker 1: go out with him, you just wear a mask and

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Speaker 1: and that sort of gives us a sense of safety.

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Speaker 1: But I think we'll probably try it. And you're younger guy,

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Speaker 1: he's four, and he um, he just kind of isn't

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Speaker 1: really there yet. He's just not into wearing anything. He

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Speaker 1: doesn't wear a jacket like, so we have problem getting

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Speaker 1: him out and winner let alone in a costume. He'll

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Speaker 1: just tag along and chase Gabriel up and up and

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Speaker 1: down the street, that that'll be his thing. He'll have

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Speaker 1: a good time too. So bring this back to E

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Speaker 1: t F s uh Eric. This year, like every year,

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Speaker 1: there are closures, and so we're going to talk about

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Speaker 1: the e t F Graveyard this episode. Yeah, it's a

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Speaker 1: great term for it. There's over eleven ETFs that are

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Speaker 1: dead rest in peace. That's one in every four launches,

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Speaker 1: basically dies. This year has been particularly brutal. There's been

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Speaker 1: about two d and twelve closures, um and that is

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Speaker 1: already a record by about fifty, right, so this is

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Speaker 1: more than ever. And really the difference this year was

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Speaker 1: what we call exotics leverage e tps and e t

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Speaker 1: n s, which normally make up a certain percentage, are

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Speaker 1: really punching above their weight enclosures. And that's because March

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Speaker 1: wiped a bunch of them out because the volatility was

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Speaker 1: just too strong and so a lot of the issues

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Speaker 1: like you know what, we gotta get out of here. Um.

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Speaker 1: So that's really the difference maker this year. But there's

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Speaker 1: always closures. I mean, this is an industry with a

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Speaker 1: lot of cash coming in, so you get a lot

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Speaker 1: of spaghetti, get thrown on the wall and a lot

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Speaker 1: of the stuff doesn't make it and joining us to

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Speaker 1: talk about the closures. Todd rosen Bluth, who's the director

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Speaker 1: of et F Research at c f R, A also

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Speaker 1: regular on the show, as well as Claire Balantine who's

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Speaker 1: back with us as well. She's a cross s at

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Speaker 1: reporter with Bloomberg. Does this time on Trillions lead Prave Todd, Claire,

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Speaker 1: thanks for joining us on Trillians. Great to be with

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Speaker 1: you guys. Thanks for having us. Todd, I want to

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Speaker 1: start with you what jumps out to you about. I

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Speaker 1: think there's a couple of key themes. Eric touched on

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Speaker 1: leverage products and E t N s and we can

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Speaker 1: come back to that, but the traditionally E t F products.

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Speaker 1: I think there's two main things that were happening. One

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Speaker 1: is Investco, which has made a number of acquisitions including

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Speaker 1: Guggenheim and Oppenheimer Funds. In the last few years. They

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Speaker 1: called their their lineup and there's a lot of overlap

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Speaker 1: between what they acquired and what they had that was successful.

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Speaker 1: So we saw a number of products earlier in the

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Speaker 1: year UH get cut out of the overall lineup, and

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Speaker 1: that's a good thing. I think for the overall industry.

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Speaker 1: And then secondly, and we can dive deeper into all

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Speaker 1: of this, is there was a wave of launching currency

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Speaker 1: hedge e t f s a few years back. Uh.

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Speaker 1: This was back when wisdom Tree was having success with

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Speaker 1: d x J uh HAD Japan and h E d

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Speaker 1: J the hedge Euro product. Everybody wanted a piece of

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Speaker 1: that pie. Money didn't go in. It takes a couple

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Speaker 1: of years later. Now the products are closing. I share

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Speaker 1: his Wisdom Tree DWS. All those firms were closing a

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Speaker 1: large number of these uh, currency hedge products. Yeah, and

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Speaker 1: let me jump in and say also a minimum ball

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Speaker 1: low low ball. And currency hedge became like this fad.

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Speaker 1: I call it a craze. Todd doesn't like that term.

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Speaker 1: But when like something that makes up two percent of

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Speaker 1: the assets start taking the flows, what you have is

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Speaker 1: a rush of products. And like here here's something I

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Speaker 1: shares clothes this year. Listen this currency hedged Italy. I

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Speaker 1: mean there's barely anybody buying the regular Italy et F

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Speaker 1: currency hedged Australia. UM. They also had a minimum volve Japan.

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Speaker 1: I mean some of these they just went one step

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Speaker 1: too far. And they know it, and they've you know,

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Speaker 1: reined it in a little bit. And I think that's

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Speaker 1: you see that most years. I think, Claire, what's what

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Speaker 1: jumped out to you as you sort of looked into

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Speaker 1: everything here? Yeah, what was interesting to me is the

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Speaker 1: fact that a lot of these bigger asset managers and

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Speaker 1: issuers were closing funds. I think there's this narrative about,

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Speaker 1: you know, smaller issuers really struggling against these bigger players,

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Speaker 1: and so you know, one might expect that a lot

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Speaker 1: of the smaller and more niche funds were closing, but

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Speaker 1: when I'm looking at the list of funds that closed,

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Speaker 1: a lot of it is these these bigger players, Um.

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Speaker 1: That seems like they can sort of, you know, try

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Speaker 1: out these strategies and if it doesn't work, then they

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Speaker 1: can close them, especially with Investco closing so many of them. Um.

