1 00:00:06,080 --> 00:00:08,600 Speaker 1: Welcome trains. I'm Joel Webber and I'm Eric bel Tunis. 2 00:00:12,080 --> 00:00:14,680 Speaker 1: Ericter's been a like a mood in the wind of 3 00:00:14,800 --> 00:00:18,480 Speaker 1: late where things have been getting cheap, cheap and cheaper. 4 00:00:19,480 --> 00:00:22,840 Speaker 1: What's going on? Uh? We we have seen an outbreak 5 00:00:23,040 --> 00:00:24,680 Speaker 1: in the e t f F F war, which by the way, 6 00:00:24,720 --> 00:00:27,160 Speaker 1: has been going on ever since Vanguard was a company 7 00:00:27,800 --> 00:00:29,680 Speaker 1: um and ever since the first t t F came 8 00:00:29,680 --> 00:00:31,800 Speaker 1: out at sp Y came out at twenty basis points 9 00:00:31,800 --> 00:00:34,000 Speaker 1: to sort of tie the Vanguard Index fund. This e 10 00:00:34,080 --> 00:00:36,320 Speaker 1: t F FEW war is nothing new, but what was 11 00:00:36,400 --> 00:00:40,520 Speaker 1: different was the intensity of this particular outbreak. And in fact, 12 00:00:40,560 --> 00:00:42,800 Speaker 1: some people inside e t F the conference we covered 13 00:00:42,800 --> 00:00:44,800 Speaker 1: a couple of months ago, they thought the e t 14 00:00:44,920 --> 00:00:47,519 Speaker 1: f FE war was kind of over and rate is. 15 00:00:47,680 --> 00:00:50,960 Speaker 1: I sort of heard people whispering like, ooh, it's done, 16 00:00:50,960 --> 00:00:55,200 Speaker 1: it's over. Bam. Uh. There was a outbreak like I've 17 00:00:55,240 --> 00:00:59,160 Speaker 1: never seen. We're talking about ten different issuers or shots fired, 18 00:00:59,600 --> 00:01:03,800 Speaker 1: with about twenty different ETFs being affected. And it included 19 00:01:03,840 --> 00:01:07,800 Speaker 1: everything everything from the big guys to the indies. It's 20 00:01:07,840 --> 00:01:11,360 Speaker 1: all there. It was unbelievable and you know, garnered a 21 00:01:11,360 --> 00:01:14,000 Speaker 1: lot of news. It also garnered a lot of reaction. 22 00:01:14,319 --> 00:01:17,199 Speaker 1: You know, I think deep down inside you've got people 23 00:01:17,200 --> 00:01:19,919 Speaker 1: in the fundustry are probably scared that this is really 24 00:01:20,680 --> 00:01:24,880 Speaker 1: wild and scary for everybody's livelihood. Then you had some mockery. 25 00:01:25,200 --> 00:01:28,280 Speaker 1: You know, what's nucks free, steak knives, um, you know 26 00:01:28,360 --> 00:01:31,440 Speaker 1: that's always what you hear. One guy when the first 27 00:01:31,880 --> 00:01:34,960 Speaker 1: shot was fired, which was a zero feetf one guy 28 00:01:34,959 --> 00:01:37,280 Speaker 1: in my Twitter feed a couple of days later said 29 00:01:37,680 --> 00:01:40,360 Speaker 1: how long till they pay you? And then and it 30 00:01:40,360 --> 00:01:43,480 Speaker 1: turns out day later he was, you know, there there 31 00:01:43,480 --> 00:01:45,759 Speaker 1: it was. So that's right, like it went not only 32 00:01:45,959 --> 00:01:49,520 Speaker 1: to zero, but it went below zero. To the fact 33 00:01:49,560 --> 00:01:52,440 Speaker 1: that one issue or basically started to pay you to 34 00:01:52,640 --> 00:01:55,840 Speaker 1: actually hold an ETF. Yeah, this was I think a 35 00:01:55,920 --> 00:01:58,040 Speaker 1: place we all thought we were going to go. But 36 00:01:58,080 --> 00:02:01,000 Speaker 1: I think most people thought pay you would be a 37 00:02:01,000 --> 00:02:03,200 Speaker 1: couple of years down the road. But the fact that 38 00:02:03,240 --> 00:02:05,160 Speaker 1: it came so close on the heels of the zero, 39 00:02:06,240 --> 00:02:09,320 Speaker 1: I think that's what. And then in between you had 40 00:02:09,440 --> 00:02:12,400 Speaker 1: Vanguard in Black Rock and State Street all do their shots. 41 00:02:12,880 --> 00:02:15,000 Speaker 1: Those are more like bombs because those are going to 42 00:02:15,080 --> 00:02:19,720 Speaker 1: really affect some flows. But this was, I get again, 43 00:02:19,880 --> 00:02:23,040 Speaker 1: the most intense two week period of the fee war 44 00:02:23,200 --> 00:02:25,640 Speaker 1: that I've ever seen. Joining us on this episode of 45 00:02:25,639 --> 00:02:29,520 Speaker 1: Trillions is Rachel Evans to help us walk through this 46 00:02:29,680 --> 00:02:36,520 Speaker 1: timeline of the great fee War, this time on Trillians 47 00:02:37,040 --> 00:02:41,560 Speaker 1: the Race for Zero. Rachel, always a pleasure to have you. 48 00:02:41,639 --> 00:02:45,040 Speaker 1: Thanks having me. When you saw this happen and it 49 00:02:45,200 --> 00:02:49,040 Speaker 1: kind of culminated in in late February, what was your 50 00:02:49,120 --> 00:02:51,120 Speaker 1: take on it? Yeah, so I mean as that as 51 00:02:51,160 --> 00:02:53,320 Speaker 1: that kind of said earlier, like we've been seeing this 52 00:02:53,440 --> 00:02:56,960 Speaker 1: fee war developing over the last few years. In many respects, 53 00:02:57,000 --> 00:02:59,560 Speaker 1: this is really nothing new. This kind of cut and 54 00:02:59,680 --> 00:03:02,680 Speaker 1: count a cup, particularly from the big three Black Rock, 55 00:03:02,960 --> 00:03:05,680 Speaker 1: Vanguard and State Street, has really been taking place for 56 00:03:05,720 --> 00:03:08,480 Speaker 1: a long long time. However, what struck me is kind 57 00:03:08,520 --> 00:03:11,080 Speaker 1: of new this time is that really that the diversity 58 00:03:11,160 --> 00:03:14,240 Speaker 1: of players that kind of like suddenly wanted to have 59 00:03:14,360 --> 00:03:17,119 Speaker 1: a crack at lowering price in order to either get 60 00:03:17,120 --> 00:03:21,080 Speaker 1: attention and or lure assets. And it really seems that 61 00:03:21,120 --> 00:03:23,960 Speaker 1: this has become something that is not just for a 62 00:03:24,000 --> 00:03:27,600 Speaker 1: select few large issuers, but something that really everybody wants 63 00:03:27,600 --> 00:03:28,960 Speaker 1: to have a go out. And I think it really 64 00:03:29,000 --> 00:03:32,600 Speaker 1: speaks to exactly how important cost has become within the 65 00:03:32,600 --> 00:03:34,840 Speaker 1: e t F market. You know, whether you're a retail 66 00:03:34,880 --> 00:03:37,760 Speaker 1: investor putting in a few thousand here or there, or 67 00:03:37,760 --> 00:03:40,480 Speaker 1: whether you're an advisor with a millions or billions to 68 00:03:40,520 --> 00:03:44,520 Speaker 1: allocate cost has become something that issuers can can't afford 69 00:03:44,560 --> 00:03:47,600 Speaker 1: to ignore. They have to have something that they can 70 00:03:47,600 --> 00:03:50,640 Speaker 1: show to to those investors that says, hey, you know, 71 00:03:50,720 --> 00:03:53,040 Speaker 1: if you get into this fund, yes the strategy is good, 72 00:03:53,120 --> 00:03:54,680 Speaker 1: Yes we have a good brand. But actually it's also 73 00:03:54,720 --> 00:03:57,120 Speaker 1: not going to cost you much. But isn't this I mean, 74 00:03:57,360 --> 00:04:00,480 Speaker 1: this is a huge business problem. When it's great for 75 00:04:00,520 --> 00:04:04,680 Speaker 1: a consumer like great, everything's free or almost free, what 76 00:04:04,760 --> 00:04:08,360 Speaker 1: does it mean for asset managers? That is the big challenge, right, 77 00:04:08,400 --> 00:04:10,560 Speaker 1: I mean, if you are charging nothing for your funds, 78 00:04:10,560 --> 00:04:14,040 Speaker 1: where do you make a profit? Now? For for some companies, Banker, 79 00:04:14,120 --> 00:04:16,480 Speaker 1: for example, has an interesting business model in which it 80 00:04:16,800 --> 00:04:19,560 Speaker 1: isn't really working for shareholders. It's working very much for 81 00:04:19,720 --> 00:04:22,400 Speaker 1: kind of I guess, the shareholders in its ETFs. Whereas 82 00:04:22,440 --> 00:04:24,440 Speaker 1: you know, for other companies that are publicly listed, you 83 00:04:24,440 --> 00:04:26,440 Speaker 1: know they have shareholders that they are accountable to and 84 00:04:26,440 --> 00:04:28,800 Speaker 1: they do need to generate a profit. So the idea 85 00:04:28,960 --> 00:04:31,520 Speaker 1: is that if you cut two very very low. You 86 00:04:31,560 --> 00:04:33,280 Speaker 1: then either kind of managed to make it up by 87 00:04:33,320 --> 00:04:35,880 Speaker 1: getting lots of assets into those funds and a very 88 00:04:35,960 --> 00:04:38,960 Speaker 1: very low one basis point on a billion dollars, for example, 89 00:04:39,000 --> 00:04:41,919 Speaker 1: it's better than fifty basis points on no billion dollars. 