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Speaker 1: And then the other thing that I thought was interesting

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Speaker 1: was really those leverage products in the E T N s.

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Speaker 1: And you know, this year has just been so volatile

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Speaker 1: and crazy in general, and it seems like after what

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Speaker 1: we saw in March that really, um, you know, put

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Speaker 1: in a stark relief what some of these funds actually

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Speaker 1: did and their performance. It's interesting you say that because

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Speaker 1: we did notice, and I think it was um when

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Speaker 1: black Rock closed their first fund. I believe it was

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Speaker 1: called ALT it was an alternative fund. Ever since then,

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Speaker 1: the number of closures just jumped up. I think people saw, well,

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Speaker 1: if black Rock will close a fund, then there's no

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Speaker 1: shame in it anymore. There's no stigma. And I think

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Speaker 1: that's a great point, I think, and there really shouldn't

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Speaker 1: be if you if you have no assets and no

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Speaker 1: one cares and the spreads wide and out, just just

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Speaker 1: get rid of it. Although on the flip side, the

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Speaker 1: other voice would say, well, sometimes you need to hang

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Speaker 1: on for three or four years for your moment in

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Speaker 1: the sun, because we've seen a couple of times where

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Speaker 1: an E T F that is in the graveyard, like

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Speaker 1: the short Squeeze et F for example, would have been

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Speaker 1: having a great year this year if it had just

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Speaker 1: hung on. So there's two conflicting messages there with when

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Speaker 1: to throw in the towel. Yeah, I remember we used

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Speaker 1: to have another airline ETF that's out there, f A

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Speaker 1: A that would have been a good product. Given you

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Speaker 1: guys have covered how J E T S has performed,

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Speaker 1: and got the assets. It would have been nice to

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Speaker 1: have a competitor in that space, but we no longer

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Speaker 1: have that. So actually, I want I want to add

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Speaker 1: a little context here, which is, and you kind of

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Speaker 1: hinted at it a little bit there, Eric, let's just

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Speaker 1: be clear for clear about it for people, how many

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Speaker 1: closures have we had this year and how does that

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Speaker 1: compare in context to previous years? Anomaly or is this

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Speaker 1: part of the trend that there's just more calling every year?

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Speaker 1: So if you look at the chart, it's a trend.

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Speaker 1: I mean it's been building up, and the spread between

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Speaker 1: launches enclosures have has been coming down. In other words,

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Speaker 1: closures has made that spread smaller. That said, this year

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Speaker 1: is is an outlier. I mean you're already way past

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Speaker 1: the record. I mean, what are your past the record already?

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Speaker 1: So to me, this year is an outlier, but it

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Speaker 1: also is part of the trend of more closures every

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Speaker 1: year starting in about two thousand thirteen fourteen. Um, Like

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Speaker 1: I said, I think that I share is et F

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Speaker 1: closing kind of kicked off a lot. Plus the industry

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Speaker 1: is getting older, and how many of the closures this

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Speaker 1: year are pandemic related? Do you think I would say

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Speaker 1: in all time, leverage ETFs make up about nine eight

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Speaker 1: percent of all closures, even they only make up like

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Speaker 1: two percent of the assets, so they definitely punch above

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Speaker 1: their weight enclosures. But this year they made up e

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Speaker 1: t n is normally make up about fifteen percent of

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Speaker 1: the closures. They made up nineteen percent this year. So

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Speaker 1: I think those were really busted up in March. I

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Speaker 1: think March, these leverage ETFs have to reset every day,

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Speaker 1: and when the markets limit up limit down, resetting really

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Speaker 1: messes up their math. It messes up what they're trying

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Speaker 1: to do. And I think if you took March out

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Speaker 1: and you made in March never happened and it was

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Speaker 1: like a normal year, I don't think those would have closed,

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Speaker 1: and I think we would be more at the one

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Speaker 1: fifty level. But there's been about fifty leverage GTF that

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Speaker 1: I think specifically closed because of the pandemic and what

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Speaker 1: it did in March with the volatility. Yeah, I totally agree,

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Speaker 1: and I think especially from those issuers like Direction and

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Speaker 1: pro Shairs, you know, there wouldn't really be an impetus

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Speaker 1: or a reason to close these funds. You know, at

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Speaker 1: a certain time but after the March volatility that we

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Speaker 1: saw that really you know, led to that I think

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Speaker 1: we're also seeing is that the firms that are not

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Speaker 1: closing the leverage and the et N products, firms like

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Speaker 1: Global x, U firms like Wisdom Trade, Direction that's doing

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Speaker 1: it for their non leverage products is what they're also launching.

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Speaker 1: So we've seen Global x increase the number of thematic

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Speaker 1: oriented etf so it's not surprising that they closed some

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Speaker 1: of their smart data products that haven't been as popular.

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Speaker 1: Um you know, we've we've seen it with other firms

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Speaker 1: that are doing this as well. Direction has had success

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Speaker 1: with their work from home et F and thematic products,

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Speaker 1: so that you know, they closed the suite of these

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Speaker 1: relative weight products a little bit faster than we had expected.

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Speaker 1: But it's it's just hard to be able to compete

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Speaker 1: and have a broad line up without enough assets in them.

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Speaker 1: And so we're seeing asset managers called the herd a

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Speaker 1: little bit to focus on where their priorities are going

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Speaker 1: in the future instead of where it was three years ago. Okay, Todd,

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Speaker 1: I have a really basic question for you, which is,

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Speaker 1: say I own something and it closes what happens to

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Speaker 1: my money, So it's really not that big a deal.