90 00:04:42,160 --> 00:04:43,720 Speaker 1: So in that respect, you can make it up there, 91 00:04:43,920 --> 00:04:47,640 Speaker 1: or you try and potentially upsell by having other products 92 00:04:47,680 --> 00:04:49,680 Speaker 1: that you know, do charge more that you can kind 93 00:04:49,680 --> 00:04:53,200 Speaker 1: of move clients into once they brought those very cheap products. 94 00:04:53,320 --> 00:04:55,160 Speaker 1: There are also a few ways in which you can 95 00:04:55,200 --> 00:04:57,520 Speaker 1: try and make a no cost funds sort of pay 96 00:04:57,600 --> 00:04:59,880 Speaker 1: for itself. They're a little bit more technical, but tend 97 00:04:59,880 --> 00:05:02,520 Speaker 1: to involve, you know, securities lending, lending out the securities 98 00:05:02,560 --> 00:05:04,919 Speaker 1: from within the fund for a fee, and then using 99 00:05:04,960 --> 00:05:07,880 Speaker 1: that to offset the lost revenue from charging nothing. Let 100 00:05:07,960 --> 00:05:11,040 Speaker 1: me jump in here, because you know, the invisible hand 101 00:05:11,040 --> 00:05:14,719 Speaker 1: behind all this is advisors. They switched to a model 102 00:05:14,760 --> 00:05:16,760 Speaker 1: where they get paid as a percentage of the client's 103 00:05:16,800 --> 00:05:19,600 Speaker 1: assets as opposed to getting a commission from the mutual fund. 104 00:05:20,400 --> 00:05:22,400 Speaker 1: So what that did is it kind of left mutual 105 00:05:22,440 --> 00:05:24,800 Speaker 1: funds out and out in the cold, because now that 106 00:05:24,839 --> 00:05:27,359 Speaker 1: you're getting a percentage of your client's assets. Of course, 107 00:05:27,360 --> 00:05:30,640 Speaker 1: you want cheap stuff, right, But advisors may be creating 108 00:05:30,640 --> 00:05:34,040 Speaker 1: a monster that when may come back and haunt them 109 00:05:34,080 --> 00:05:36,840 Speaker 1: because if they're so cost obsessed to the point where 110 00:05:36,839 --> 00:05:40,200 Speaker 1: they're going to drive the issuer's fees down to nothing, 111 00:05:40,839 --> 00:05:43,480 Speaker 1: these issuers who can't sell a fund over ten basis 112 00:05:43,520 --> 00:05:47,000 Speaker 1: points may start looking at their one percent fees and 113 00:05:47,040 --> 00:05:48,640 Speaker 1: be like, hm, that looks like a good business to 114 00:05:48,640 --> 00:05:51,560 Speaker 1: get into. And so advisors, for the most part haven't 115 00:05:52,000 --> 00:05:55,120 Speaker 1: felt anything close to what asset managers are going through 116 00:05:55,160 --> 00:05:57,719 Speaker 1: with their fees. So you may find asset managers start 117 00:05:57,720 --> 00:06:00,920 Speaker 1: to get closer and closer to the end customer and 118 00:06:00,960 --> 00:06:03,240 Speaker 1: become advisors themselves. You've already seen it with Vanguard and 119 00:06:03,279 --> 00:06:06,799 Speaker 1: Schwab black Rocks becoming like a technology provider to advisors 120 00:06:06,800 --> 00:06:08,960 Speaker 1: to try to make money from them in different ways. 121 00:06:09,360 --> 00:06:12,320 Speaker 1: And this is also you know when Fidelity did their 122 00:06:12,400 --> 00:06:15,640 Speaker 1: zero about a year ago. Since then, the index of 123 00:06:15,680 --> 00:06:19,800 Speaker 1: asset managers is down, and this is when the S 124 00:06:19,839 --> 00:06:23,920 Speaker 1: and P is up six percent, so that's under performance 125 00:06:24,040 --> 00:06:27,039 Speaker 1: of stocks of asset managers. So you can see that 126 00:06:27,080 --> 00:06:30,400 Speaker 1: Wall Street is really onto this, even though the revenues 127 00:06:30,440 --> 00:06:34,000 Speaker 1: haven't been hurt that badly. Because of the bull market's 128 00:06:34,000 --> 00:06:36,920 Speaker 1: been nice for their assets and revenue. This is sort 129 00:06:36,960 --> 00:06:41,120 Speaker 1: of them looking forward and saying these companies are in trouble. Yeah, 130 00:06:41,200 --> 00:06:42,800 Speaker 1: that's gonna be really interesting, you know, when we do 131 00:06:42,880 --> 00:06:45,560 Speaker 1: get a bear market, given that things are already at 132 00:06:45,560 --> 00:06:48,680 Speaker 1: this point where so many fund issues have had to 133 00:06:48,839 --> 00:06:51,400 Speaker 1: lower their fees towards zero, and that has been very 134 00:06:51,480 --> 00:06:53,800 Speaker 1: much done on the basis that assets will continue coming 135 00:06:53,800 --> 00:06:56,120 Speaker 1: into these funds and these funds will continue growing to 136 00:06:56,160 --> 00:06:58,000 Speaker 1: allow them to make a profit. If we start to 137 00:06:58,040 --> 00:07:00,719 Speaker 1: see a bear market, yes, et F may well become 138 00:07:00,800 --> 00:07:02,680 Speaker 1: kind of a place where people can hide out and 139 00:07:02,960 --> 00:07:05,479 Speaker 1: try and kind of ride out the storm. But it 140 00:07:05,560 --> 00:07:07,880 Speaker 1: does make it much harder for those asset managers to 141 00:07:08,000 --> 00:07:10,360 Speaker 1: keep blowering costs and to make a profit. It could 142 00:07:10,400 --> 00:07:13,440 Speaker 1: become quite nasty when we do see see that bad market. Yeah. 143 00:07:13,440 --> 00:07:15,760 Speaker 1: I mean most people are calling for an intense period 144 00:07:15,800 --> 00:07:18,600 Speaker 1: of consolidation, and I think a bear market may trigger that. 145 00:07:19,280 --> 00:07:22,800 Speaker 1: In my opinion, you know, I think these brave souls 146 00:07:22,840 --> 00:07:24,440 Speaker 1: in the E t F Terror Dome as I call it, 147 00:07:24,480 --> 00:07:27,520 Speaker 1: that are fighting vanguard and you know, losing limbs left 148 00:07:27,520 --> 00:07:29,760 Speaker 1: and right. I think they will be rewarded In the 149 00:07:29,760 --> 00:07:33,400 Speaker 1: long run, I think these companies, because they have organic growth, 150 00:07:33,520 --> 00:07:36,920 Speaker 1: they have things people want, which is cheap ETFs um. 151 00:07:37,000 --> 00:07:38,800 Speaker 1: On the other side of a bear market, they may 152 00:07:38,840 --> 00:07:41,520 Speaker 1: find themselves the buyer of some of these large asset 153 00:07:41,520 --> 00:07:45,000 Speaker 1: managers that have were brand names for years. So companies 154 00:07:45,040 --> 00:07:49,200 Speaker 1: like Black Rock, State Street Invest, Go Schwab. I think 155 00:07:49,240 --> 00:07:51,440 Speaker 1: their names could be around in ten or twenty years. 156 00:07:52,080 --> 00:07:54,320 Speaker 1: As much as the pain they're feeling now, they may 157 00:07:54,320 --> 00:07:57,480 Speaker 1: be rewarded down the road in terms of growing through 158 00:07:57,520 --> 00:08:01,000 Speaker 1: acquisition and getting scale that way. Okay, I want to 159 00:08:01,040 --> 00:08:05,560 Speaker 1: walk through this leaderst fee war and and this two 160 00:08:05,560 --> 00:08:08,680 Speaker 1: week period that we've been talking about. What was the 161 00:08:08,680 --> 00:08:11,680 Speaker 1: first shot across the bow? So so the first shot 162 00:08:11,720 --> 00:08:14,200 Speaker 1: across the bow was really so far. This is the 163 00:08:14,280 --> 00:08:17,640 Speaker 1: the online lender you've probably received through the mail various 164 00:08:17,720 --> 00:08:20,960 Speaker 1: kind of offers to refinance your student debt. Well, these 165 00:08:21,000 --> 00:08:23,440 Speaker 1: guys now have their own kind of like asset management 166 00:08:23,440 --> 00:08:26,400 Speaker 1: type business where they're trying to encourage people to to 167 00:08:26,480 --> 00:08:28,720 Speaker 1: let them sort of invest their money on their behalf 168 00:08:28,760 --> 00:08:31,160 Speaker 1: as well as be financing their loans. So one of 169 00:08:31,200 --> 00:08:33,480 Speaker 1: the things that they're doing as part of that is 170 00:08:33,480 --> 00:08:35,920 Speaker 1: that they are launching these two e t fs that 171 00:08:35,960 --> 00:08:38,600 Speaker 1: are going to be zero fee or at least zero 172 00:08:38,679 --> 00:08:41,280 Speaker 1: fee for a certain period in time. The way they're 173 00:08:41,320 --> 00:08:43,920 Speaker 1: doing this is rather than price the product at zero 174 00:08:43,960 --> 00:08:46,839 Speaker 1: basis points for for the life of the products, they're 175 00:08:46,840 --> 00:08:49,360 Speaker 1: actually doing a fee waiver, so the management fee will 176 00:08:49,440 --> 00:08:52,679 Speaker 1: kick in potentially in a year's time. And so this 177 00:08:52,720 --> 00:08:54,880 Speaker 1: was that the kind of first real shot across the bow. 178 00:08:55,000 --> 00:08:57,360 Speaker 1: This came out in late February, and it really shows 179 00:08:57,400 --> 00:08:59,199 Speaker 1: I think kind of in terms of you know, these 180 00:08:59,240 --> 00:09:01,439 Speaker 1: different theater as of war, if you will, of kind 181 00:09:01,440 --> 00:09:03,720 Speaker 1: of like how the this price always kind of being four. 182 00:09:03,960 --> 00:09:05,760 Speaker 1: This is really that this is a new entrance that 183 00:09:05,840 --> 00:09:07,720 Speaker 1: kind of needs come into the market. They need to 184 00:09:07,760 --> 00:09:09,960 Speaker 1: make a splash, and this is a way to kind 185 00:09:10,000 --> 00:09:13,079 Speaker 1: of like get headlines and get people interested in their products, 186 00:09:13,120 --> 00:09:15,040 Speaker 1: you know, when they don't necessarily have a background in 187 00:09:15,080 --> 00:09:18,160 Speaker 1: asset management, especially when it has a younger audience. Exactly 188 00:09:18,200 --> 00:09:20,679 Speaker 1: absolutely a couple of things on so far. I do 189 00:09:20,760 --> 00:09:23,199 Speaker 1: think this one isn't going to become big business. I 190 00:09:23,240 --> 00:09:25,760 Speaker 1: think they'll probably service their own clients with this product 191 00:09:25,920 --> 00:09:28,559 Speaker 1: or these products that are zero I don't know how 192 00:09:28,559 --> 00:09:31,800 Speaker 1: many outside investors they'll get a couple of reasons. One, 193 00:09:31,840 --> 00:09:33,520 Speaker 1: they're not that well known. You know, they're not a 194 00:09:33,559 --> 00:09:37,240 Speaker 1: brand name like black Rock or Vanguard or JP morgan UM. 195 00:09:37,320 --> 00:09:39,640 Speaker 1: The second thing is that the zero fee funds they're 196 00:09:39,679 --> 00:09:42,880 Speaker 1: launching aren't pure beta or you know, it's not like 197 00:09:42,920 --> 00:09:45,160 Speaker 1: the SNP or the total market. They're actually a sort 198 00:09:45,160 --> 00:09:47,760 Speaker 1: of a proprietary index that has a growth tilt. I 199 00:09:47,800 --> 00:09:50,760 Speaker 1: think they think the millennial clients are more aggressive, and 200 00:09:50,800 --> 00:09:53,319 Speaker 1: I get that. So you know, unless you're pure beta, 201 00:09:53,480 --> 00:09:55,160 Speaker 1: you're not going to get mass money. I mean you're 202 00:09:55,160 --> 00:09:58,560 Speaker 1: you're obviously looking for a smaller audience, uh that way. 203 00:09:58,600 --> 00:10:01,560 Speaker 1: So I don't know if that'll be big, but it's 204 00:10:01,559 --> 00:10:05,720 Speaker 1: certainly got the headlines. UM. It's something that I think 205 00:10:05,760 --> 00:10:08,080 Speaker 1: will have ripple effects. And but beyond that, it is 206 00:10:08,120 --> 00:10:11,320 Speaker 1: interesting that it shows that outside companies that have nothing 207 00:10:11,360 --> 00:10:13,440 Speaker 1: to do with the t F s UM now have 208 00:10:13,559 --> 00:10:15,880 Speaker 1: a quick way to launch a free t F to 209 00:10:15,880 --> 00:10:17,840 Speaker 1: serve their existing clients, because there's been some calls that 210 00:10:17,880 --> 00:10:21,520 Speaker 1: tech companies may get into this business, and so far 211 00:10:21,640 --> 00:10:25,280 Speaker 1: went through a UM somebody else's exemptive relief. So it's 212 00:10:25,280 --> 00:10:28,080 Speaker 1: almost like they took this fast track to get it done, 213 00:10:28,559 --> 00:10:30,760 Speaker 1: and you may find um E t f s being 214 00:10:30,800 --> 00:10:33,960 Speaker 1: issued to service small groups of clients, and that way 215 00:10:33,960 --> 00:10:35,640 Speaker 1: they don't have to pay Vanguard to black Rock. I 216 00:10:35,679 --> 00:10:38,120 Speaker 1: actually think that I kind of disagree with you. I think, 217 00:10:38,160 --> 00:10:40,840 Speaker 1: actually this is a really interesting strategy because you have 218 00:10:40,920 --> 00:10:44,160 Speaker 1: a built in audience and you've just got them basically 219 00:10:44,200 --> 00:10:46,440 Speaker 1: out of their debt, and now it's like, hey, as 220 00:10:46,480 --> 00:10:48,199 Speaker 1: long as we get you out of debt, do you 221 00:10:48,240 --> 00:10:52,600 Speaker 1: wanna help make money? Yeah? But the question is, again, 222 00:10:52,640 --> 00:10:55,480 Speaker 1: if you're looking at the big, gigantic sort of ocean 223 00:10:55,520 --> 00:11:00,560 Speaker 1: of assets, um is an advisor in Texas gonna put 224 00:11:00,600 --> 00:11:02,640 Speaker 1: their clients money in so Far and have to explain 225 00:11:02,679 --> 00:11:05,000 Speaker 1: what that is rather than say black Rock or shall 226 00:11:05,040 --> 00:11:07,880 Speaker 1: you know what I mean? It's maybe if so Far 227 00:11:07,960 --> 00:11:09,720 Speaker 1: grows and grows. But I just think this is a 228 00:11:09,760 --> 00:11:13,720 Speaker 1: product for their own audience. That's it. I actually think 229 00:11:13,760 --> 00:11:19,480 Speaker 1: that's advantageous. But then the next day of February what happened. 230 00:11:19,960 --> 00:11:23,000 Speaker 1: So we we've already just heard about the new entrance. 231 00:11:23,240 --> 00:11:27,000 Speaker 1: This was really a case of the old established guard 232 00:11:27,080 --> 00:11:29,440 Speaker 1: kind of like coming out with with their latest round 233 00:11:29,440 --> 00:11:31,400 Speaker 1: of feed cuts. This was Vanguard. Vanguard came out and 234 00:11:31,440 --> 00:11:34,960 Speaker 1: cut by one or two basis points fees on about 235 00:11:35,000 --> 00:11:38,480 Speaker 1: ten ETFs. Of course, they didn't finish off that week necessarily, 236 00:11:38,600 --> 00:11:40,160 Speaker 1: and sitting on that, they actually came out and then 237 00:11:40,200 --> 00:11:43,320 Speaker 1: cut a few basis points off another three funds, three 238 00:11:43,320 --> 00:11:46,680 Speaker 1: big funds, including their SMP five hundred funds that became 239 00:11:46,760 --> 00:11:49,840 Speaker 1: the lowest cost SMP five hundred focused e t F 240 00:11:49,920 --> 00:11:51,640 Speaker 1: with that fee cut. So that was kind of a 241 00:11:51,640 --> 00:11:54,120 Speaker 1: really interesting example I guess of kind of how I 242 00:11:54,120 --> 00:11:56,079 Speaker 1: sort of think of, like, you know, the US versus 243 00:11:56,080 --> 00:11:58,079 Speaker 1: the Soviet Union in this kind of price wall. I mean, 244 00:11:58,080 --> 00:11:59,839 Speaker 1: this is kind of like where the real sort of 245 00:12:00,360 --> 00:12:03,720 Speaker 1: arms races going on between Vanguard and Black Black and Vanguard. 246 00:12:03,840 --> 00:12:06,480 Speaker 1: The two tend to kind of like they won't tell 247 00:12:06,480 --> 00:12:09,720 Speaker 1: you necessarily that they're watching that their their rivals that closely, 248 00:12:09,840 --> 00:12:13,600 Speaker 1: but they're very aware exactly. Yeah, there are some interesting 249 00:12:13,640 --> 00:12:16,160 Speaker 1: timings that on these things. Um So, Vanguard very much 250 00:12:16,200 --> 00:12:17,880 Speaker 1: came out and kind of like put down a sort 251 00:12:17,880 --> 00:12:19,640 Speaker 1: of market and said, you know, here, here we have 252 00:12:19,679 --> 00:12:21,960 Speaker 1: the cheapest kind of S and P fivet F now 253 00:12:22,000 --> 00:12:23,480 Speaker 1: out there. Um So that was kind of like an 254 00:12:23,480 --> 00:12:26,400 Speaker 1: example I guess of of perhaps more of the type 255 00:12:26,400 --> 00:12:28,959 Speaker 1: of feewall that we've been coming to expect rather than 256 00:12:29,160 --> 00:12:32,440 Speaker 1: the new guys. And that's interesting because Vanguard hasn't been 257 00:12:32,480 --> 00:12:34,839 Speaker 1: the cheapest in the S and P five hundred, right, 258 00:12:35,000 --> 00:12:37,160 Speaker 1: They've they've struggled to kind of always be lower than 259 00:12:37,200 --> 00:12:39,160 Speaker 1: anybody else there. Yes, I mean it's kind of an 260 00:12:39,200 --> 00:12:41,080 Speaker 1: interesting one because, like you know, you have all these 261 00:12:41,120 --> 00:12:43,760 Speaker 1: broad stock market funds and Vanguard has always kind of 262 00:12:43,760 --> 00:12:46,600 Speaker 1: been towards the top there. But it's very much been 263 00:12:46,679 --> 00:12:49,720 Speaker 1: kind of this question of people changing positions every few months. 