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Speaker 1: It's a it's a little bit of a big deal

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Speaker 1: in that you are forced into the sale and there's

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Speaker 1: a capital gain implication and a tax implication. Basically it

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Speaker 1: was sold, and that if you held on until the

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Speaker 1: last trading day then you actually will get the money

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Speaker 1: that's there. It's probably not a good decision when you

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Speaker 1: hear that your et F is closing. It's probably worthwhile

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Speaker 1: to just exit the position so that you're trading when

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Speaker 1: they're actually is other people that might be trading as well,

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Speaker 1: and there's redemptions that can take place. And thankfully in

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Speaker 1: the ETF industry there's often two or three or four

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Speaker 1: other products that are in the broad style. They may

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Speaker 1: not be the same, and we certainly it's see if

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Speaker 1: they think it matters what's inside. But there are other

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Speaker 1: products that are out there. Yes, you couldn't buy a

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Speaker 1: currency hedge Italy product, but you could still buy Italy

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Speaker 1: where you could buy a currency hedge Europe product in

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Speaker 1: the case of that I Shares example that Eric offered

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Speaker 1: Um and Todd. Though we should also mention let's say

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Speaker 1: you don't do anything like you you don't even get

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Speaker 1: the notice that your et F is closing. You know,

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Speaker 1: you're out to lunch. What Howen says, the e t

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Speaker 1: F will then redeem the the assets and then send

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Speaker 1: you a check. Basically, now you could have capital gains

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Speaker 1: to deal with. I think that's probably the worst case scenario.

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Speaker 1: Would you agree, Yeah, it's that's the worst case scenario

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Speaker 1: is that if you've held this for a while, UM,

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Speaker 1: you will get a capital gain implication and then you'll

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Speaker 1: have to find something else to do with your money.

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Speaker 1: But there'll be other choices that are at there. But

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Speaker 1: I think we as an industry fear these uh e

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Speaker 1: t f that are closing that get a lot of

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Speaker 1: attention from a closure rate, but they're closing for the

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Speaker 1: reasons that there's just not a lot of money. So

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Speaker 1: it's not impacting that many investors. As you mentioned, most

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Speaker 1: of the products that are closing are under twenty five

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Speaker 1: million in assets overall. Yeah. Well, on on the topic

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Speaker 1: of finding other options for your money. UM, I think

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Speaker 1: it's interesting too that this year we still have seen

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Speaker 1: a ton of e t F launches. UM. The data

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Speaker 1: that we have is two eighteen funds that started trading,

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Speaker 1: and so you know, if one of these funds closes.

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Speaker 1: There really are so many more options, and I think

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Speaker 1: that also points to you know, maybe the future of

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Speaker 1: closures is if so many more funds are launching. You know,

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Speaker 1: the e t F rule has made it easier than

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Speaker 1: you know. I think that the rate of closures could

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Speaker 1: even continue to be, you know, move up and locksed

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Speaker 1: up with how many launches there are. Yeah, I mean

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Speaker 1: I think so too, And I think it's fine. I

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Speaker 1: once sort of static of apps that are launched clothes,

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Speaker 1: so E t F it's not as bad as apps

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Speaker 1: at least yet. Okay, So I want to talk about

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Speaker 1: other notable closures, Eric with another one that that you noticed, well,

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Speaker 1: you know, we went over to load the n C

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Speaker 1: seventeen crowd is what I call the Velocity Shares t

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Speaker 1: vix u w T. I mean, these are beloved by

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Speaker 1: the robin Hood crowd, and they lost a lot of

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Speaker 1: their playthings, but they found other ones in like t

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Speaker 1: q q Q and those kind of e t s.

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Speaker 1: But t VIX was probably, if I could be wrong,

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Speaker 1: but the biggest DTF efort to delist and probably the

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Speaker 1: most traded. I mean, the thing was very very robust.

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Speaker 1: The news I have a feeling. Janice was just like,

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Speaker 1: we don't really want to be involved in this all

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Speaker 1: the time anymore, and they closed that out. Janice also

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Speaker 1: closed too theme ETFs, which I thought was interesting, slim

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Speaker 1: and organ the obesity e t F S and the

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Speaker 1: organic CTF And I don't think that was really Janice's personality.

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Speaker 1: When you think Janice, do you really think like like

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Speaker 1: themes and fads. So I think Janice this year they've

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Speaker 1: seen a lot of money into v n l A,

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Speaker 1: which is the their bond e TF. I think it

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Speaker 1: really speaks to when an issuer goes against who they are,

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Speaker 1: and I don't think they you find a lot of

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Speaker 1: success doing that. I think you kind of have to

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Speaker 1: stick to your d n A, what you're good at,

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Speaker 1: when you're comfortable with. And I think Janice this year

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Speaker 1: closing their wild NC seventeen products as well as these

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Speaker 1: wacky themes, knows that they probably had a conversation of

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Speaker 1: like who they want to be, and they're like, let's

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Speaker 1: just be us, and I think that will happen more

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Speaker 1: and more. Janice this past in October, UH launched a

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Speaker 1: CLO Collateralized Loan Obligation et F J and then triple a. Um,

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Speaker 1: so you know, piggybacking off of what you said with

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Speaker 1: the v n L A product that they're focuses more

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Speaker 1: within fixed income with their lineup and using some of

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Speaker 1: their in house capabilities. So yes, we're certainly seeing asset

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Speaker 1: managers refocus their priorities like we saw with global Ax earlier.

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Speaker 1: It's frustrating though, because the themes and the crazy stuff

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Speaker 1: gets a lot of the press attention. You know, Um,

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Speaker 1: the short duration BONDYTF is just you know, the thirty

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Speaker 1: six version, you know, one of them. It just puts

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Speaker 1: you to sleep. But if that's who you are, I

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Speaker 1: think that these firms are going to continue to be

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Speaker 1: who they are, especially the new ones coming in with active,

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Speaker 1: non transparent ETFs and such. Fixed income also viewed as

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Speaker 1: a growth opportunity by most of the industry too. So well,

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Speaker 1: I think on the topic of of these funds closing,

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Speaker 1: I think it really is. It seems like Eric had

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Speaker 1: had a good point about a lot of them are

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Speaker 1: closing kind of early, and that when I was looking

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Speaker 1: at the list of funds that had closed this year, Um,

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Speaker 1: there's a good portion that had launched only and so

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Speaker 1: you know, maybe not quite giving them a chance. Um.

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Speaker 1: And then I also think sort of the wild card,

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Speaker 1: especially this year is the robin Hood crowd and kind

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Speaker 1: of what products they could launch or could latch onto.

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Speaker 1: And you know who can predict that almost So it's um,

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Speaker 1: I think that's a big factor this year that's sort

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Speaker 1: of thrown into the mix. Yeah, that's a good point, Claire.

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Speaker 1: And you know, I believe the record holder for the

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Speaker 1: shortest lifespan ever was about six months, um the Trade

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Speaker 1: War ETF. Remember that came out to a lot of

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Speaker 1: press attention. It launched in June, closed by Christmas. Um.

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Speaker 1: So I'm you know, it's possible we'll see something with

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Speaker 1: a shorter lifespan than that, But that is really short.

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Speaker 1: I mean, this thing only gave itself a couple of months. Um.

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Speaker 1: So yeah, I don't know, it would be interesting to

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Speaker 1: see if we see more of that. Yeah. And to me,

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Speaker 1: that seems like that must point to a change in

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Speaker 1: issue or strategy. I mean, I can't imagine it just

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Speaker 1: you know, didn't get enough demand within six months. It

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Speaker 1: definitely seems like, you know, you would I wanted to

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Speaker 1: have more of a chance to to you know, come

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Speaker 1: to life By the way, remember the trade war. It

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Speaker 1: does seem like a lifetime ago that that was really relevant.

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Speaker 1: I've gotta say this is not to self why you

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Speaker 1: don't want to launch ant F based on a news cycle.

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Speaker 1: I think Todd, we brought up robin Hood a second ago.

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Speaker 1: Are there e t f s that either the robin

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Speaker 1: Hood crowd to help drive out of existence that that

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Speaker 1: stood out to you, or that we're calm calm pounded

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Speaker 1: by their interest in various fads, I'll call them. Sure,

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Speaker 1: So we don't we don't think that, you know, the

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Speaker 1: trading crowd is actually driving products out, they're actually keeping

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Speaker 1: some of the products afloat. Uh So a product like

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Speaker 1: J E. T S that I touched on earlier found

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Speaker 1: investor interest through this more retail trading audience. I think

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Speaker 1: these more tactical and thematic and higher risk by reward

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Speaker 1: products likely had a chance to succeed, and so we

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Speaker 1: probably still have some of these leverage and inverse products

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Speaker 1: that are hanging on because of a trading crowd. It's these,

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Speaker 1: you know, products that they really just don't that aren't

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Speaker 1: performing well, that fit into a niche that makes sense

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Speaker 1: to that audience that just had a challenge, and particularly

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Speaker 1: international investing products. You know, US retail investors just don't

337
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Speaker 1: really want to touch a narrowly focused you know, Japan

338
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Speaker 1: or or single country product. Okay, so we've talked about

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Speaker 1: some issuers Janice for instance, Investco who called more than

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Speaker 1: anybody else who's not contributing to the graveyard Todd. Yeah.

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Speaker 1: I mean Vanguard and Schwab are the number two and

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Speaker 1: and number five largest et F providers. They perennially don't cut.

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Speaker 1: I don't think Vanguard or Swab has actually cut any

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Speaker 1: of their et F s. Certainly Vanguard hasn't. They obviously

345
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Speaker 1: have more assets in in a concentrated number of products,

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Speaker 1: but they're more prudent in their overall strategy. So I

347
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Speaker 1: think that's logical that we haven't seen them this year

348
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Speaker 1: or in prior years. Um. So those are two that

349
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Speaker 1: come to mind. You know, we saw Wisdom Tree that

350
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Speaker 1: that made some cuts. We saw DWS, we saw Global

351
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Speaker 1: X that made some cuts. Just rounding out the rest

352
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Speaker 1: of the top ten that I can think of, and

353
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Speaker 1: then you know, JP Morgan made a couple of them.

354
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Speaker 1: And you know, Eric, I think it was something you

355
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Speaker 1: wanted to touch on, you know, JP Morgan. That's relatively

356
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Speaker 1: new to the e t F market. You know, cut

357
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Speaker 1: not their cheap data products and not their smart beta products.