264 00:12:49,720 --> 00:12:52,000 Speaker 1: You know, you've got sort of Black Rock and Vanguard 265 00:12:52,080 --> 00:12:54,120 Speaker 1: kind of vuying like one's one's up on the other 266 00:12:54,160 --> 00:12:55,920 Speaker 1: one month, one's up on the other the next month. 267 00:12:56,080 --> 00:12:58,040 Speaker 1: You've got State Street making a push to get into 268 00:12:58,080 --> 00:13:00,480 Speaker 1: that space, not so much with their and P five 269 00:13:00,559 --> 00:13:03,600 Speaker 1: hundred fund spy that's actually ready to be expensive, but 270 00:13:03,640 --> 00:13:06,440 Speaker 1: with broad stock market funds. They have also been in 271 00:13:06,480 --> 00:13:09,240 Speaker 1: that space. And Schwab, which is a new entrant into 272 00:13:09,240 --> 00:13:12,720 Speaker 1: the space, has been incredibly aggressive at launching and cutting 273 00:13:12,800 --> 00:13:15,600 Speaker 1: fees to actually be in that space and very much 274 00:13:15,600 --> 00:13:18,480 Speaker 1: alongside Black rocome Banguard at the top there. Yeah, this 275 00:13:18,559 --> 00:13:21,240 Speaker 1: is kN Congrese Godzilla, right, So this is and this 276 00:13:21,280 --> 00:13:24,480 Speaker 1: will move billions if not hundreds of billions of dollars. 277 00:13:24,480 --> 00:13:27,319 Speaker 1: This is big boy stuff here. The Vanguard case is 278 00:13:27,360 --> 00:13:30,600 Speaker 1: interesting because and what Rachel just described we referred to 279 00:13:30,600 --> 00:13:33,000 Speaker 1: as the core wars, because these are products that would 280 00:13:33,000 --> 00:13:35,040 Speaker 1: make the core of your portfolio, which is where most 281 00:13:35,080 --> 00:13:37,800 Speaker 1: of the money in America is. Right. So when they 282 00:13:37,880 --> 00:13:41,040 Speaker 1: cut one bib, when i VV came out and went 283 00:13:41,240 --> 00:13:45,280 Speaker 1: one bit lower than VOO back in, i VV immediately 284 00:13:45,320 --> 00:13:48,679 Speaker 1: doubled its rate of flows and became the biggest flow getter, 285 00:13:48,720 --> 00:13:53,520 Speaker 1: and since then and got separation from VO from twenty 286 00:13:53,559 --> 00:13:56,520 Speaker 1: billion to sixty billion. Now VO comes out cuts one 287 00:13:56,760 --> 00:14:00,680 Speaker 1: bit lower than i VV two weeks ago, and since 288 00:14:00,720 --> 00:14:03,360 Speaker 1: then it's had its biggest weekend flows. Ever. We can't 289 00:14:03,400 --> 00:14:05,839 Speaker 1: prove that's related, but I wouldn't be surprised if you 290 00:14:05,880 --> 00:14:09,320 Speaker 1: see VOO get a nice bump out of this, because 291 00:14:09,640 --> 00:14:12,480 Speaker 1: we've seen the power of of one basis points one 292 00:14:12,520 --> 00:14:16,080 Speaker 1: basis point in this case, especially in the SMP five hundred. 293 00:14:16,080 --> 00:14:20,280 Speaker 1: But overall, the core wars are a rough, brutal place 294 00:14:20,320 --> 00:14:22,400 Speaker 1: to be. But if you just take the four corey 295 00:14:22,480 --> 00:14:24,520 Speaker 1: tfs from black Rock and you compare them to the 296 00:14:24,520 --> 00:14:27,840 Speaker 1: four corey ETFs of Vanguard, those eight e t f 297 00:14:27,920 --> 00:14:30,960 Speaker 1: s alone have taken in the inflows in the past 298 00:14:30,960 --> 00:14:34,040 Speaker 1: three years, even though they only made up eighteen percent 299 00:14:34,240 --> 00:14:36,400 Speaker 1: ish of the assets at the beginning of that time. 300 00:14:36,400 --> 00:14:38,680 Speaker 1: In other words, that is where a lot of the 301 00:14:38,720 --> 00:14:41,440 Speaker 1: money is flowing. UM again, that this is a real 302 00:14:42,000 --> 00:14:44,160 Speaker 1: assets that that you know, you see at the top 303 00:14:44,200 --> 00:14:46,280 Speaker 1: of the leaderboard year in and year out. I have said, 304 00:14:46,400 --> 00:14:48,640 Speaker 1: I really liked a stat that Blamebag Intelligence had at 305 00:14:48,640 --> 00:14:50,480 Speaker 1: the end of last year, which was that I think 306 00:14:50,560 --> 00:14:53,920 Speaker 1: nine percent of flows into index funds when you look 307 00:14:53,960 --> 00:14:56,760 Speaker 1: at ets and mutual funds have gone into products charging 308 00:14:56,840 --> 00:14:59,440 Speaker 1: less than twenty basis points. I mean, that's crazy. I 309 00:14:59,440 --> 00:15:01,920 Speaker 1: mean that show to you quite like quiet how imports 310 00:15:02,000 --> 00:15:10,960 Speaker 1: into it is to have a cheap product. Okay, the 311 00:15:11,000 --> 00:15:13,960 Speaker 1: next turn of this grew happened on March first, Eric. 312 00:15:14,000 --> 00:15:17,480 Speaker 1: What happened then March first was an interesting one UM 313 00:15:17,480 --> 00:15:20,760 Speaker 1: State Street. Quietly, this was in the shadow of Vanguard. 314 00:15:20,760 --> 00:15:24,440 Speaker 1: I thought said they were gonna UM convert C junks, 315 00:15:25,000 --> 00:15:28,000 Speaker 1: J and K, which was a crossover sort of double 316 00:15:28,040 --> 00:15:30,640 Speaker 1: B bond et F they had that wasn't getting much 317 00:15:30,680 --> 00:15:33,600 Speaker 1: traction because of the products had sort of done better. 318 00:15:34,000 --> 00:15:36,680 Speaker 1: They're converting it to a broad high yield product. But 319 00:15:36,760 --> 00:15:38,520 Speaker 1: by the way, they're going to slash the fee to 320 00:15:38,720 --> 00:15:42,760 Speaker 1: fifteen basis points. This was quiet, but in any other 321 00:15:42,960 --> 00:15:46,240 Speaker 1: you know, time period, you're essentially seeing State Street a 322 00:15:46,240 --> 00:15:48,760 Speaker 1: major issue or come out with the cheapest junk bond 323 00:15:48,760 --> 00:15:52,480 Speaker 1: etf on the market by a good measure too. And 324 00:15:52,560 --> 00:15:55,440 Speaker 1: we've seen that. Deutsche Bank, I think two years ago 325 00:15:55,560 --> 00:15:58,680 Speaker 1: came out with h y LB, which was at the 326 00:15:58,720 --> 00:16:01,360 Speaker 1: time undercut everybody and fees in the junk bond market 327 00:16:01,880 --> 00:16:05,160 Speaker 1: because it was twenty basis points. So here comes State Street. 328 00:16:05,200 --> 00:16:07,280 Speaker 1: Now as of April one is going to have a 329 00:16:07,320 --> 00:16:11,720 Speaker 1: broad high yield TF for fifteen um. I can't imagine 330 00:16:11,760 --> 00:16:14,160 Speaker 1: this doesn't do well. It's a big issuer. And we've 331 00:16:14,160 --> 00:16:16,800 Speaker 1: seen the power of cheap in the junk bond space. 332 00:16:17,080 --> 00:16:19,240 Speaker 1: Most people who are traders are going to use H 333 00:16:19,360 --> 00:16:21,479 Speaker 1: y G and J and K. They just want that liquidity. 334 00:16:21,520 --> 00:16:24,480 Speaker 1: But there is a group of longer term investors who 335 00:16:24,520 --> 00:16:28,440 Speaker 1: are really going to respond to those uh that those 336 00:16:28,480 --> 00:16:30,960 Speaker 1: low fees, and I think H C, J and K. 337 00:16:31,400 --> 00:16:33,000 Speaker 1: Let's look out for New Year to probably have a 338 00:16:33,000 --> 00:16:36,240 Speaker 1: billion dollars. I'm really curious though, to see how Deutsche 339 00:16:36,240 --> 00:16:39,040 Speaker 1: Bank and black Rock potentially react to this, because there 340 00:16:39,080 --> 00:16:42,040 Speaker 1: was a really entertaining, from my perspective, a little spat 341 00:16:42,080 --> 00:16:43,800 Speaker 1: that kind of like flared up in this fee wall. 342 00:16:44,200 --> 00:16:45,960 Speaker 1: I think it was last year, may have been the 343 00:16:46,000 --> 00:16:48,760 Speaker 1: year before. Time is flying past, but basically what once 344 00:16:48,840 --> 00:16:50,920 Speaker 1: h y LB came out and did kind of undercut 345 00:16:50,920 --> 00:16:53,400 Speaker 1: the rest of the market. Black Rock came out with 346 00:16:53,400 --> 00:16:56,360 Speaker 1: this new broad high yield fund. I think the tackle 347 00:16:56,520 --> 00:16:58,800 Speaker 1: was U s h Y. Does that sound right, Eric, Yes, 348 00:16:58,880 --> 00:17:02,800 Speaker 1: that's the that's the one that's like double the securities 349 00:17:02,840 --> 00:17:04,719 Speaker 1: of h YG but it's still broad and sort of 350 00:17:04,840 --> 00:17:06,919 Speaker 1: market exactly. But anyway, they came out with that, so 351 00:17:07,000 --> 00:17:08,880 Speaker 1: that was that was cheaper, and then Deutsche came out 352 00:17:08,920 --> 00:17:10,880 Speaker 1: and cut the fee on h y l B two 353 00:17:10,920 --> 00:17:12,879 Speaker 1: it's to kind of undercut U s h Y. So 354 00:17:12,960 --> 00:17:15,360 Speaker 1: I'm curious to see kind of like whether this fifteen 355 00:17:15,359 --> 00:17:18,800 Speaker 1: basis point sort of shot across the bow actually prompts 356 00:17:19,200 --> 00:17:21,560 Speaker 1: black Rock or Deutsche has come out and try and 357 00:17:21,600 --> 00:17:24,240 Speaker 1: be the cheapest again, or whether they're prepared to, you know, 358 00:17:24,320 --> 00:17:26,040 Speaker 1: take the fact that they've managed to get decent number 359 00:17:26,040 --> 00:17:27,560 Speaker 1: of assets into h y l B and kind of 360 00:17:27,600 --> 00:17:30,160 Speaker 1: sit on that and assume that that money will keep 361 00:17:30,200 --> 00:17:32,200 Speaker 1: coming in now that they've reached that kind of landmark. 