358
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Speaker 1: Put something in more of the alternative world. Yeah, this

359
00:19:03,880 --> 00:19:05,720
Speaker 1: is a space, the alternative world where you take a

360
00:19:05,760 --> 00:19:11,800
Speaker 1: hedge fund strategy like long short um or UH multi strategy.

361
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Speaker 1: I think they had an event driven and you try

362
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Speaker 1: to democratize it in an e t F. When they

363
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Speaker 1: launched these, the JP Morgan, head of et F said,

364
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Speaker 1: we want to democratize hedge funds. This has been said

365
00:19:21,080 --> 00:19:23,040
Speaker 1: over and over, like every three years, and it just

366
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Speaker 1: can't happen. My theory is UH beta it works too well.

367
00:19:27,560 --> 00:19:29,639
Speaker 1: In other words, just investing in the SNP is just

368
00:19:29,720 --> 00:19:33,199
Speaker 1: too good. Nobody needs alts. Why would you need that

369
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Speaker 1: when the market is just so on fire bonds and

370
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Speaker 1: stocks And the other thing is I think they're pretty pricey.

371
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Speaker 1: I think the hedge fund category, I would like to

372
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Speaker 1: see a vanguard come in and vanguard it with like

373
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Speaker 1: a twenty bit hedge fund e t F or a

374
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Speaker 1: rock star manager like a Cliff ast Nous launched like

375
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Speaker 1: an a K a q R version or e t

376
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Speaker 1: F version of his fund. I think that could Jack

377
00:19:56,000 --> 00:19:58,359
Speaker 1: up or beta just stops working and people all of

378
00:19:58,359 --> 00:20:01,439
Speaker 1: a sudden look for alternatives but that category, and no

379
00:20:01,480 --> 00:20:02,960
Speaker 1: one has to be able to crack the code on

380
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Speaker 1: that really in ten fifteen years, and including JP Morgan

381
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Speaker 1: with all their might, power and pocketbook. Well, I think

382
00:20:09,720 --> 00:20:13,320
Speaker 1: it's interesting you talk about how they're trying to democratize

383
00:20:13,320 --> 00:20:14,879
Speaker 1: it for the masses, because I think it points to

384
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Speaker 1: the fact that having a narrative in terms of these

385
00:20:18,119 --> 00:20:21,399
Speaker 1: strategies and these products is really important now. And you

386
00:20:21,440 --> 00:20:24,280
Speaker 1: know that narrative obviously wasn't didn't work out that well,

387
00:20:24,280 --> 00:20:26,760
Speaker 1: but I think you know, we've seen a huge growth

388
00:20:26,920 --> 00:20:30,560
Speaker 1: in thematic funds this year that kind of have that narrative.

389
00:20:30,840 --> 00:20:34,040
Speaker 1: So I think as the market becomes more crowded and

390
00:20:34,080 --> 00:20:36,240
Speaker 1: as it's harder to you know, have these funds to

391
00:20:36,280 --> 00:20:38,840
Speaker 1: be successful, what kind of narrative you're pushing out as

392
00:20:38,840 --> 00:20:43,560
Speaker 1: you launch can really make or break you. Speaking of narratives, Eric,

393
00:20:43,600 --> 00:20:46,359
Speaker 1: there's another ticker on your list here, H, Y and

394
00:20:46,600 --> 00:20:51,400
Speaker 1: D that was almost built for an era that never came.

395
00:20:51,440 --> 00:20:54,000
Speaker 1: Can you talk more about what happened with that one? Yeah,

396
00:20:54,119 --> 00:20:57,280
Speaker 1: I'm I'm thinking of calling this type of situation the

397
00:20:57,359 --> 00:21:01,320
Speaker 1: waiting for godot problem, which is when you you you

398
00:21:01,359 --> 00:21:03,159
Speaker 1: think this thing is going to happen, and it just

399
00:21:03,240 --> 00:21:05,320
Speaker 1: never does. So there was a whole bunch of ets

400
00:21:05,440 --> 00:21:08,639
Speaker 1: lunch called rate hedge dtfs, and they were designed to

401
00:21:08,720 --> 00:21:10,960
Speaker 1: do well when rates rose because everyone was like, oh,

402
00:21:11,080 --> 00:21:13,399
Speaker 1: rates are definitely gonna rise again, right they go up?

403
00:21:13,400 --> 00:21:18,120
Speaker 1: They couldn't. Right, well, they did, and they kept going

404
00:21:18,119 --> 00:21:20,960
Speaker 1: lower and lower. Remember how many articles todd do you

405
00:21:20,960 --> 00:21:24,080
Speaker 1: think there have been with how to play et s

406
00:21:24,119 --> 00:21:26,760
Speaker 1: for rising rates? But they never went up. So h

407
00:21:26,880 --> 00:21:28,840
Speaker 1: Y and D was one of the Wisdom Tree closed

408
00:21:28,880 --> 00:21:30,720
Speaker 1: this year, and there's been a couple of rate hedge

409
00:21:30,800 --> 00:21:34,600
Speaker 1: dts that have closed and their moment just never came.

410
00:21:34,840 --> 00:21:37,439
Speaker 1: And I'm gonna throw this out there to you guys

411
00:21:37,520 --> 00:21:40,960
Speaker 1: just to get some controversy going. I think we're gonna

412
00:21:40,960 --> 00:21:42,840
Speaker 1: see a bunch of E S G T s closed

413
00:21:42,880 --> 00:21:46,240
Speaker 1: the next couple of years too. I don't that moment

414
00:21:46,320 --> 00:21:49,400
Speaker 1: just isn't gonna come. I mean, the fetish said they're

415
00:21:49,440 --> 00:21:52,320
Speaker 1: there on hold for the foreseeable future. So you know,

416
00:21:52,359 --> 00:21:55,239
Speaker 1: I know E W S and pro Shares have some

417
00:21:55,280 --> 00:21:58,880
Speaker 1: of these rate hedged products and and they've closed other products.

418
00:21:59,000 --> 00:22:01,560
Speaker 1: This year and in prior years, so it's it's conceivable

419
00:22:01,680 --> 00:22:05,080
Speaker 1: that the products are have a short lifespan as well.

420
00:22:05,080 --> 00:22:08,600
Speaker 1: There's limited assets in them where their right reasons, they've

421
00:22:08,600 --> 00:22:12,000
Speaker 1: been performing poorly in the latest environment, there's just more

422
00:22:12,000 --> 00:22:15,200
Speaker 1: products to be cut. Did you mention E s G

423
00:22:15,400 --> 00:22:18,640
Speaker 1: E T S. Yeah, I'm basically saying that, maybe not

424
00:22:18,680 --> 00:22:20,960
Speaker 1: to the extent because there is some assets in E

425
00:22:21,119 --> 00:22:24,359
Speaker 1: s G. But the product per asset level is through

426
00:22:24,400 --> 00:22:26,560
Speaker 1: the roof. There's just so much of a supply products

427
00:22:26,560 --> 00:22:28,560
Speaker 1: and it looks like everybody's not slowing down anytime soon.

428
00:22:29,119 --> 00:22:31,440
Speaker 1: I bet E s G in three or four years

429
00:22:31,440 --> 00:22:33,920
Speaker 1: and we all meet up again on Halloween, we're E

430
00:22:34,080 --> 00:22:35,600
Speaker 1: s G is gonna make up like a third of

431
00:22:35,640 --> 00:22:39,679
Speaker 1: the graveyard. Yeah, I totally agree. I think unless like

432
00:22:39,720 --> 00:22:43,240
Speaker 1: your black Rock, Um, you know, there's so many assets

433
00:22:43,280 --> 00:22:45,800
Speaker 1: in just a couple of those funds, and I think that,

434
00:22:46,760 --> 00:22:50,240
Speaker 1: um yeah, there's so many products launching, it seems like

435
00:22:50,400 --> 00:22:53,920
Speaker 1: sort of a fad um they can all gather as

436
00:22:54,000 --> 00:22:56,880
Speaker 1: much money. And I think it also depends on what's

437
00:22:56,960 --> 00:22:59,000
Speaker 1: under the hood in the E s G. You know,

438
00:22:59,080 --> 00:23:05,080
Speaker 1: whether it's just you know, companies that don't have really

439
00:23:05,119 --> 00:23:07,840
Speaker 1: bad things going on, or if it's like renewable or

440
00:23:07,880 --> 00:23:12,119
Speaker 1: clean energy. There's very much a differentiation between that. I disagree.

441
00:23:12,160 --> 00:23:15,200
Speaker 1: I mean e s G is the wave of the future.

442
00:23:15,400 --> 00:23:18,159
Speaker 1: I think their data says that the assets are certainly

443
00:23:18,200 --> 00:23:21,400
Speaker 1: saying it. Yes, there's there's more products right now than

444
00:23:21,440 --> 00:23:24,080
Speaker 1: there are assets, but it's going to be We're hearing

445
00:23:24,119 --> 00:23:27,800
Speaker 1: more from advisors that are building strategies using e s

446
00:23:27,840 --> 00:23:31,280
Speaker 1: G only, and we have firms that are replacing core

447
00:23:31,440 --> 00:23:34,680
Speaker 1: with their e s G. There's gonna be closures, naturally,

448
00:23:34,720 --> 00:23:37,160
Speaker 1: there's gonna be closures in any space, but I don't

449
00:23:37,160 --> 00:23:39,560
Speaker 1: think it's going to be anywhere close to the currency

450
00:23:39,600 --> 00:23:44,119
Speaker 1: hedge wave of launches and closures three years from now.

451
00:23:45,119 --> 00:23:46,719
Speaker 1: I mean, I think the other wild card is what

452
00:23:46,760 --> 00:23:50,360
Speaker 1: happens with the presidential election. Um. You know, we've been

453
00:23:50,400 --> 00:23:53,359
Speaker 1: reporting a lot on Robin Hood traders and some that

454
00:23:53,400 --> 00:23:55,679
Speaker 1: I've talked to have said that, you know, they're going

455
00:23:55,720 --> 00:23:58,720
Speaker 1: to be watching on election night, and if there's a

456
00:23:58,760 --> 00:24:01,400
Speaker 1: Biden win, they may plow money into some of these

457
00:24:01,400 --> 00:24:06,440
Speaker 1: e s G funds. So that's another factor. Take that, Eric, Yeah,

458
00:24:06,760 --> 00:24:08,680
Speaker 1: some of ye. I think Claire has it right. There'll

459
00:24:08,680 --> 00:24:10,080
Speaker 1: be a couple of E s G t s that

460
00:24:10,160 --> 00:24:13,040
Speaker 1: hog up most of the assets. But I mean, there's

461
00:24:13,119 --> 00:24:17,040
Speaker 1: just way too many. And I think that UM, forget

462
00:24:17,080 --> 00:24:20,000
Speaker 1: what it's called, but this polling service called it h