362 00:17:32,480 --> 00:17:35,320 Speaker 1: And what's interesting is what Spiders really doing here, and 363 00:17:35,320 --> 00:17:38,280 Speaker 1: they've done it over and over, is in a way 364 00:17:38,359 --> 00:17:40,800 Speaker 1: mirror what black Rock did, which was pretty genius. Back 365 00:17:40,840 --> 00:17:43,000 Speaker 1: in the day. Black Girl was getting its lunch eaten 366 00:17:43,040 --> 00:17:46,480 Speaker 1: by Vanguard, so it said, hey, let's instead of we 367 00:17:46,520 --> 00:17:48,600 Speaker 1: know we've got these liquid products that traders want and 368 00:17:48,600 --> 00:17:50,280 Speaker 1: they don't care what the fee is, Let's keep those 369 00:17:50,280 --> 00:17:53,080 Speaker 1: there and we'll come out with a core series. So 370 00:17:53,119 --> 00:17:55,800 Speaker 1: they've come up with similar products that do similar things, 371 00:17:55,800 --> 00:17:58,120 Speaker 1: but they're way cheaper. Their priced at Van Guardian level. 372 00:17:58,200 --> 00:18:01,320 Speaker 1: So Spider is keeping J and K, which I think 373 00:18:01,359 --> 00:18:05,119 Speaker 1: is forty BIPs and now they've got their sort of 374 00:18:05,160 --> 00:18:08,040 Speaker 1: core series version with C junk and that's what black 375 00:18:08,119 --> 00:18:10,080 Speaker 1: Rock has with h Y G and U S h Y. 376 00:18:10,240 --> 00:18:12,480 Speaker 1: So a lot of these issues are started getting with 377 00:18:12,520 --> 00:18:14,760 Speaker 1: the program of let's keep our liquid ones at the 378 00:18:14,840 --> 00:18:18,040 Speaker 1: higher fee because traders don't care what it costs, and 379 00:18:18,080 --> 00:18:20,919 Speaker 1: then we'll have these lower ones for these costs obsessed advisors. 380 00:18:21,760 --> 00:18:24,639 Speaker 1: And what's this done. I mean, look, we're a couple 381 00:18:25,440 --> 00:18:29,440 Speaker 1: shots into this. This full on cost cutting war here. 382 00:18:29,840 --> 00:18:32,600 Speaker 1: What's the mood like by this point that you guys 383 00:18:32,640 --> 00:18:35,480 Speaker 1: can kind of discern. I think people are starting to 384 00:18:35,480 --> 00:18:37,679 Speaker 1: sort of quake a little bit in their boots. And 385 00:18:37,680 --> 00:18:39,400 Speaker 1: when you start to see kind of like this happening 386 00:18:39,560 --> 00:18:42,520 Speaker 1: across such a variety of different products, it makes you 387 00:18:42,520 --> 00:18:44,600 Speaker 1: start wondering, like, you know, you start looking over your shoulder, 388 00:18:44,640 --> 00:18:46,440 Speaker 1: who's next, Who's going to come up, come out, Who's 389 00:18:46,480 --> 00:18:48,720 Speaker 1: going to undercut which products? So I think there's a 390 00:18:48,720 --> 00:18:51,119 Speaker 1: lot of people, you know, on the sidelines kind of 391 00:18:51,160 --> 00:18:54,240 Speaker 1: talking to their their fund boards, talking to others in 392 00:18:54,280 --> 00:18:55,720 Speaker 1: the market, and trying to get a sense of like 393 00:18:56,160 --> 00:18:58,760 Speaker 1: where the right prices for their products at the moment. 394 00:18:58,760 --> 00:19:00,760 Speaker 1: I mean, no, no an issue is ever going to 395 00:19:00,840 --> 00:19:02,879 Speaker 1: tell you before that they come out and cut that 396 00:19:02,920 --> 00:19:04,919 Speaker 1: they're thinking about cutting it. It doesn't have it a 397 00:19:04,920 --> 00:19:06,520 Speaker 1: good ring to it. But I think there's a lot 398 00:19:06,560 --> 00:19:08,600 Speaker 1: of kind of conversations going on behind the scenes as 399 00:19:08,640 --> 00:19:11,720 Speaker 1: to whether this kind of like resets the dial for 400 00:19:11,800 --> 00:19:13,800 Speaker 1: what you can actually ask for these types of products, 401 00:19:14,040 --> 00:19:17,600 Speaker 1: and and are people seeing any glimpses of success, because 402 00:19:17,680 --> 00:19:20,479 Speaker 1: success would look like what inflow right, Well, it's it's 403 00:19:20,600 --> 00:19:22,800 Speaker 1: Eric's point. I mean like Voo which did cut. That's 404 00:19:22,800 --> 00:19:25,119 Speaker 1: the the SMP five D product that Vanguard runs, and 405 00:19:25,160 --> 00:19:28,120 Speaker 1: that had a four billion dollar plus week, and last 406 00:19:28,160 --> 00:19:30,760 Speaker 1: week was a bit of an odd week for for flows. 407 00:19:30,800 --> 00:19:34,000 Speaker 1: It's what we call quadruple witching, which has a very 408 00:19:34,080 --> 00:19:35,800 Speaker 1: nice ring to it, but basically just means that there's 409 00:19:35,800 --> 00:19:38,320 Speaker 1: an awful lot of futures contracts and an options contracts 410 00:19:38,320 --> 00:19:41,240 Speaker 1: expiring around the same time. It can fuel some flows 411 00:19:41,280 --> 00:19:43,840 Speaker 1: and some index rebalance things that happened then too, So 412 00:19:43,840 --> 00:19:46,080 Speaker 1: there's a little hard to kind of like disaggregate the 413 00:19:46,119 --> 00:19:49,680 Speaker 1: flows from from all of that kind of activity. However, 414 00:19:50,080 --> 00:19:51,760 Speaker 1: the fact that this was a record week for for 415 00:19:51,800 --> 00:19:53,760 Speaker 1: the fund and it came, you know, just a couple 416 00:19:53,760 --> 00:19:56,600 Speaker 1: of weeks after that FEKA does certainly suggest that they 417 00:19:56,600 --> 00:19:59,720 Speaker 1: are seeing some early success there. Okay, we're in early March, 418 00:20:00,240 --> 00:20:03,680 Speaker 1: March fifth, March seventh. What happens, So this is kind 419 00:20:03,680 --> 00:20:06,040 Speaker 1: of like where things start to get a bit thematic. 420 00:20:06,320 --> 00:20:08,200 Speaker 1: So we're kind of talking so BEFO, I've been talking 421 00:20:08,200 --> 00:20:11,359 Speaker 1: about kind of these broad exposures, so broad equity exposure 422 00:20:11,480 --> 00:20:14,359 Speaker 1: or broad kind of like debt high yield exposure. This 423 00:20:14,400 --> 00:20:15,879 Speaker 1: is where the fee will starts to kind of like 424 00:20:15,960 --> 00:20:18,640 Speaker 1: really sort of drill down into some of these more nuanced, 425 00:20:18,720 --> 00:20:21,840 Speaker 1: niche kind of products. So Defiance, which is a relatively 426 00:20:21,880 --> 00:20:25,600 Speaker 1: new issue, it comes out with a five G focused ETF, 427 00:20:25,680 --> 00:20:28,439 Speaker 1: so this is looking kind of the next generation of 428 00:20:28,520 --> 00:20:32,439 Speaker 1: smartphones and of communications. They're charging thirty basis points for that, 429 00:20:32,440 --> 00:20:35,280 Speaker 1: which in the thematic spaces is pretty down low. The 430 00:20:35,280 --> 00:20:38,560 Speaker 1: theme space is interesting. Thirty BIPs, you know, that's like 431 00:20:38,680 --> 00:20:41,320 Speaker 1: coming out with a broad based ETF at like four. 432 00:20:41,359 --> 00:20:44,840 Speaker 1: I mean, that is extremely low. The average thematic et 433 00:20:45,000 --> 00:20:47,920 Speaker 1: F fee is sixty two basis points. But even when 434 00:20:47,960 --> 00:20:50,280 Speaker 1: you asset weighted, typically you get to a number half that. 435 00:20:50,359 --> 00:20:54,680 Speaker 1: But the asset weighted average is sixty. So a thematic 436 00:20:54,720 --> 00:20:58,760 Speaker 1: ETF doesn't really need to go that hardcore. The problem 437 00:20:58,880 --> 00:21:02,159 Speaker 1: is once of THETF hits and if you charge like 438 00:21:02,200 --> 00:21:07,080 Speaker 1: say sixties seventy, black Rock, Goldman and these other big 439 00:21:07,119 --> 00:21:09,479 Speaker 1: issues are going to smell some money, They're gonna come 440 00:21:09,480 --> 00:21:12,160 Speaker 1: in and undercut you. So I think this is Defiance 441 00:21:12,200 --> 00:21:15,280 