463
00:24:21,200 --> 00:24:25,080
Speaker 1: h I sampling bias or I forget what the word was,

464
00:24:25,160 --> 00:24:27,080
Speaker 1: but it's when you two when you do a survey

465
00:24:27,160 --> 00:24:30,640
Speaker 1: or a poll and the person doesn't want to say

466
00:24:30,680 --> 00:24:33,159
Speaker 1: their real feelings for fear of being judged by the

467
00:24:33,240 --> 00:24:36,280
Speaker 1: survey person. And I just think that E s G

468
00:24:36,400 --> 00:24:38,680
Speaker 1: has been inflated in the surveys because who isn't who

469
00:24:38,680 --> 00:24:40,200
Speaker 1: wants to act like say, oh I'm not into E

470
00:24:40,359 --> 00:24:42,320
Speaker 1: s G. This'll be like, oh, what are you bad person?

471
00:24:42,800 --> 00:24:44,639
Speaker 1: I think the whole thing has been over inflated. And

472
00:24:44,640 --> 00:24:46,800
Speaker 1: the other thing is, let's say entered the energy sector

473
00:24:47,400 --> 00:24:50,280
Speaker 1: starts to rebound because E s G has had a

474
00:24:50,320 --> 00:24:52,800
Speaker 1: nice run where tech is beating energy, which is E

475
00:24:52,920 --> 00:24:55,160
Speaker 1: s G t s are largely overweight tech underweight energy.

476
00:24:55,520 --> 00:24:57,800
Speaker 1: If that changes for a couple of years and the

477
00:24:57,840 --> 00:25:01,359
Speaker 1: performance lags, that's when I think the be outflows, and

478
00:25:01,800 --> 00:25:03,960
Speaker 1: that's when they're gonna be a bunch of closures. I

479
00:25:04,000 --> 00:25:06,280
Speaker 1: think E s G is built on a trade which

480
00:25:06,320 --> 00:25:09,239
Speaker 1: is tech beating energy and people just don't even know that.

481
00:25:09,280 --> 00:25:11,439
Speaker 1: They just think, oh, it's E s G working. No,

482
00:25:11,640 --> 00:25:13,520
Speaker 1: it's just that text having a nice run and energy

483
00:25:13,520 --> 00:25:16,160
Speaker 1: sucks right now. But I could be wrong. We'll see.

484
00:25:16,240 --> 00:25:19,760
Speaker 1: We it's all on tape now. I will say, I

485
00:25:19,760 --> 00:25:21,879
Speaker 1: think there could be more of a lingering death for

486
00:25:22,000 --> 00:25:24,159
Speaker 1: some of these E s G funds. I I do

487
00:25:24,240 --> 00:25:26,760
Speaker 1: agree that they'll eventually be in the graveyard, but I

488
00:25:26,800 --> 00:25:30,280
Speaker 1: wonder maybe if you know, because it's such a compelling narrative,

489
00:25:30,359 --> 00:25:32,159
Speaker 1: you know, we want to invest with their values, some

490
00:25:32,240 --> 00:25:34,800
Speaker 1: of these issuers will kind of stick it out and

491
00:25:35,320 --> 00:25:38,120
Speaker 1: let it die a slow death, sort of like Linus

492
00:25:38,200 --> 00:25:40,560
Speaker 1: in the pumpkin patch, like waiting for the gray pumpkin.

493
00:25:40,920 --> 00:25:42,800
Speaker 1: He's just gonna sit there and keep saying the great

494
00:25:42,800 --> 00:25:46,760
Speaker 1: pumpkins coming. Uh. These E s G look advisors want.

495
00:25:46,760 --> 00:25:48,760
Speaker 1: E s G is gonna say a year after year

496
00:25:48,840 --> 00:25:54,200
Speaker 1: after year, and the the advisors don't want E s G. Um.

497
00:25:54,240 --> 00:25:56,600
Speaker 1: I mean, you guys are reigning on the E s

498
00:25:56,640 --> 00:26:00,399
Speaker 1: G parade, but you're quite comfortable that we've got seven

499
00:26:00,440 --> 00:26:03,600
Speaker 1: cannabis et fs, and we've got six video game e

500
00:26:03,720 --> 00:26:06,600
Speaker 1: t f s, and we've got eight of this other

501
00:26:06,720 --> 00:26:10,399
Speaker 1: upcoming category. It's crowded in a lot of places in

502
00:26:10,480 --> 00:26:12,639
Speaker 1: the et F market. We're going to see closures that

503
00:26:12,720 --> 00:26:15,720
Speaker 1: take place because there are going to be one and losers.

504
00:26:15,800 --> 00:26:18,639
Speaker 1: But there there's there is broader demand for E s

505
00:26:18,720 --> 00:26:22,440
Speaker 1: G over some of these other subcategories. Absolutely, themes will

506
00:26:22,440 --> 00:26:24,800
Speaker 1: always be on the list. They're they're just but a

507
00:26:24,920 --> 00:26:27,720
Speaker 1: cannabis ETF here and there, a video game ETF here

508
00:26:27,760 --> 00:26:29,840
Speaker 1: and there. What I'm saying is E s G is

509
00:26:29,880 --> 00:26:32,879
Speaker 1: going to be like currency hedging, where there's like a

510
00:26:33,080 --> 00:26:37,200
Speaker 1: mass culling of products where you see like ten on

511
00:26:37,320 --> 00:26:40,119
Speaker 1: the list or fifteen in a year, not like one

512
00:26:40,240 --> 00:26:42,760
Speaker 1: or two. But I agree with you themes, A lot

513
00:26:42,800 --> 00:26:44,760
Speaker 1: of themes are spaghetti at the wall. I think there's

514
00:26:44,800 --> 00:26:47,720
Speaker 1: no doubt about it. Okay, we've come to that part

515
00:26:47,760 --> 00:26:51,560
Speaker 1: of the program where we have to talk about favorite tickers.