Speaker 1: his way of spraying black rock repellent on the e 442 00:21:15,359 --> 00:21:17,520 Speaker 1: t F. And just I've seen this before a lot 443 00:21:17,520 --> 00:21:19,800 Speaker 1: of issues just look into the future and they'll go 444 00:21:20,520 --> 00:21:22,879 Speaker 1: you know, what the hell with it, Let's just go 445 00:21:23,000 --> 00:21:25,359 Speaker 1: to where we're never'll be gonna go anyway, and this 446 00:21:25,400 --> 00:21:28,000 Speaker 1: way we can save ourselves all the trouble. So to me, 447 00:21:28,080 --> 00:21:31,200 Speaker 1: that is a just as interesting a shot in the 448 00:21:31,240 --> 00:21:33,520 Speaker 1: few war as any other ones, even though thirty doesn't 449 00:21:33,520 --> 00:21:36,240 Speaker 1: seem nearly as low as the other ones. Relatively speaking, 450 00:21:36,920 --> 00:21:40,400 Speaker 1: that's low, and especially low for such a specific thematic 451 00:21:41,040 --> 00:21:43,000 Speaker 1: e t F. It's an interesting one as well, because, 452 00:21:43,000 --> 00:21:45,399 Speaker 1: I mean you do have very much that kind of 453 00:21:45,440 --> 00:21:47,080 Speaker 1: like you know, breathing on the back of your neck 454 00:21:47,119 --> 00:21:49,320 Speaker 1: from Black Rock and State Street and Goldman. I mean, 455 00:21:49,440 --> 00:21:53,080 Speaker 1: they've all launched thematic products over the last year. So 456 00:21:53,119 --> 00:21:55,760 Speaker 1: if you are a niche issue where that focuses on thematic, 457 00:21:55,840 --> 00:21:58,080 Speaker 1: you are very aware of those kind of goliaths in 458 00:21:58,080 --> 00:22:00,000 Speaker 1: the room that kind of like a looking to step 459 00:22:00,000 --> 00:22:02,320 Speaker 1: once your turf. At the same time, you're one of 460 00:22:02,359 --> 00:22:04,280 Speaker 1: the reasons that they're looking to step onto that turf 461 00:22:04,640 --> 00:22:07,280 Speaker 1: is that they are able to charge higher fees for 462 00:22:07,320 --> 00:22:09,720 Speaker 1: those products. It's it's something that helps offset from a 463 00:22:09,760 --> 00:22:12,639 Speaker 1: revenue perspective, the fact that they're cutting costs elsewhere. So 464 00:22:12,680 --> 00:22:15,119 Speaker 1: there's this interesting dynamic whereby on the one hand, you 465 00:22:15,160 --> 00:22:17,080 Speaker 1: know you need to kind of like go low because 466 00:22:17,119 --> 00:22:18,960 Speaker 1: it does act as black clock repellent is. To the 467 00:22:18,960 --> 00:22:20,800 Speaker 1: other hand, black bocks coming into that space because they 468 00:22:20,800 --> 00:22:22,639 Speaker 1: do want to be able to charge your fee. And 469 00:22:22,640 --> 00:22:24,840 Speaker 1: when you look at the ETFs, you know that they 470 00:22:24,880 --> 00:22:26,399 Speaker 1: are cheap, and this one is a good example. It 471 00:22:26,480 --> 00:22:29,080 Speaker 1: charges thirty basis points. But we have this new score 472 00:22:29,119 --> 00:22:31,760 Speaker 1: we're running uh in BI, which we call the thematic 473 00:22:31,800 --> 00:22:34,480 Speaker 1: capture score, which looks at how much of the stocks 474 00:22:34,560 --> 00:22:37,680 Speaker 1: actually get the revenue from the theme. And this one's 475 00:22:37,800 --> 00:22:41,399 Speaker 1: very low, thirty six. We've got other ones that are nine, 476 00:22:41,640 --> 00:22:44,720 Speaker 1: so this is on the low side. So in a way, again, 477 00:22:44,880 --> 00:22:47,080 Speaker 1: this is a good reason to look beyond the fee 478 00:22:47,160 --> 00:22:50,760 Speaker 1: sometimes because if you're looking for five G direct direct revenue, 479 00:22:50,960 --> 00:22:53,040 Speaker 1: you're only getting a slice of it here. And the 480 00:22:53,080 --> 00:22:56,000 Speaker 1: other thing is it also shows that what I used 481 00:22:56,040 --> 00:22:59,280 Speaker 1: to call vf z s Vanguard free zones where you 482 00:22:59,320 --> 00:23:01,639 Speaker 1: could make a little money and you know, buy some 483 00:23:01,680 --> 00:23:05,520 Speaker 1: food and stuff, those are gone, um Vanguard free zones. 484 00:23:05,720 --> 00:23:08,240 Speaker 1: Other people are now taking a page from Vanguard's book 485 00:23:08,760 --> 00:23:10,880 Speaker 1: and coming in low. Goldman did it in smart Bet 486 00:23:10,920 --> 00:23:13,919 Speaker 1: a couple of years ago with GSLC, and so the 487 00:23:14,000 --> 00:23:16,240 Speaker 1: vanguard free zone is almost the thing in the past. 488 00:23:16,280 --> 00:23:19,920 Speaker 1: The only place left where none of this is really 489 00:23:19,920 --> 00:23:22,880 Speaker 1: happening is in these high octane leverage gts which charged 490 00:23:23,920 --> 00:23:27,000 Speaker 1: No one's really messed with those. Outside of that, I mean, 491 00:23:27,119 --> 00:23:29,760 Speaker 1: it's pretty much fee war on. So maybe there is 492 00:23:29,840 --> 00:23:32,600 Speaker 1: black Rock repellent spray. But on the seventh of March, 493 00:23:32,720 --> 00:23:37,480 Speaker 1: black Rock also launched a cheap e t F specifically 494 00:23:37,480 --> 00:23:41,240 Speaker 1: on Japan. Yeah, necessary Japan e t F. They've they've 495 00:23:41,240 --> 00:23:43,800 Speaker 1: had e w J for a long long time. It's 496 00:23:43,840 --> 00:23:46,680 Speaker 1: pretty expensive. It charges forty seven basis points as expense 497 00:23:46,760 --> 00:23:48,600 Speaker 1: ratio for that. They came out with a couple of 498 00:23:49,040 --> 00:23:52,000 Speaker 1: Japan products that charge fifteen basis points, so they are 499 00:23:52,080 --> 00:23:55,760 Speaker 1: undercutting themselves. Now, these products are slightly different um one 500 00:23:55,760 --> 00:23:58,040 Speaker 1: of them is equal weighted, for example, so it's taking 501 00:23:58,040 --> 00:24:01,080 Speaker 1: a more kind of smart beta appro to to the 502 00:24:01,080 --> 00:24:04,359 Speaker 1: country specific space. But it's interesting that in this war 503 00:24:04,480 --> 00:24:07,520 Speaker 1: they are even prepared to undercut themselves if it means 504 00:24:07,560 --> 00:24:10,000 Speaker 1: trying to kind of get some market share. Interesting to me. 505 00:24:10,080 --> 00:24:13,280 Speaker 1: They are not, however, the cheapest funds in the Japan space. 506 00:24:13,720 --> 00:24:15,640 Speaker 1: There are other products that are out there that are 507 00:24:15,720 --> 00:24:19,240 Speaker 1: nine basis points, which does mean that potentially those are 508 00:24:19,280 --> 00:24:21,359 Speaker 1: the ones that are kind of like vying for that 509 00:24:21,359 --> 00:24:24,199 Speaker 1: that you know, very very free conscious investor. But it 510 00:24:24,280 --> 00:24:26,639 Speaker 1: is interesting that they are trying to I guess, similar 511 00:24:26,680 --> 00:24:29,000 Speaker 1: to what they did with these core products and a 512 00:24:29,040 --> 00:24:31,480 Speaker 1: while back, they are trying to create a product that 513 00:24:31,640 --> 00:24:34,159 Speaker 1: is cheaper and potentially appeals to the free conscious investor, 514 00:24:34,160 --> 00:24:36,680 Speaker 1: whilst keeping the products that has a lot of assets 515 00:24:36,680 --> 00:24:39,359 Speaker 1: already and can afford to charge forty seven pips. This 516 00:24:39,480 --> 00:24:41,800 Speaker 1: was also I don't know if a response to JP 517 00:24:41,920 --> 00:24:44,240 Speaker 1: Morgan JP. Morgan had come out with a cheap Japan 518 00:24:44,280 --> 00:24:46,840 Speaker 1: e t F b b JP at nineteen basis points, 519 00:24:46,920 --> 00:24:49,640 Speaker 1: undercutting e w J, and a lot of its own 520 00:24:49,680 --> 00:24:52,160 Speaker 1: advisors moved from e w J to b b JP, 521 00:24:52,320 --> 00:24:55,320 Speaker 1: which brought up concerns of conflict of interest, pushing that 522 00:24:55,359 --> 00:24:58,280 Speaker 1: aside for a seconds, a whole other conversation. Um, this 523 00:24:58,320 --> 00:25:02,840 Speaker 1: is kind of a shot fired back, although it's equal weighted, 524 00:25:02,920 --> 00:25:04,600 Speaker 1: so you are going to get a little more risk. 525 00:25:04,640 --> 00:25:06,840 Speaker 1: It's not maybe for the same audience, but I guess 526 00:25:06,840 --> 00:25:08,840 Speaker 1: black Rock can now roll into a meeting and say, yeah, 527 00:25:08,840 --> 00:25:11,960 Speaker 1: we have cheap Japan too. They weren't the only ones 528 00:25:12,040 --> 00:25:16,040 Speaker 1: to do something. On March seventh, DWS did something in 529 00:25:16,080 --> 00:25:19,439 Speaker 1: the E s G space. So this is the asset 530 00:25:19,440 --> 00:25:22,560 Speaker 1: management arm of Deutsche Um that they rebranded, but it's 531 00:25:22,560 --> 00:25:25,480 Speaker 1: always good to remember as Deutsche Um. So they launched 532 00:25:25,600 --> 00:25:28,080 Speaker 1: an E s G fund U s s G that 533 00:25:28,119 --> 00:25:30,560 Speaker 1: came in at ten basis points, undercutting all the other 534 00:25:30,560 --> 00:25:32,600 Speaker 1: E s G funds out there. And they did this 535 00:25:32,640 --> 00:25:35,480 Speaker 1: because they had the help of a finished pension funds. 536 00:25:35,480 --> 00:25:39,120 Speaker 1: So they already have eight hundred million of assets under management, 537 00:25:39,119 --> 00:25:41,879 Speaker 1: which is very very good for for a new fund 538 00:25:41,880 --> 00:25:44,560 Speaker 1: that often kind of daudals that around three million UM. 539 00:25:44,640 --> 00:25:47,359 Speaker 1: But basically are they are charging the least um for 540 00:25:47,560 --> 00:25:48,840 Speaker 1: an E s G E T F in in the 541 00:25:48,920 --> 00:25:50,920 Speaker 1: U S And it really shows, I think of how 542 00:25:51,080 --> 00:25:52,879 Speaker 1: you're not just in the thematic space, not just in 543 00:25:52,880 --> 00:25:55,520 Speaker 1: the in the country space, but even within areas like 544 00:25:55,800 --> 00:26:00,359 Speaker 1: environmental social governance social responsibility fee is important. That potentially 545 00:26:00,400 --> 00:26:02,600 Speaker 1: is an area where you could see invest is more 546 00:26:02,640 --> 00:26:04,840 Speaker 1: willing to pay up if they actually think that a 547 00:26:04,880 --> 00:26:07,320 Speaker 1: fund represents their values or think that a fund is 548 00:26:07,400 --> 00:26:09,680 Speaker 1: kind of you know, sort of doing the right thing 549 00:26:09,760 --> 00:26:12,919 Speaker 1: in terms of how it how it measures those criteria, 550 00:26:13,119 --> 00:26:14,960 Speaker 1: but this is still an area where we are seeing 551 00:26:15,000 --> 00:26:16,560 Speaker 1: that kind of fear reduction come through, and I think 552 00:26:16,560 --> 00:26:19,280 Speaker 1: it just shows you how extensive this people already is. 553 00:26:19,359 --> 00:26:21,200 Speaker 1: And also E s G had been the one space 554 00:26:21,240 --> 00:26:23,800 Speaker 1: where we weren't sure back in the day whether people 555 00:26:23,840 --> 00:26:27,760 Speaker 1: just didn't like E s G in reality or they 556 00:26:27,800 --> 00:26:30,240 Speaker 1: just wanted it cheap. Now I think we're starting to 557 00:26:30,280 --> 00:26:32,480 Speaker 1: see they do want E s G. They just waiting 558 00:26:32,520 --> 00:26:35,000 Speaker 1: for cheap products. Because Vanguard came up with a product 559 00:26:35,040 --> 00:26:37,240 Speaker 1: for twelve basis points in the s G space that's 560 00:26:37,240 --> 00:26:40,280 Speaker 1: already up to million. That's that's not bad for less 561 00:26:40,280 --> 00:26:42,919 Speaker 1: than a year old um, and then you have US SG. 562 00:26:43,520 --> 00:26:45,600 Speaker 1: So if you look at it, most of the flows 563 00:26:45,640 --> 00:26:47,399 Speaker 1: now we're going to E s G products less than 564 00:26:47,400 --> 00:26:50,680 Speaker 1: twenty bits, which sticks to that whole of the money 565 00:26:50,720 --> 00:26:54,080 Speaker 1: likes to go into that space. So in a way, 566 00:26:54,080 --> 00:26:56,119 Speaker 1: it's probably a good sign for E s G people, 567 00:26:56,160 --> 00:26:58,080 Speaker 1: because I think there was some I mean, I was 568 00:26:58,119 --> 00:27:01,600 Speaker 1: definitely thinking that s G was maybe more of a 569 00:27:01,680 --> 00:27:04,480 Speaker 1: myth because had all this great suppress, all these surveys, 570 00:27:04,800 --> 00:27:07,600 Speaker 1: and the assets weren't coming. But now we're seeing that 571 00:27:07,680 --> 00:27:10,320 Speaker 1: maybe they just wanted it a little cheaper because we 572 00:27:10,359 --> 00:27:12,920 Speaker 1: are seeing decent flows now into them if they're low cost. 573 00:27:13,359 --> 00:27:18,159 Speaker 1: So this part of this two week moment was all 574 00:27:18,200 --> 00:27:21,360 Speaker 1: about sort of thematic E t s and then things 575 00:27:21,440 --> 00:27:25,879 Speaker 1: got crazy. What happened the next week because Swab, JP Morrigan, 576 00:27:26,040 --> 00:27:31,200 Speaker 1: and then the harbinger of of crazy craziness the negative 577 00:27:31,200 --> 00:27:35,040 Speaker 1: fee e t F what happened with sub and JP Morgan. 578 00:27:35,160 --> 00:27:37,880 Speaker 1: So this week really encapsulated pretty much everything that we've 579 00:27:37,960 --> 00:27:40,800 Speaker 1: kind of been seeing. So JP Morgan, it's a relatively 580 00:27:40,840 --> 00:27:43,040 Speaker 1: new entrant into the e t F space. It comes 581 00:27:43,040 --> 00:27:46,040 Speaker 1: out with a two basis point a fee on its products. 582 00:27:46,080 --> 00:27:48,320 Speaker 1: Some have speculated that it could have been zero. We 583 00:27:48,320 --> 00:27:50,920 Speaker 1: were slightly disappointed in that, but two basis points still 584 00:27:50,920 --> 00:27:52,919 Speaker 1: the cheapest e t F out in the market if 585 00:27:53,000 --> 00:27:55,800 Speaker 1: you exclude those that are offering fee waivers. Interesting because 586 00:27:55,880 --> 00:27:58,359 Speaker 1: JP Morgan, as his new entrant, has actually managed to 587 00:27:58,400 --> 00:28:00,399 Speaker 1: double its assets over the last year it so this 588 00:28:00,440 --> 00:28:02,600 Speaker 1: is something that has definitely worked for them. They have 589 00:28:02,640 --> 00:28:05,600 Speaker 1: been able to undercut their competitors and game market share. 590 00:28:06,040 --> 00:28:08,680 Speaker 1: But that wasn't gonna stand in the headlines for long. 591 00:28:09,119 --> 00:28:13,320 Speaker 1: We had Schwab coming out and reducing small cap MidCap 592 00:28:13,359 --> 00:28:15,720 Speaker 1: and dividend e t F by one basis point at 593 00:28:15,760 --> 00:28:18,479 Speaker 1: piece shows you exactly how much these little margins go. 594 00:28:18,720 --> 00:28:21,040 Speaker 1: And then we had Self Financial, a name that I 595 00:28:21,080 --> 00:28:23,800 Speaker 1: don't think many people in the industry had come across before. 596 00:28:23,920 --> 00:28:26,000 Speaker 1: They only had one et F out there, coming out 597 00:28:26,080 --> 00:28:29,399 Speaker 1: with something totally changed the game, offering fifty cents for 598 00:28:29,440 --> 00:28:31,760 Speaker 1: every one thousand invested for the first year if you 599 00:28:31,840 --> 00:28:35,000 Speaker 1: buy their e t F and so just quick clime 600 00:28:35,040 --> 00:28:37,600 Speaker 1: at Schwab always response. We were waiting for them, and 601 00:28:37,640 --> 00:28:40,800 Speaker 1: just on que they responded, they're famous for that and 602 00:28:40,840 --> 00:28:44,360 Speaker 1: they're all cheap. So not a shocker there, JP Morgan 603 00:28:44,360 --> 00:28:45,640 Speaker 1: a little bit of a shocker. I thought that would 604 00:28:45,640 --> 00:28:48,240 Speaker 1: be zero. It was two. I don't know if we'll 605 00:28:48,240 --> 00:28:50,120 Speaker 1: move the needle that much because if you get if 606 00:28:50,120 --> 00:28:52,840 Speaker 1: you can get that kind of exposure total market for 607 00:28:53,000 --> 00:28:56,360 Speaker 1: three um and its liquid, that's a tough cell. But 608 00:28:56,680 --> 00:28:59,080 Speaker 1: we'll see. And then the negative fee one got a 609 00:28:59,120 --> 00:29:01,720 Speaker 1: lot of eye rolling, lot of skepticism. I think it 610 00:29:01,800 --> 00:29:05,600 Speaker 1: was this really taps into the plight of the small issuer. 611 00:29:05,880 --> 00:29:08,000 Speaker 1: They're what they're really doing is saying, and it's not 612 00:29:08,040 --> 00:29:10,120 Speaker 1: a bad product, it's a low ball product. That charges 613 00:29:10,160 --> 00:29:13,840 Speaker 1: twenty nine basis points. That's fine, that's that's reasonable. They're 614 00:29:13,840 --> 00:29:16,680 Speaker 1: just waiving it and giving you five bits to help 615 00:29:16,760 --> 00:29:18,440 Speaker 1: bring you in because not many people want to be 616 00:29:18,440 --> 00:29:19,880 Speaker 1: the first investor in a new e t F. So 617 00:29:19,920 --> 00:29:22,360 Speaker 1: we'll pay you for that concern, and we're going to 618 00:29:22,520 --> 00:29:24,840 Speaker 1: cover the wide spreads that a new e t F has. 619 00:29:24,880 --> 00:29:27,520 Speaker 1: So I don't know, it's sort of representative of the 620 00:29:27,600 --> 00:29:30,160 Speaker 1: hurdles that a new indie e t F has, and 621 00:29:30,200 --> 00:29:32,800 Speaker 1: they're just addressing that in a common sense way. But 622 00:29:32,840 --> 00:29:35,600 Speaker 1: it got you know, people just I don't know, they 623 00:29:35,720 --> 00:29:38,479 Speaker 1: their intuitions start to smell like some sort of a gimmick. 