516
00:26:52,160 --> 00:26:54,440
Speaker 1: Only this time we're gonna have a little twist on it,

517
00:26:54,520 --> 00:26:58,360
Speaker 1: which is, if you could resurrect one of the tickers

518
00:26:58,560 --> 00:27:01,200
Speaker 1: that ended up in this year's et F graveyard, which

519
00:27:01,200 --> 00:27:06,320
Speaker 1: would it be Todd? What's yours? So the direction I'll

520
00:27:06,520 --> 00:27:10,520
Speaker 1: leverage products and and inverse products just always have great

521
00:27:11,000 --> 00:27:14,560
Speaker 1: tickers around it, and so as a New Yorker with

522
00:27:14,720 --> 00:27:18,040
Speaker 1: an accent, uh family that has accents around to talk

523
00:27:18,520 --> 00:27:22,200
Speaker 1: T A w K. It's just a great ticker. I

524
00:27:22,280 --> 00:27:24,240
Speaker 1: don't know what it's going to come back as. Maybe

525
00:27:24,320 --> 00:27:27,239
Speaker 1: it's a the next five G E T f uh

526
00:27:27,720 --> 00:27:32,120
Speaker 1: the incarnation. Yeah. But but but everybody at home say

527
00:27:32,160 --> 00:27:34,760
Speaker 1: the say the letters T A w K out loud

528
00:27:34,920 --> 00:27:37,120
Speaker 1: with the best New York accent, and you can find

529
00:27:37,840 --> 00:27:40,640
Speaker 1: and and Claire if you could bring something back from

530
00:27:40,680 --> 00:27:44,399
Speaker 1: the grave. What what what's your ticker from this year? Easy?

531
00:27:44,600 --> 00:27:49,000
Speaker 1: It's the dogs d O G s Um. The actual

532
00:27:49,080 --> 00:27:53,600
Speaker 1: fund strategy was really complicated, but the ticker I love

533
00:27:53,880 --> 00:27:56,720
Speaker 1: and I'm a huge dog lover getting a puppy in January,

534
00:27:56,960 --> 00:27:58,840
Speaker 1: so that would be the one for me. It was

535
00:27:59,080 --> 00:28:02,280
Speaker 1: a well timed option there, Um and Eric, how about

536
00:28:02,320 --> 00:28:04,919
Speaker 1: how about for you? I'm gonna stick with what I mean.

537
00:28:04,960 --> 00:28:07,520
Speaker 1: I like directions to the one that I was drawn

538
00:28:07,600 --> 00:28:09,240
Speaker 1: to for the ten years that it was out or

539
00:28:09,280 --> 00:28:12,400
Speaker 1: whatever is gas X to me, this just seems because

540
00:28:12,440 --> 00:28:14,320
Speaker 1: it was always the top of the bottom performer because

541
00:28:14,359 --> 00:28:17,200
Speaker 1: it's a natural gas leverage three times and I just

542
00:28:17,320 --> 00:28:21,080
Speaker 1: always thought of like the CBS brand of pepto bismol

543
00:28:21,760 --> 00:28:24,119
Speaker 1: that you go, you know, by after you've had like

544
00:28:24,160 --> 00:28:26,240
Speaker 1: too much McDonald's or something. I don't know why that

545
00:28:26,400 --> 00:28:29,920
Speaker 1: just gas X just sounds like generic pepto and I

546
00:28:30,040 --> 00:28:34,159
Speaker 1: just always like that. A portion of Trillion just sponsored

547
00:28:34,200 --> 00:28:40,640
Speaker 1: by Alright, Todd Claire. Thank you both for joining us

548
00:28:40,680 --> 00:28:49,120
Speaker 1: a Tralians, Thank you, thanks for having us, Thanks for

549
00:28:49,200 --> 00:28:51,800
Speaker 1: listening to Trillions until next time. You can find us

550
00:28:51,800 --> 00:28:55,520
Speaker 1: on the Bloomberg Terminal, Bloomberg dot com, Apple Podcast, Spotify,

551
00:28:55,920 --> 00:28:58,240
Speaker 1: and wherever else you like to listen. We'd love to

552
00:28:58,320 --> 00:29:01,520
Speaker 1: hear from you. We're on Twitter, I'm at Joel Webber Show,

553
00:29:01,840 --> 00:29:05,680
Speaker 1: He's at Eric Falcunus. You can find Claire balancing at

554
00:29:05,920 --> 00:29:09,960
Speaker 1: c f B Underscore eight ten and Todd at Todd

555
00:29:10,160 --> 00:29:14,040
Speaker 1: c f r A. This episode of Brillions was produced

556
00:29:14,080 --> 00:29:17,960
Speaker 1: by Magnus Hendrickson. Francesco Levie is the head of Bloomberg Podcast.

557
00:29:18,520 --> 00:29:18,800
Speaker 1: Bye