624 00:29:38,560 --> 00:29:40,160 Speaker 1: But if you dig in, I didn't think it was 625 00:29:40,200 --> 00:29:43,280 Speaker 1: that irrational. It's a gimmick, but it might be one 626 00:29:43,320 --> 00:29:46,280 Speaker 1: that we see again because again, the the that moment 627 00:29:46,320 --> 00:29:49,080 Speaker 1: that somebody launches the problem is they don't have assets. 628 00:29:49,160 --> 00:29:53,520 Speaker 1: So how do you get assets? Like give them, incentivize them. Yeah, exactly. 629 00:29:53,600 --> 00:29:55,360 Speaker 1: I think I would say that the one caveat to 630 00:29:55,440 --> 00:29:57,400 Speaker 1: all this kind of like fee cutting that we're seeing 631 00:29:57,680 --> 00:29:59,760 Speaker 1: is that if you are already invested in one of 632 00:29:59,760 --> 00:30:02,480 Speaker 1: these funds, there needs to be a reason. Potentially that 633 00:30:02,480 --> 00:30:03,840 Speaker 1: reason is cost, but they need to see a good 634 00:30:03,840 --> 00:30:05,960 Speaker 1: reason to kind of shift from one to another. And 635 00:30:06,000 --> 00:30:08,880 Speaker 1: when you sell a fund, you are obviously incurring various 636 00:30:08,920 --> 00:30:11,440 Speaker 1: trading costs. You also may be incurring a tax bill 637 00:30:11,480 --> 00:30:13,240 Speaker 1: if that fund has gone up over the past year. 638 00:30:13,440 --> 00:30:16,320 Speaker 1: So when thinking about switching from something that maybe charges 639 00:30:16,360 --> 00:30:18,880 Speaker 1: twenty basis points something that charges ten basis points, you 640 00:30:18,920 --> 00:30:20,360 Speaker 1: need to kind of be aware of that it may 641 00:30:20,400 --> 00:30:22,160 Speaker 1: be worth it, particularly if you're going to be holding 642 00:30:22,160 --> 00:30:24,000 Speaker 1: something for for the long haul and you don't want 643 00:30:24,000 --> 00:30:26,560 Speaker 1: to be paying that that annual fee. But it's something 644 00:30:26,560 --> 00:30:29,760 Speaker 1: to consider. By the way, just as we end this, uh, 645 00:30:29,840 --> 00:30:33,640 Speaker 1: just this morning, black Rock announced it was cutting the 646 00:30:33,640 --> 00:30:36,440 Speaker 1: fee on its SMP five hundred index mutual fund to 647 00:30:36,640 --> 00:30:40,400 Speaker 1: point oh one to five, which would undercut fidelity by 648 00:30:40,440 --> 00:30:45,160 Speaker 1: seventy five dred of a basis point. So now that's 649 00:30:45,200 --> 00:30:51,560 Speaker 1: the cheapest points. Yeah, that cheap so uh. And then 650 00:30:51,560 --> 00:30:55,600 Speaker 1: there was some fee uh some really low cost ets 651 00:30:55,640 --> 00:30:57,959 Speaker 1: being launched in Europe in the middle of all this 652 00:30:58,000 --> 00:31:00,880 Speaker 1: as well. So this isn't really just relegated to e 653 00:31:00,960 --> 00:31:03,400 Speaker 1: t F, so it's actually spreading to other fun types 654 00:31:03,480 --> 00:31:07,600 Speaker 1: other countries. Um, this thing is not going away anytime soon. Okay, 655 00:31:07,600 --> 00:31:10,360 Speaker 1: we'll step back for a second and let's let's put 656 00:31:10,400 --> 00:31:12,960 Speaker 1: a bull on this. What is the in game gonna 657 00:31:13,000 --> 00:31:20,000 Speaker 1: look like? Here resounding silence. I mean, I think the 658 00:31:20,080 --> 00:31:22,720 Speaker 1: endgame looks something kind of like where we're actually at. 659 00:31:22,760 --> 00:31:24,239 Speaker 1: I don't think that this is going to be a 660 00:31:24,240 --> 00:31:27,080 Speaker 1: case where all funds end up cutting to zero or 661 00:31:27,120 --> 00:31:29,240 Speaker 1: below in order to be successful. I mean, if you 662 00:31:29,280 --> 00:31:31,680 Speaker 1: look at kind of the larger asset managers, you know 663 00:31:32,000 --> 00:31:35,480 Speaker 1: they have position in the market already. They do already 664 00:31:35,480 --> 00:31:37,320 Speaker 1: have assets, and they're going to look to defend this. 665 00:31:37,400 --> 00:31:40,040 Speaker 1: There's no interest necessarily for them in cutting all of 666 00:31:40,080 --> 00:31:42,280 Speaker 1: their products to zero. If they're doing well and gathering 667 00:31:42,280 --> 00:31:45,200 Speaker 1: assets with something that charges ten basis points, they're gonna 668 00:31:45,360 --> 00:31:48,000 Speaker 1: keep something kind of around ten basis points. But for 669 00:31:48,120 --> 00:31:50,240 Speaker 1: newer issuers that do want to make a splash, I 670 00:31:50,240 --> 00:31:52,320 Speaker 1: think we will see a succession of those come out 671 00:31:52,600 --> 00:31:55,520 Speaker 1: with zero or below zero kind of incentives to try 672 00:31:55,520 --> 00:31:57,760 Speaker 1: and get those headlines. After a while, though, you know, 673 00:31:57,800 --> 00:31:59,880 Speaker 1: people like anybody, kind of gets bored of this sort 674 00:31:59,880 --> 00:32:03,000 Speaker 1: of things until once it starts being kind of a commonplace, 675 00:32:03,120 --> 00:32:05,120 Speaker 1: then people will need to think about something else that 676 00:32:05,160 --> 00:32:07,080 Speaker 1: makes them stand out. I agree with all that, I 677 00:32:07,120 --> 00:32:09,160 Speaker 1: would maybe out also. Sometimes when I see the vision 678 00:32:09,160 --> 00:32:11,920 Speaker 1: of all this, I see it looking like the airline industry, 679 00:32:11,960 --> 00:32:15,440 Speaker 1: where you have three big carriers basically competing on cost 680 00:32:15,560 --> 00:32:19,640 Speaker 1: every day, giving you routes everywhere, and they control the market. 681 00:32:19,720 --> 00:32:22,160 Speaker 1: I see a lot of consolidation. You have three companies 682 00:32:22,200 --> 00:32:24,600 Speaker 1: which basically give you these core portfolios for nothing or 683 00:32:24,640 --> 00:32:27,840 Speaker 1: two basis points. And then on the outskirts you have 684 00:32:27,880 --> 00:32:31,160 Speaker 1: these sort of niche airlines like you know, Alaska Air 685 00:32:31,400 --> 00:32:34,520 Speaker 1: or private jets, and those would be like alternatives hedge funds, 686 00:32:34,560 --> 00:32:38,280 Speaker 1: themes innovative products that do certain specialized things, and those 687 00:32:38,280 --> 00:32:39,840 Speaker 1: will be sort of sprinkled on the outside of the 688 00:32:39,880 --> 00:32:42,920 Speaker 1: portfolio and people will pay up a little more for those, 689 00:32:43,240 --> 00:32:44,720 Speaker 1: at least for a while. Some of that will probably 690 00:32:44,800 --> 00:32:48,320 Speaker 1: come down to but um, I don't see anything stopping 691 00:32:48,400 --> 00:32:51,520 Speaker 1: that future scenario. But the catalyst would have to be 692 00:32:51,560 --> 00:32:53,920 Speaker 1: a bear market. A bear market would be what starts 693 00:32:53,960 --> 00:32:58,960 Speaker 1: to reshape this, and that the basically the ramifications of 694 00:32:59,000 --> 00:33:01,959 Speaker 1: all this organic growth going to stuff that doesn't charge anything, 695 00:33:02,200 --> 00:33:06,360 Speaker 1: we'll start to show itself in the market. Rachel Evans 696 00:33:06,360 --> 00:33:08,360 Speaker 1: and Bloomberg News as always Thank you so much for 697 00:33:08,400 --> 00:33:17,200 Speaker 1: joining us on Tryans. Thanks for listening to Trillions until 698 00:33:17,240 --> 00:33:19,320 Speaker 1: next time. You can find us on the Bloomberg terminals, 699 00:33:19,480 --> 00:33:23,600 Speaker 1: Bloomberg dot com, Apple Podcasts, Spotify, and wherever else you 700 00:33:23,680 --> 00:33:26,080 Speaker 1: like to listen. We'd love to hear from you. We're 701 00:33:26,120 --> 00:33:30,360 Speaker 1: on Twitter, I'm at Joel Webber Show, He's at Eric Faltunas, 702 00:33:30,520 --> 00:33:33,800 Speaker 1: and he can find Rachel at Rachel Evans. Underscore in 703 00:33:33,920 --> 00:33:39,320 Speaker 1: Why Trillions is produced by Magnus Hendrickson. Francesca Levy is 704 00:33:39,360 --> 00:33:43,040 Speaker 1: the head of Bloomberg Podcast. Bye.